We understand that the use of extensions may raise some questions. To help you feel more comfortable, we have compiled a list of the common extension myths and explained why they are not true.

Myth #1 – Filing after 4/15 is filing late.

Tax filings have two components:

1. Your tax liability- the amount of money due for the year
2. Your tax return- the document that reports your income, deductions, tax liability, and results in a balance due or refund

The April 15th  deadline is for payment of your tax liability (#1 above) and that deadline cannot be extended.  You can, however, request an automatic extension of 6 months (to October 15th) to file your tax return.

Myth #2 – Filing an extension is asking for trouble.

To file an extension, you submit Form 4868 by April 15th and this automatically shifts your due date to October 15th.

The title of Form 4868 is “Application for Automatic Extension of Time to File US Individual Income Tax Return” – automatic is in the name!

Returns filed by October 15th, after requesting an extension, are on time and are treated the same as those filed by April 15th.

Myth #3 – “I won’t know the projected results of the return. Will I owe? Can I make a retirement contribution?”

Filing an extension requires a comprehensive projection of the tax return results. We request certain information related to income, withholdings, and estimated tax payments to determine your tax liability. An extension extends the deadline for filing, not for paying.

If there are balances due, you must pay them by April 15th.  We will let you know how much, if anything, is owed. 

If you are considering a retirement contribution, we will provide you information for that decision.

Myth #4 – An extension costs more money.

There is no fee for filing an extension.

Myth #5 – It is better to file by April 15th and amend the return later.

Filing by April 15th and planning to file an amended return to correct and/or add information is an unnecessary complication. In addition to managing multiple submissions and slow processing by the government agencies, it generates additional accounting fees. (We are not interested in making money from duplicating our efforts!)

Myth #6 – My return is simple, so I do not need an extension.

Even “simple returns” are sometimes held up because we are waiting for source documents.  Brokerage accounts often don’t send final 1099s until late March, April or even May. There is nothing simple about a last-minute rush. Taking the time to review the return together is important. We will always prioritize this collaboration over filing by April 15th.

Quality tax preparation requires an understanding of both the documents being processed and the taxpayers themselves. It is our focus on collaboration that provides clients with the best services. If we attempt to file as many returns as possible by April 15th each year, our attention would be on quantity and not quality. To achieve the highest standards of care, our tax preparation process includes the extension of the April 15th due date to October 15th for most of the people that we serve. This gives us the time we need to collect all the accurate, final documents and we have time to connect with you throughout the process.

The criteria for filing prior to April 15th excludes nearly all of our clients:

• The taxpayer must not have any investment accounts. Brokerage statements are issued later each year and the ongoing corrections of the statements are often issued as late as May.
• The taxpayer must not have any investments that report on Form K-1. Having ownership in a Partnership or S Corporation means that a K-1 is issued to the taxpayer. Those forms are issued on or after March 15th.
• If the taxpayer is self-employed, all business records would need to be submitted by January 31 and they would need to confirm that they are not planning to contribute to a retirement account.
• The taxpayer is not impacted by any current year tax law changes. Late changes to the tax law cause delays in the availability of forms and the opening of efiling with the IRS.