A tax extension is what you apply for when you need more time to file your tax returns. You can do so by filling out the IRS Form 4868. If the IRS approves your request, it gives you six more months to sort out any complications. This is great for business owners, whose lives are anything but simple.
Acquiring extra time to file your tax returns is good, but it won’t solve all your problems. Here are a couple of tips to help you take full advantage of this feature during the next tax season.
Pay Your Taxes on Time
You’ve filed for the extension, and they approved your request. That’s great, but it doesn’t take care of your actual taxes. Here’s the truth about how an extension affects those.
You don’t have six extra months to pay your taxes. You have to pay them on time as usual.
They will charge you 0.5 percent plus interest for every month that you fail to pay.
Don’t Be Afraid to Extend
Let’s say that you failed to apply for a tax extension. You had to rush your tax returns to complete them before the deadline. If you managed to do so on time, then good job. But, it wasn’t the best that you could have done.
Rushing your tax returns may result in mistakes. Do you really want to mess up your tax forms?
Even a single mistake could result in a massive headache for you and your accountant.
Extend if you even suspect that you’re running out of time.
Be Prepared for Tax Season 2020
Remember that you still have until October 15 to file your returns if you were approved for an extension. For those of you who failed to extend this year, you now know exactly what you need to do for next year. Use the knowledge you’ve learned today to gain the upper hand on the next tax season.
For more information that could be beneficial to you and your business, contact us today.
Tax Tips for the Self-Employed
How the SECURE Act Impacts Small Business Owners
What You Need to Know About the QBI Deduction
Do You Need to Send Out 1099s?
Checklist for Maintaining Your Limited Liability: Avoiding Piercing the Corporate Veil
Why Small Businesses Need a CPA