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Oh man. You’re taking a look – your first real, honest look – at your tax forms, receipts, and other paperwork and you just realized there’s absolutely no way you’re going to finish on time. You get that familiar sinking in your stomach, like when you realized you forgot your homework at school and you knew your parents were going to yell at you.
So this is it, right? The end of your business, your life, your bank account…the IRS is going to destroy them all since you can’t finish your taxes on time. If anything you’re guaranteed to go through an audit, and that’s pretty much the end of the world.
Well, actually, you have a pretty solid alternative to throwing in the towel and giving up completely: the tax extension. If you’ve never considered it before, it’s possibly because you believe there’s a stigma around getting the extension or that’s a difficult process to undertake. We’re here to bust both of these myths!
How Form 4868 Works
Surprisingly, Form 4868, the form you need to file for a tax extension, is easy to fill out. You just need some basic info: identification like name, social security number, and address, plus some estimates of how much you believe you owe based on preliminary calculations.
And…that’s about it. The IRS doesn’t make you go through a huge ordeal to file for an extension. You can even use a service like FileLater to automate the process. Just a few bites of information and you’re done. Even better, the tax extension generally goes through unchallenged. It’s enough for the IRS that you’re bothering to check in with them. Really!
But hang on – why are you filling in how much you might owe? Isn’t the whole point of filing this extension that you don’t know how much you owe and need some extra time? Yes, but that doesn’t alleviate your obligation to Uncle Sam in the meantime.
You see, Form 4868 gives you an extension of your paperwork, but not your actual tax obligation. Luckily, getting an estimate is relatively simple by briefly going over your paperwork, and you’ll settle the real amount when you finish filing in six months.
Why You Should Do It
Isn’t filing for a tax extension admitting defeat, though? Won’t my friends and neighbors be ashamed of me when they see me at the café or at pub trivia?
Of course not – if anything, they’ll be jealous they didn’t think of it first. The thing is the tax extension can be used for a variety of reasons. Maybe you’re unsure of deductions you can take and need more time, or you realized you didn’t have a few proper forms, or you had a family emergency and just cannot deal with the mess right now.
Whatever the reason, the extension is the IRS’s way of admitting the process can take some time and occasionally we need a little bit more of it. They would much rather you take the time to do things correctly and not rush the process than have to submit a correction form later.
So if you need the extra six months, go for it! Just remember to pay the estimate when you submit Form 4868 and you’ll be good to go. Take the extra time to really buckle down and get the most out of your taxes that you can, including all the deductions and exemptions you can find so you don’t owe as much.