Filing an Extension on Taxes? Tips for Managing Tax Deadlines Effectively
It might surprise you to learn that the average tax refund in 2023 was just over $2,800.
This can vary drastically, though, depending on certain circumstances, like your annual income.
It’s not uncommon for people with substantial tax obligations to file for extensions.
However, it’s essential to understand how these work so you can avoid potential complications.
We’ve put together a guide full of tips on how to manage an extension on taxes so you can hit the ground running.
Let’s explore the key information you need to know.
Plan Ahead
It should come as no surprise, but planning ahead can dramatically improve your situation.
The sooner you realize you need to file for an extension, the better the future outcome on your finances and stress levels will be.
If you plan your finances sensibly and promptly, you can often make this assertion months ahead of time.
Companies that are vigilant about their finances won’t have an issue with this obligation.
Assessing historical data will help you make accurate financial predictions.
If your company’s performance has shown an upward trend over the past few years, you can likely deduce that your revenue will be within a certain range.
This will also tell you that you’ll need to budget a certain amount for your taxes.
Avoid Common Mistakes
There’s no shortage of mistakes that people make when filing for an extension.
One of the most notable is assuming you have more time to pay.
However, this only means you have more time to file.
You still need to pay your balance on Tax Day.
It’s essential to consider this so you don’t face fees and tax penalties for not paying on time.
If you live in a state that imposes state tax, you’ll also need to file a state extension.
Filing a federal extension will only apply to federal taxes.
Be careful to use the right form when filing your taxes, as well.
Using the wrong one can cause unnecessary delays that lead to issues in the future.
Similarly, you should make sure that you input the correct personal information.
If your last name or address changed since the last time you filed your taxes, ensure you contact the IRS or log into your account to input the updated information.
It’s also best not to rush the process when filing for an extension.
Rushing can cause you to input incorrect information and result in your return being rejected.
Common reasons for erroneous returns include entering the wrong tax filing status or Social Security number.
This could jeopardize your ability to file for an extension.
Double-check all the information you enter to prevent circumstances like these from arising.
Understand Behavioral Finance
By practicing better behavioral finance, you can avoid having to file for an extension.
Ensure you maintain a strong understanding of your finances so you can have accurate insight into your fiscal health.
This includes your spending, income, and contingencies that arise.
For instance, your company might be a lucrative target for hackers. A data breach could lead to extended downtime.
To clarify, imagine a scenario where your team couldn’t work for a week straight.
This could cost you thousands, and it doesn’t take into account missed opportunities or damage to your company’s reputation.
File Even if You Can’t Pay
This is a tip many people mistakenly overlook.
Even if you can’t pay your taxes on the due date, it’s still essential to file.
This conveys to the IRS that you’re following your legal tax obligations and reporting your income.
If you don’t do so, the organization may assume you’re attempting to avoid paying the money you owe.
This can come with many complications, such as legal action taken against you or your business.
If you file, however, you can sort the financial details out later.
Work With a Professional for the Best Outcome
Working with a professional is one of the best ways to accommodate this situation.
They have the tools and resources to help you overcome issues you would’ve otherwise struggled with.
For example, they could help you identify tax benefits you can take advantage of.
Their expert insight will make your situation far easier to deal with overall.
Finding a Professional Right for Your Needs
When looking for accounting services, it’s essential to consider their past reputation.
This will help you understand the type of experience you’ll get from working with them.
Look for reviews that mention timeliness, professionalism, and expertise.
However, it’s also important to look for fake reviews. These are often posted in large batches and contain many identical keywords.
They could be positive or negative, and it’s imperative to ignore them when making your assessment.
It’s also essential to check their pricing structure to get a solid idea of what you’ll pay.
This will help prevent financial surprises, and it will also allow you to determine if their services are worth the investment.
It’s best to avoid the cheapest services you find. These will likely fall short of your goals.
However, there’s a point of diminishing returns regarding how much you pay.
Spending more money won’t always yield better results.
Instead, look for someone in the middle of the price range who can meet your needs without stretching your budget.
Do they have a solid customer support policy?
Dealing with issues on your own can be difficult, and it’s essential to get the support you need when problems manifest.
With enough vigilance, you shouldn’t have an issue finding the right accounting company for your needs.
Handle Your Extension on Taxes Appropriately
The information in this guide will help ensure you understand how to manage your extension on taxes with little issue.
From here, you should have no issue getting the best results for your needs.
Just be sure to work with the right professional.
Master Accounting and Tax Service prides itself on offering premier tax, accounting, bookkeeping, and fractional CFO services.
We help small businesses throughout Arizona and California improve their performance.
Contact us today to learn more.
Considering an accounting and tax service company? Look no further than Master Accounting and Tax Service! We specialize in providing top-tier accounting, tax, bookkeeping, and fractional CFO / controller services at an affordable cost and with the utmost integrity. Call (480) 456-4999 or Contact us today!
