On Extension?

published May, 2015

For people who are on extension, or worse, not filed and not on extension, now’s the time to finish up the 2014 books, gather all those missing or errant receipts for non-cash donations and other tax documents.

May is usually a “dead month” for tax preparation, as the people who wanted to file without an extension are already filed, and the people who were not able to get their information together still don’t have it together.

I have been working all week on complex returns that I put on extension for one reason or other, but I’m about to travel for a couple of weeks to the east coast for educational purposes. See below for California classes.

So, does it make a difference if you file on extension? The payments are still due, and if you pay late, there are penalties

Does filing an extension make a difference in the likelihood of audit? Of course the IRS will not confirm or deny exactly how they select returns for audit, but a big part of it is done statistically. The computer that analyses your filed return doesn’t care if you’re on extension or not. And the Statute of Limitations runs for three years (generally) from when you file.

The only compelling reason to file “on time” in my mind, other than having things done, is to know what you actually owe, so you can lessen the penalties and interest for not paying on time. (There is a penalty for not filing on time—but not if you file the extension and file before it runs out!)

One other thing: if you generally need to make estimated payments, you’ll need to make them for the 2015 tax year as well. This amount is due even if you are on extension for 2014. If you need to make estimates and need a coupon, let me know.