It is that time of the year where you are sincerely collecting all your financial documents to file your taxes. But while doing so, you realize that there is some crucial information that you are missing out on. You feel that it would be nice to have some grace time, so that you can collect all required information before you file your taxes. Don’t panic! The IRS (Internal Revenue Services) provides you with an opportunity to file for an extension.
You might feel that filing for a tax extension is another complication that you would invite. But this is a myth. Read on to find out how you can avoid tax extension complications.
1. Remember the Tax day: If you start to collect all your information on the day of your taxes, it is too late. Remember that the IRS expects you to file for your tax extension before the Tax day. So, it’s advised that you file for your extension as soon as you realize that you would require more time to gather your required financial information. Also, if you have planned tours or vacation during the tax season, remember to plan this ahead and apply for a tax extension. Remember that if you do not file your tax extension before the tax day, the IRS puts your name into the tax defaulters. All penalties that are applicable for not filing your taxes on time will be applicable if you do not file for tax extension before this D day.
2. Fill in your details correctly: Your tax extension plea can get rejected if the IRS finds that any information that you fill in the form is not valid. So you need to be doubly sure of the details that go into the form. Make sure that you fill in your name, address and SSN (Social security Number) correctly. The IRS holds all authority to reject your tax plea if the information you provide does not match with the details it holds. Once all these details are filled in correctly and the form is submitted, you will be automatically granted an extension of six months to file your income tax.
3. Form 4868 for personal tax extension: For all your personal finance related stuff, you need to fill form 4868. This is called the Automatic Extension of Taxes form. This means that once you fill in your details in this form and submit it to the IRS; you can be rest assured that your tax extension time will be granted automatically. After this you can use this extra time to gather your personal finance related information.
4. Form 7004 for business tax extension: If you are running a business and you want to file for a tax extension for your taxes related to your business, do not use form 4868. You need to file your business tax extension using form 7004. You need to mention the details of your business, business type, partners involved and the location in which you are running your business. This form is also an automatic tax extension form (biztaxlaw.about.com/od/businesstaxseason/tp/2011-Tax-Extension-Forms-And-Filing.htm), meaning that you can get your tax extension of five or six months automatically depending on the type of the business that you are running.
5. Keep No dues: The IRS can reject your plea if you owe a huge amount of money to the IRS from your previous tax years. And the last point you need to beware of is; reasons like procrastination should not be used to file for tax extension. Filing for IRS tax extension takes the same time as filing for your actual taxes. So if you have your documents in place, it’s better to file your taxes instead of applying for a tax extension.