Many people this time of year are rushing to try to throw their taxes together. They’re doing so with regret in their heart because they promised themselves last year that they would be in better shape to get their taxes filed on time. Yet, here they are, files here, files there, a general idea of where everything they’ll need is, but no time to properly compile it, and gosh, look at the calendar. “I will never be able to get my return filed by the deadline.” We feel that this is actually a good thing for those people — the entrepreneurs or the busy folks — because rushing to put tax items together almost always puts a “win” in the IRS side of the column. You’ll miss deductions if you rush! You’ll underestimate mileage. You won’t think things through, if you do it in a mad rush.
What to do?
Filing an extension is a “big win” for you because it will give you time to decompress, relax about the process, and take time to get it right. And contrary to popular belief, the paperwork deadline has never been April 15th. An extension of time to file is automatically granted — no one has ever been refused an extension to file with the IRS. It isn’t a decision; it’s just a formality. You request more time to file, and it is automatically granted with no exceptions. Then you have until October 15th to get your records together. Of course, that would create an opportunity to procrastinate again and end up at the same kind of pressure deadline in October, so the correct way to handle this running out of time issue is to set an appointment for the first or second week of May, at the latest. Then, take your time to organize your information without being in a mad rush, and bring it into our office. We’ll compile a list of things that could improve your tax situation, some homework, if you will, and then you can calmly take a couple of weeks to gather together the bits and pieces that would have been lost if you had rushed to hit the April filing deadline.
You will get better tax deductions, pay less tax overall, feel calmer and more in control, and put a win on your own side of the column rather than on the IRS’s side! So, what do you do next? Well, simply file an extension. It’s an IRS form 4868. It is very easy to complete. It asks five questions; your name, your spouse’s name, your address, your Social Security number, your spouse’s Social Security number, and then a few payment questions. There isn’t even a signature required. Although there are ways to do this online, a tax preparer is willing to do it by mail. The best way to file an extension is to print it, fill it out, and send it certified mail to the IRS. Their electronic processes aren’t perfect. As you see in the news every day, sometimes data is hacked, lost, and so even electronically filing through a tax office or through a CPA or through the IRS website, you could still find yourself filing your taxes and getting a notification that you’re going to pay a penalty for failing to file your extension. The proof and the receipt in your hand from the USPS for $4 to $6 is the best way to guarantee yourself not paying a penalty for not filing the extension.