What You Might Not Know About Filing a Tax Return Extension
Posted on July 3, 2019
If you a small business owner wondering how the new Tax Cuts and Jobs Act (TCJA) is going to affect you, then it is very likely you filed an extension on your corporate tax return. But here is the important part — an extension to file is not an extension to pay.
The extension gives you extra time to file your return, but the IRS still expects you to pay your tax bill by April 15 whether you file your return or not. “Not having the money to pay is the worst reason to file an extension,” cautions Michael Wastvedt, Managing Partner of Wastvedt & Company. “An extension will give you extra time to file, but failure to pay brings the risk of penalties and interest.”
A surprise to many, failure-to-file penalties can add up to an extra 25 percent. If cash is a concern at the time of the extension, the IRS suggests considering paying your estimated taxes with a credit card or loan. In many cases the interest on these accounts will be lower than the combined penalties and interest you’ll pay the IRS.
If there is any silver lining in filing a return early (but perhaps incorrectly) it is the fact that you may amend your return within three years of filing. “We have saved our clients hundreds of thousands of dollars over the last few years due to errors fixed when filing an amended return” explains Wastvedt.
Wastvedt and Company, Inc. is a full-service CPA firm that provides a complete range of tax preparation, accounting, and consulting services. With a focus on asset and wealth protection, Wastvedt & Co. developed Strategic Integrated Tax Planning. This exclusive method employs tax-planning strategies to help provide business growth in wealth and assets. wastvedtco.com, firstname.lastname@example.org