Each year, some taxpayers find themselves scrambling to find their income tax return paperwork and ultimately become stressed trying to file their tax return by the April deadline. Others know and understand that simply filing a tax extension can earn them time, reduce their stress, and, possibly, find themselves with a lower tax bill.
Benefits of Extending:
• Filing an individual extension gains you and your CPA six more months to file your complete and accurate tax return. With that extra time, you also have the ability to review your options and better understand your return.
• Extending will NOT increase your likelihood of being audited by the IRS. It is better to file an extension rather than to file a return that you have not had time to review carefully before signing.
• You may qualify for additional retirement planning opportunities or additional time to fund certain types of retirement plans (e.g., SEP IRA).
• It is often less expensive (and easier) to file an extension rather than rushing now, then possibly needing to amend your return later.
What to Expect if My Return is Extended:
While extending grants you additional time to submit your return, you still need to estimate whether you will owe any taxes and pay that estimated balance by the April deadline. If there is an estimated amount due, we will provide you with your extension vouchers and the applicable payment instructions in January/February.
Please note that these vouchers do not need to be paid until April 18th, 2023. We will send you a payment reminder in early April.
If your 2022 tax return will be extended, we ask that you NOT drop-off at the office, email, or upload to ShareFile any tax documents until June of 2023. However, you are welcome to add documents to TaxCaddy at any time!
We will begin preparation of all extended tax returns beginning in June. If our firm has or will be preparing a 2022 tax plan for you, extension vouchers will be based upon this tax projection. If no tax plan is prepared, we will be providing you with “safe harbor” extension vouchers, which are based upon your prior year income tax return.
If you have any specific questions regarding your related extension position, please reach out to your firm tax contact or call our office.
Written by Jennifer Fransen, DHA CPAs