A tax extension allows you extra time to file your federal taxes. It can be an invaluable tool to help you manage your budget while still meeting your tax obligations. In some cases, it may even be a necessity. But does filing for a tax extension increase your risk of being audited? Here's what to know about the connection between tax extensions and tax audits, so that you can more safely and successfully navigate your options.
The hard, plain fact is that no one but the IRS knows how they decide whom to audit. However, many experienced Certified Public Accountants (CPAs) and financial planners have observed and analyzed the patterns and actions of the IRS over the years and conclude that filing for a tax extension will likely have no affect on your audit chances.
Their rationale is simple: they believe that the IRS imposes an audit quote on its officers that starts close to the start of tax filing season. It is, therefore, unlikely, according to this line of thinking, that an officer will wait until after the regular filing deadline to fill his or her quota.
Whether this is true or not is the subject of debate amongst many in the financial community, but most experts agree that the IRS is unlikely to single you out for a tax audit for filing for an extension.
Note that, even if you do get an extension to delay filing your federal taxes, any federal taxes you owe for the given tax year are still due by the original tax filing deadline. If you owe taxes and fail to pay them by April 15 because you received an extension to October 15, you can be charged interest and possible penalties on the taxes you owed over the six-month period of that extension.
Be aware, as well, that filing for a federal tax extension does not extend the deadline for you to file your North Carolina state taxes. If you fail to file your North Carolina state taxes on time because you have received an extension to file your federal taxes, you can incur fines and other penalties.
The simple, comforting fact is that the IRS most likely does not care that you file for a tax extension. They certainly prefer that to filing late without communicating with them. By filing an extension, at least the IRS knows you are aware of your obligations and planning to take care of them in due course.
The tax extension deadline is in September for some business tax extensions and in October otherwise. To file a tax extension or get help with any other tax filing questions or actions with a tax advisor in Charlotte, North Carolina area, give Scott Boyar a call at 704-527-2725 or visit his website at https://www.sboyarcpa.com/. A CPA for small businesses and individuals can help you with all your tax filing needs as well as new business startup, bookkeeping, and accounting.