A tax extension is a delay in when you have to file your tax return. Most of the time, if you ask for a tax extension, you’ll get an extra six months to file your taxes. That doesn’t mean that you will have more time to pay your taxes. It simply buys you more time to file your tax return.
If you own a business, you’ve had to deal with tax extensions at some point. It doesn’t matter if you didn’t have all your paperwork together or if you just needed more time to get affairs in order. Tax extensions can be a lifesaver when you need them. However, there are pros and cons to tax extensions. Read below to find out more.
If your tax deadlines are looming and you want tax extensions, it may be a good idea to enlist the expertise of Innova Investments, LLC for all of your tax extension needs. So whether you have personal or business taxes, you’ll get the help and expertise you need to make sure you’re following the law and complying correctly.
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Tax Extensions: Pros and Cons
When tax deadlines approach, businesses may wonder whether they should file for a tax extension. This IRS provision has both benefits and drawbacks. Consider some of the potential benefits and consequences that a company may face if it files for a tax extension.
1. More Time To Complete Taxes
Tax extensions can provide up to six months of extra time to file the necessary paperwork. After the standard tax deadline has passed, an accountant will be less stressed and have a detailed schedule for investigating a company’s financial situation. That extra time may even allow an accountant to discover deductions that they would have missed otherwise.
The extra time will also allow for double-checking calculations, saving the company from filing amended tax forms later on. A company can determine how much it owes and plan its budget accordingly.
2. It’s Not That Complicated
Many small business owners prefer to avoid additional IRS forms to avoid wading through complicated language. On the other hand, filing for an extension is usually not a difficult or time-consuming process. Furthermore, there is little support for the widely held belief that requesting an extension will result in an audit.
3. No Fee Advantage
An extension can help you avoid the late filing fee. According to the IRS, the penalty for late filing is 5%. Typically, unpaid taxes are assessed for each month or part of a month that a tax return is late. This penalty begins to accrue the day after the tax filing deadline and is limited to 25% of your unpaid taxes.
1. Penalties May Be Applied For Late Payment
While extensions help avoid the penalty for late filing, businesses may face a separate penalty for late payment of taxes. Therefore, even if an extension is granted, businesses can save money by filing taxes as soon as possible.
The late payment penalty ranges between 0.5 and 1 percent of the amount owed, and it begins to accrue monthly immediately after the tax filing due date.
2. Schedules May Be Changed
Because the extra time for filing taxes may postpone other business matters to complete the taxes after the regular deadline, important client targets and initiatives may remain on your to-do list. At the same time, you concentrate on finishing your taxes.
3. Loan Application May Become Difficult
If a company needs to apply for a loan, delaying filing taxes may make the process more difficult. Some lenders require a copy of the most recent tax return as proof of the company’s revenue. If a company has not completed a tax return, it may be unable to obtain the loan they require.
In conclusion, filing tax extensions for a business has both advantages and disadvantages. Businesses can make the best decision for their specific situation and business needs by becoming familiar with tax laws.
Frequently Asked Questions
Why Would You Want To File For Tax Extensions?
A lack of organization, unanticipated events, or tax planning is common for requesting tax extensions. However, even if you get an extension, you must still pay your income taxes by the tax deadline.
What’s To Be Expected If I Don’t File For Tax Extensions?
If you file your taxes after the deadline and have not requested an extension, you may incur a Failure to File Penalty.
I Don’t Owe Taxes, So Do I Need To File An Extension?
When you expect to get money back on your taxes, you are technically not required to file a return or request an extension. After all, the IRS can’t levy penalties if you don’t owe anything.
Reliable Service Tax Extensions Available
For those of you who have tax deadlines approaching and who require tax extensions, it may be wise to enlist the aid of Innova Investments, LLC for all of your tax extension requirements. In other words, whether you are dealing with personal or business taxes, you will be given the assistance and expertise necessary to ensure that you comply with the law and do so correctly.
Contact Innova Investments, LLC
At 843-951-9555 Now!
Innova Investments, LLC
3 Godfrey Place, Unit A Bluffton, SC 29910