Do You Need to File A Tax Extension? – Professional Tax Services

To begin, we encourage you to file your tax return by the April 15th deadline. There are several reasons why failing to file on time and not including outstanding taxes owed is not advantageous.

Why Filing On Time Matters
If you are due a refund, you won’t receive it until you file.
An extension only gives you more time to file — not more time to pay.
The late-payment penalty is 0.5% per month (up to 25%).
The failure-to-file penalty is 5% per month (up to 25%).
Interest compounds daily.
If you underpay by the deadline, you may be subject to penalties and interest on the unpaid amount.
Lenders often require a filed return for loans or mortgages.

When Filing an Extension May Be Beneficial
You are waiting on K-1s or brokerage statements.
You own a business and need more time to ensure accuracy.
You experienced a major life event.
You want additional time for retirement contribution planning.
An extension is not an audit trigger, nor does it increase your chances of IRS scrutiny.

Filing an IRS Extension
To initiate the process, obtain Form 4868, the Application for Automatic Extension of Time to File, from the IRS website (https://irs.gov/forms-pubs/about-form-4868). Filing late will not incur penalties if you anticipate a refund. In addition, there are special circumstances, such as military service, residing outside the United States, or living in a designated disaster zone, that may grant additional time.

Filing for an Extension in California
California offers an automatic six-month extension for filing your return. This extension is not contingent on any formal request or form completion. For most taxpayers, the deadline is October 15th. It is important to note that this extension applies solely to filing; payment is not covered under this provision. As with the IRS, there are penalties and interest associated with failing to make payment by the April 15th deadline. For payment by mail, utilize Form FTB 3519. We recommend filing electronically.
If you are encountering difficulties with filing your return and believe you may not meet the deadline, there may still be an opportunity to seek assistance from a tax professional if you are reading this article in early April. Please do not hesitate to contact us to discuss your situation, as we may be able to provide guidance. Also, we provide our clients with complimentary unlimited tax planning advice that can help prevent having to file future extensions.
Professional Tax Services is a locally owned provider serving over 3,800 local residents and businesses. For more information, call 661-259-1967 or visit www.scvprotaxservices.com.