4 Things to Consider After Filing a Tax Extension
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April 18 has come and gone. If you didn’t quite finish your tax return, you should have filed Form 4868, Application for Automatic Extension of Time to File, to the IRS.
That automatic extension gives you another six months to file your tax return, which means it’s now due on Oct. 16, 2023. With that extra time, it’s easy to simply breathe a sigh of relief, put away your documents, and forget about taxes for now.
Before you do, however, consider the following:
Completing your return won’t be any easier in October
Unless you are waiting for a specific form or piece of information, there’s probably nothing that will make filing your return easier in the fall. In fact, life has a way of being busy 365 days a year. And it certainly won’t get easier to remember your financial details for 2022 six months from now.
You may as well keep working on your return and finish it up as soon as possible.
If you have most of your information, do as much as you can now. Use estimates where necessary so you have a good idea of how much tax you may owe.
If your return is complex or if you keep finding deductible receipts, you may be tempted to continue putting off filing your return. But, rather than wait, go ahead and file. If you find a significant tax item after you file, you can always file an amended return.
You can’t get a refund until you file
If the IRS owes you money, you should file your return and get your refund as soon as possible. Ask yourself this, “Why am I letting Uncle Sam hold on to my money?” That money is yours, and there are a variety of ways you can put it to good use.
For instance, you could use it to pay down any credit card debt. No one likes to continuously pay those sky-high interest rates. You could also use it to invest in your business, stocks, or other money-making ventures.
If you owe more tax, you could be penalized
Even if you paid tax when you filed for your extension, you could discover you owe more when you finish your return. It happens. Owing penalties and interest on top of your tax bill only makes things worse.
The longer you wait to file, the more you’ll have to pay in penalties and interest.
Don’t forget to enter payments you made with your extension
When you resume working on your tax return, be sure to enter any taxes you paid when you filed for an extension so you don’t overpay. It’s an easy mistake to make.
When you complete your return, there’s no need to notify the IRS that you filed for an extension.