Five Myths about Personal Income Tax Extensions

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The popular perception creating clout over a general tax payer’s decision making dynamics is that whenever a person apply for a tax extension, he turns more vulnerable in the eyes of the IRS. More often than not this fear of getting noted for a supposedly wrong reason is nothing but a myth. Busting this false notion requires sincere efforts to be made and this post wishes to do the same.

Myth # 1: IRS sees applications for extensions suspiciously and they are more than ready to reject the application, provided the reasons cited are not supremely powerful

There cannot be a more twisted interpretation of IRS’s nature and intentions. The IRS grants a five to six month extension to anyone and everyone who has merely filled the application form correctly. They do not even enquire about the motives as to why an extension is being asked. Those who are aware of this actuality, especially the professionally managed firms, make it a necessary point to apply for an income tax extensions so that precise and beneficial returns are ensured.

Myth#2: Applying for a tax extension will make me more prone to be audited

Firstly, there is nothing to worry about getting audited if someone has reported his finances correctly, but on a more practical level, applying for a tax extension, quite opposite to the popular belief makes a firm less probable for going through an audit. The IRS auditors have a fixed quota in terms of how many companies they require to audit in a year. This quota is a certain percentage of total number of returns filed. Now, in most of the cases the IRS auditors fulfil their respective quotas well within October which is even prior to the commencement of extension deadline.

Myth#3: A tax extension requires an accountant to handle the complicacies

An extended filing is as easy, convenient and comfortable as a regular filing. There are several applications available as well which comes in handy in e-filing extension applications online in minutes. Dedicated websites also serve the purpose of extended application filing without delving much deeper into the traditional federal tax jargons, making life easier for a common man.

Myth#4: I will have to wait up till October even though my preparation is done by July

Anyone and everyone can fill their tax return as and when he/she is ready with his/her papers. The return can easily be filed well before its due date as the IRS starts accepting return files from the month of January. The deadlines for individual filers come in April whereas businesses go by the March deadline. If someone is even done with his papers before April then he can easily submit the requisites instantaneously.

Myth#5: I am the only person doing it

One who thinks that applying for tax extensions ( make his position vulnerable also suffers from the fear of being the only one who is asking for an extension. There is nothing more false than this thought as it has been studied and found that almost every year number of people asking for an annexed period exceeds 10 million on average. This demand for extension is so generic that state tax authorities make no delay in approving a commensurate extension to someone who has asked for an extension on the federal level.

To conclude, if the myth surrounding the IRS tax extension is cleared over properly, it will be found that not only it is a perfectly regular or legal thing to do; it is profitable from the perspective of filling the exact returns as well. It can be done online and it does not make one suspicious in the eyes of the IRS auditors.