When the tax filer is unable to file the tax on or before the given deadline, then the tax filer can request for a tax extension. The persons who are serving in the military get an automatic tax extension without any requests. Usually, when a tax extension is made, it moves the deadline to file the tax further. Having said that, there are both Pros and Cons in filing a 4868 tax extension.
Pros of filing 4868 Tax Extension
There are many benefits when you extend the tax filing deadline. Listing them as follows:
- Get Some Extra Time Period:
Extensions give the tax filer some extra time to file the tax returns so that the tax filer gets some more time to gather the required tax documents. Also, can get time in organizing the deductions.
- Reduces Late Penalties:
There are two types of penalties, 5% per month on due tax as late filing penalty and late payment penalty of half % per month. When the tax filer files the tax extension and file tax return in the extended deadline, the tax filer can avoid that late filing penalty 5% per month.
- Preserves Tax Refunds:
Some of the taxpayers may not have filed the tax returns for years. The IRS provides 3 years of time to receive the refund check. The 3-year limitation is applicable from the original filing deadline. When a tax extension is made, the refund limitations statute also gets extended.
- improves the tax filing accuracy:
As the tax filing deadline is extended, you get a sample amount of time for the tax filer to gather the tax records. Make sure that the tax filing information is correct before submitting the file. Thus, the submitted tax return will be accurate and can avoid rejections.
- Reduces Tax Preparation Fees:
By extending the tax due date, you are reducing the tax preparation fee considerably. Because during the month of April (Extended to July 15, 2020) that is the tax filing deadline, many accountants and the tax filers increase their tax preparation fees. You can avoid these added fees while you extend the tax filing date.
Cons of filing the 4868 Tax Extension
Even though there are many benefits in filing the extension, there are also considerable disadvantages that need to be checked before filing the extension Form 4868.
- No Extra time to pay the tax amount: Note that the tax filing extension does not give the permission to extend your tax pay. It just extends the filing time of the tax returns.
- No extensions for IRA: Roth IRAs and traditional IRA due date are the same and cannot be extended.
- No extra time for the couples: If a married couple files the tax by April (Extended to July 15, 2020) deadline and they can amend the returns to switch from joint to separate before April 15 (Extended to July 15, 2020)and this cannot be extended.
- Filing unnecessary tax returns: In the case, when you file the extension the IRS might think that you will be paying the tax returns before the extended deadline. By that time, you may realize you do not meet the tax filing requirements and ignore to file the returns on an extended time. But the IRS asks you to do the tax returns even though it is not necessary.
How to file a Personal Tax Extension?
The tax extension can be done online and it is quite simple. Follow the instructions on the site Tax2efile.com. and receive the confirmation code. Now, you have submitted the tax extension request electronically to the IRS.
Note: An extension gives extra time only to file the tax and not to pay the tax. Payments have to be made before the deadline. But in some cases, extensions may help in reducing the penalties when the payment cannot be made full.