Spring has truly sprung in McMinnville, and also did you know that we’re two weeks away from the tax deadline?
Here at Above All Accounting, Inc, the home stretch means our heads are all wrapped up in paperwork, but we’re still able to notice that lawn mowers have accelerated their good work around here.
So yes — we’re focused. Which is why we’ll be talking about extensions today.
Passing the national deadline day (which, in California, is actually in October because of all the storms there) doesn’t mean our work stops. Getting a handle on 2023 and making tax planning moves for the year ahead will be our big priority over the rest of the spring and the summer.
If you want to talk tax maneuvers that’ll yield some positive effects when you file your taxes next year, grab a time with us: 503-648-6184
Alright, I’m about to attempt a clumsy segue…
Did you see that Apple rolled out its own “buy now, pay later” service (Apple Pay Later)? They seem to be playing the long game when it comes to eventually replacing your physical wallet completely.
Speaking of the long game — if you’re nervous about that April 18th deadline and are looking for some more time to file your taxes, the IRS does grant extensions. Unfortunately, though, you can’t pay later… You get to file later but still pay now.
(Nice segue, right?)
Here are some things you should know about asking for an extension:
Need Extra Time to File Your Taxes?
“Time is on my side, yes it is.” – The Rolling Stones
Time’s always at a premium, especially when you’ve got a complicated task. Speaking of those, getting your tax return in — even if you’re just pulling papers together to give to a trusted professional — is a complicated job with potentially big consequences. The last thing you want to do is jam yourself, especially if there’s an easy way to buy more time to get the job done right.
Enter IRS Form 4868, “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” Fill this out and you’ll have six more months to file your federal taxes (until October 16th this year).
An extension can be your best friend if you know there’s no way you’ll have your tax ducks in a row by April 18th. So, what’s involved in getting one? And should you?
What a year it’s been
A big part of making life easier at tax time is remembering big parts of your life in the previous year. What happened to you in 2022?
Did you change jobs? Open a retirement account? Buy a house in McMinnville or make energy-efficient improvements to the one you live in? You’d be stunned how many folks forget to mention that they got married or divorced, had a death in the family, or welcomed a child. All of these can complicate your tax situation — necessitating extra time to get your tax return right.
Then there’s paperwork. In recent years McMinnville banks, brokerage houses, and the like have gotten a little better about getting you what you need by the end of January… but forms like K-1s (“Beneficiary’s Share of Income, Deductions, Credits, etc.”) can still show up deep into tax season. It’s the same with corrected 1099s, which are rare but do happen — meaning that if you file your taxes too early, you face the extra cost and hassle to file an amended return.
And if you dealt at all with cryptocurrency or non-fungible tokens in 2022, you’d better be rock-solid sure you have all your paperwork in order. These are hot areas that the IRS is keen to investigate.
By the way, you don’t need to explain to the IRS why you want an extension to file your taxes. All you have to do is ask. It’s also a good idea to file for an extension only if you’re certain you won’t be able to file a tax return by Tax Day.
Don’t get the wrong idea
Here’s a big hitch about tax-filing extensions: If you owe taxes, they do not give you more time to pay without a penalty. You still have to pony up by April 18th. (We can help you calculate any amount that you owe.)
Here are some other wrong (yet common) ideas about extensions:
- Extensions do not automatically flag you for audit.
- They do not affect any refund you have coming.
- They generally do not give you more time to contribute to your individual retirement account.
- Again, they do not give you extra time to pay taxes that you legitimately owe.
You can just file your Form 4868 electronically or by paper. If using snail mail or a parcel delivery service, make sure it’s postmarked before Tax Day (and note the IRS only works with FedEx, UPS, and DHL). Double-check the information on your extension request before sending it, obviously.
There may also be special rules if you’re serving our country in a combat zone or you live outside the U.S. The IRS (and most state governments, too) give extra time to file — and often even for you to pay your taxes — if you’re in a federally declared disaster area. Check with us if you think that might apply to you.
Tax-filing software can tell you if the IRS accepted your extension request. If you send your request via snail mail, you’ll have to call the IRS to make sure your request was accepted. (You can’t do this on their website yet.) You can only ask for one extension on one kind of tax return per year. The good folks at the IRS will also take your tax return at any time during the extension. (You don’t have to wait the full six months.)
And don’t forget to extend your state tax return. Many states follow federal guidelines for extensions (or are even more lenient), and some even accept the federal 4868.
Finally, all this is pointless if you simply don’t file your taxes by October. Make a plan to ensure that gets done! If you owe money and haven’t paid by then, the penalties start getting stiffer.
If you’re thinking about filing for an extension, or have questions about your taxes, reach out to us as soon as possible!
Here for you,