Why Extension Isn’t a Dirty Word
Ah, tax season—a time filled with numbers, deadlines, and just a hint of chaos. But let’s talk about something that gets a bad rap: tax extensions. No, they’re not a sign of failure or disorganization, nor is extension a dirty word. In fact, they’re often a smart move for business owners and individuals alike.
Here’s why you shouldn’t cringe at the idea of an extension—and why it might just be the strategic play you need this year.
Why Do People File Extensions?
The reasons for filing an extension are as varied as your morning coffee orders. For some, it’s as simple as this: the accounting wasn’t ready for a March deadline. If you’re an S Corp or Partnership, you know the struggle of wrangling all the paperwork in time. Life happens, and sometimes, so does an extension.
For others, it’s about strategy. Yes, extensions can actually save you money. If you’ve got significant investments, keeping your money in the market rather than handing it over to the IRS could make sense. High-income earners in particular might find that the return on their investments outweighs the interest they’d owe for a delayed tax payment. (Of course, this isn’t for everyone—consult your tax pro before trying this strategy.)
And then, there are reasons completely out of your control. If you’ve been affected by a natural disaster, such as wildfires in California, hurricanes in the Southeast, or the 25 tornadoes that tore through Cook and Will counties last July, extensions might not just be a choice—they’re a necessity.
The Tax Law Wild Card
Here’s where things get interesting: potential tax law changes. As of now, there’s chatter about a new tax bill landing on President Trump’s desk by April. If this bill passes (and it’s a big “if”), it could be retroactive and impact 2024 filings.
What does that mean for you? If you’ve already filed your return by the March deadline, you could be stuck waiting for the IRS to correct your return—or you’d have to file an amended return, which takes time and money. (Yes, I charge full price for amended returns—they’re just as time-consuming and risky as the originals.)
My Recommendation: Take It Slow
Here’s my advice: wait. Send me your information, and I’ll prepare your return as much as possible so that you’re ready to make a payment by April 15 (remember, the IRS still expects their money on time, even if you extend).
If Congress does pull it together and pass a tax bill, I can make adjustments before finalizing your return. This saves you from unnecessary tax prep fees and gives you peace of mind knowing everything is done right the first time.
Extensions Aren’t the Enemy, not a dirty word
So, whether you’re dealing with life, investments, natural disasters, or the uncertainty of Congress, know this: extensions are a tool, not a failure, nor is extension a dirty word. They give you the flexibility to adapt and make the best financial decisions for your situation.
If I’m not already your tax pro, feel free to reach out—or come to the dark side. (I promise, I have cookies 🍪).
As always, if you have questions, I’m here to help. Let’s make this tax season as painless as possible.
