Today’s issue we’re diving into tax filing extensions… and Chicago people do this for all kinds of reasons. Truthfully, extended deadlines and delays have been pretty commonplace in the tax world over the last few years. Sometimes life smacks you in the face and you need a little more time to get yourself together. And speaking of smacks…
… slap me silly and call me … Chris Rock? I’m pretty sure no one will ever forget the iconic moment when Will Smith went full angry husband at the 94th Oscars. Talk about a night to remember.
Did you know that award nominees get a free swag bag? This year’s included something like 50 gifts valued at more than $140,000 (though it’s been heftier in past years). But when it comes to tax time, the IRS doesn’t see that bag of free goodies as a gift at all. In fact, stars can end up paying up to 50% of that total in taxes.
If their tax pros aren’t advising them on how to plan for things like that, they should be (Will, if you’re reading this, feel free to shoot me a note … ).
It’s always a good idea to look ahead when it comes to your taxes and make moves in 2022 for next year’s filing. If you’ve already filed your taxes (or haven’t), let’s get a time on the books and sit down to talk about the year ahead:
And maybe you’re wondering why you should go with a pro over all those “free” (or mostly free) software programs out there. Well, sometimes algorithms are wrong. Just recently some computer errors led to people wrongly receiving Child and Dependent Care credits – and the IRS will expect that money back.
But with a Chicago pro, we’re already aware of your situation and are well aware of what credits you do and do not qualify for. We’re looking out for you.
Now, let’s dive into why filing an extension might be the right choice for you…
Abdalla Alyousef’s Perspective on Tax Filing Extensions
“It’s really clear that the most precious resource we all have is time.” – Steve Jobs
This time of year there are loads of pull-yourself-together, running-around to-do, deadlines to meet. Kind of like the end-of-year holidays – except IRS style.
With Tax Day looming ahead (Monday, April 18th), we want you to know that we’re here for you all the way to the filing deadline.
Sometimes, no matter how hard you try you just can’t get everything done by the final bell. Filing your tax return can be like that, too. But remember that you can always ask for more time to file your taxes.
Should you? This year, after two years of delayed tax deadlines, Tax Day is back in its old mid-April spot – no extra filing time due to worldwide sickness. Even as we all try to handle complex tax laws, new documents, and reporting requirements, the IRS is still way behind …
Should you jump right to filing for a six-month extension to file (though not to pay) your federal taxes this spring?
Facts and myths
People have many wrong ideas about tax-filing extensions. Let’s set some straight:
- Extensions do not automatically flag you for audit.
- They do not affect any refund you legitimately have coming.
- They do not give you more time to fatten up your individual retirement account (unless it’s the self-employed kind).
- We say again, they do not give you extra time to pay taxes that you owe unless you feel like ponying up the penalties.
- They’re not hard to get.
You can just ask for one – that’s right, no explanation needed – by filing IRS Form 4868 electronically or by paper. There might also be a little figuring about how much tax or estimated tax you should pay at the same time and of course, you should make sure all the information on your 4868 is right. (You’d be stunned what people can get wrong …)
There may be special rules if you’re serving our country in a combat zone or you live outside the U.S. The IRS (and most state governments, too) give extra time to file – and sometimes even pay the tax – if you’re in a federally declared disaster area. Check with us at any time with questions.
Year after year (and again this year, when the IRS has a record-sized amount of returns they still haven’t processed from previous years – though they’re ahead of where they were this time in 2021 …), the IRS insists it’s good to file your taxes as soon as possible. If you expect a refund that you’d like in your pocket ASAP, that is in fact a good idea.
You can only ask for one extension on one kind of tax return per year, by the way. If you get one, those form checkers at the IRS will also take your tax return any time during the extension – you don’t have to wait the full six months.
But if I can afford to pay any taxes I owe right now, more time is more time and that’s good, right?
Maybe. Let’s look at the arguments.
The case for extending
If you do have all your info, filing before the tax deadline is smart. It keeps everything running smoothly in terms of your standing with the IRS.
Those extra months afforded with an extension can give you a solid chance to double-check your return for accuracy and completeness. You don’t want to have to file an amended return later.
You also may not even have everything you need to file as quickly as in previous years. Maybe you lost your Form W-2 that told you your exact 2021 salary. It happens. The IRS also says that for 2021, people are making some missteps with the Recovery Rebate and Child Tax Credits. You may want to take the time to get everything right – and everything you’ve got coming.
Remember, the IRS generally communicates with taxpayers via snail mail. Between Uncle Sam’s processing backlog and the Post Office’s new and improved slower delivery service, even standard tax documents like letters confirming last year’s Economic Impact Payments may take longer to show this year.
Sometimes too, stuff just happens. Life’s curveballs can be a perfect reason for a filing extension.
If you file for your extension online, the IRS will notify you that they got it. If you file by mail, make sure it’s postmarked by April 18th.
Couple other notes: It’s a good idea to file for an extension only if you’re certain you’re going to be filing a tax return. And it’s important to keep in mind that filing an extension doesn’t necessarily mean more time to pay.
And by the way, do not miss filing by the extended due date, October 17th – the penalty gets a lot stiffer after that.
There are a few other aspects to filing extensions, so reach out to us with any questions. We’re the Chicago experts who can walk you through this and all other details about your taxes.
In your corner,