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April 17 is coming fast. For some of us, it’s coming too fast. We’re not quite ready to file our federal and state income taxes for one reason or another.
And while you can always file an extension to get extra time, it may not be the right choice depending on your situation. Here are three reasons not to file a tax extension this year.
1. You want to put off paying your tax bill.
If you’re contemplating filing an extension to avoid paying your tax bill, don’t! That strategy derives from one of the biggest tax filing myths. Even if you file an extension, you’re still required to pay your tax bill by the deadline. Any amount not paid will accrue interest and penalties. To avoid paying even more than required, file your return by April 17.
2. You anticipate receiving a refund, so you’re not worried about it.
File your return and claim your refund. You likely have a better use for that money than leaving it with Uncle Sam. For instance, you could:
- pay off debt
- create an emergency fund
- fund your retirement
- invest the money back into your business
Plus, there’s always the small chance you may owe money – even if you didn’t last year. You can never be completely certain until you file. Tax laws change from year to year, and you don’t want to be left paying penalties and interest because you thought you didn’t have a tax bill.
3. You file an extension out of habit.
If you file an extension every year, take a minute to re-evaluate why you make that choice. Perhaps you first started filing an extension a few years ago because you were waiting to receive important tax information. In that case, it likely made sense. But if that’s no longer your situation, an extension may not be the better choice. Instead of delaying the process until later in the year, file your return by the deadline and check tax filing off your yearly to-do list.