5 Tax Extension MythsPublished:
You may think you know everything there is to know about tax extension forms. However, some things about this form are just untrue! Here are five common myths about tax extensions that may get you into trouble if you’re not careful.
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1. You Can’t Be Rejected Many believe that once they file their tax extension, they’re in the clear. Because the form is considered “automatic,” they think there is nothing that can go wrong. Unfortunately, that’s not true! While it is usually the case that the IRS will automatically take your tax extension, it is possible to be rejected. Generally this is because the information on the form is either old or just plain wrong.
2. It Takes Forever Another common myth about the 2011 tax extension form is that it takes forever to fill out. Some taxpayers even skip out on filing this form and dealing with the IRS just because they don’t want to bother with it. This isn’t the case. The tax extension form, IRS Form 4868, is one of the shortest forms the IRS publishes! It should just take a few minutes to fill out. This is even considering the fact that you must estimate your taxes owed with a tax calculator.
3. There Are No Penalties It would stand to reason that when you file to extend the time to file your taxes that you wouldn’t incur any fees. Besides, the alternative is to just let the deadline pass, right? So why would the IRS fine you for filing a tax extension? However, the IRS will sometimes penalize taxpayers when an extension form is filed. This is usually in the form of interest on taxes you might owe. However, if you send in a payment with your form you may be off the hook.
4. It’s An Easy Way Out Many file the 2011 tax extension form thinking that it’s a simple way out of doing your taxes for a few months. However, is there any way you could finish your taxes before the deadline? Don’t see it as just an easy way out of doing your work. Getting it all out of the way before April 15th is much easier than dealing with new deadlines and possible fees.
5. It’s For Losers On the other hand, don’t sweat it if you need to file an extension! Yet another common misconception is that this form is just for taxpayers who can’t handle their taxes. This thinking creates a stigma around the tax extension form. But that's not so! Sometimes life gets in the way, and this form provides a way to set your mind at ease. So file away!