tax return extension time to fileAlthough the IRS doesn’t ask for a reason as to why you’re filing for an extension, it does ask that you file an extension by April 15th. If you’re not sure whether or not you should file your tax return by the due date or file an extension, we’ve provided you five reasons why you should consider filing a tax extension.
  1. Filing an extension may save you from getting audited. A common misconception is that filing an extension increases your chances for getting audited. However, if you rush to file your taxes and make a mistake that raises a red flag with auditors, you’re more likely to get audited. The same holds true if you decide to not file a return at all.
  2. No penalties for filing an extension. As long as your make the necessary tax payments by the due dates, you will not incur any penalties for filing an extension.
  3. Multi-year planning. By filing your taxes later in the year, you allow yourself more insight into your finances for 2014. This allows you to take advantage of opportunities that allow you to get the best tax savings. Examples of potential tax saving strategies include making elections to carry-forward or carry-back certain losses and whether to take advantage of the bonus depreciation.
  4. Roth IRA. If you made a Roth IRA conversion in 2013, you have until the date your file your 2013 taxes to confirm or undo your conversion. This allows you time to monitor your investments and determine whether your Roth conversion was a good move. This loophole is only available if your file your taxes by the October 15th deadline.
  5. Retirement Planning. If you plan on making any retirement contributions to accounts like SEP IRAs, 401Ks, or SIMPLE IRAs to reduce your taxes, you have until the date your file your tax returns to make the contributions and deduct it for your 2013 taxes.
Remember, although the IRS allows you time to file an extension, keep in mind that the extension only extends the time for filing the tax return, not the time to pay. Give yourself the extra time you need to file the best possible return.