Extensions are a dirty word at our office.
99.9% of Nearly all of our clients are able to get their business’ books closed and personal tax information to us in plenty of time to make the filing deadlines. This allows our clients a peace of mind knowing that their obligations are settled and provides an opportunity to start planning for the current year taxes early.
For those of our clients who have to extend their taxes, it is usually an extenuating circumstance that we plan for and our clients are on board with the process.
Let’s go ahead and “bust” some myths about extensions, just in case anyone reading has heard some crazy stories from a “friend.”
Extensions provide extra time to pay – This myth seems to never go away. Extensions only provide extra time to file the returns, not pay any balances due. This myth is easily busted when the IRS and your State send bills for penalty and interest due on payments made after extensions are filed. This can be costly!
Extensions affect my audit potential – The evidence is not there to support this assertion one way or another. For taxpayers who do get audited, whether or not they extended their return is not the item that caused the IRS or State to take a closer look at their returns. Accuracy of the information filed is usually the culprit, for better or for worse.
If we get our information to our CPA on time, we don’t need to extend – “On time” means different things to different people. Take an informal poll with the immediate people nearest to you and there will likely be a few different answers. Your doctor’s office may require you to be 15 minutes early in order to be considered “on time” for appointments, so the client’s idea of timely does not always mesh with the CPA’s understanding of timely. The best way to confirm that your return is or is not on the extension list is to communicate with your CPA directly about the issue. GP CPA communicates regularly with our clients regarding our timelines and deadlines for receiving information to make sure we don’t surprise anyone.
If you are a business owner who has had to extend your returns the past few years, we would like to speak to you about your tax situation. Just because someone else can’t get your taxes done on time does not mean that is the way it has to be. Let’s talk and see where your business would benefit through our partnership.
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