If your tax preparer said your extension is OK, then trust their instincts. Richard Tullier, CPA, tells us why it’s OK to extend your tax return.
Before I get to some of the many scenarios in which extensions make sense, here’s an analogy: It’s the day before a big test, but you just got out of the hospital because you didn’t realize before that maybe you couldn’t jump across Springfield Gorge like you were told. You talk to your teacher who then takes pity on you, and so you get an extension. Why, then, do people fear an IRS extension so much?
Some people worry that getting an extension on taxes is a red flag to the IRS. Instead, it’s more of a red flag if you put incorrect numbers on a return due to rushing or guessing. Don’t rush or guess. There’s even a form (on the IRS website and elsewhere) to request an automatic extension – the IRS Form 4868.
Now for real world scenarios: Extensions are in place for when you just don’t have the right information yet. Maybe you sold some stock and still don’t have a brokerage statement. Maybe you own a partnership and your partner/brother hasn’t gotten around to filing the return yet, so you don’t have a K-1. Or maybe you are simply pulling together and calculating your expenses. It’s OK to extend your tax return.
Trust your tax preparer’s instincts. If they think an extension is the better way to go, then trust them. After all, you do pay them for their experience, right?
As I tell my son all the time, there is no prize for being first to finish a test; and in fact it’s better to take your time and do things right than to be first. It’s OK to extend your tax return.
Have questions about an extension? Give us a ring.