Pros and Cons of Tax Extensions

A tax extension is simple a process that gives you an additional six months to file your tax reporting forms. For some taxpayers, a tax extension can be a good idea, and for others it may not be a good idea at all. Let's have a look at the pros and cons of filing it in order to help you reach the best determination for yourself.
PROS

A tax extension gives you an extra six months time to file your return. When you know that you cannot have your taxes done in time, for whatever reason, it is a good option. It is always better to get an extension than to file an incomplete return.

A tax extension does not raise the likelihood of an audit. Some people, incorrectly, believe that a tax extension is a red flag for the auditors.
There are no fees, penalties, or interest associated with a tax extension.
There is no final moment rushing to file your return. For many taxpayers, getting the income tax return filed in time becomes very stressful. Why not lower your stress level and file an extension? Then, you won't have to worry about rushing around to get your income tax return in on time.
CONS

Filing an income tax extension does give you more time to get your paperwork in, but it doesn't buy you time to pay. Your taxes are still due by April 15, if you owe. Filing it does not alter that integral fact. When you file your extension, you must send a check for at least ninety percent of what you owe or you will be in arrears and interest, penalties, and fines will begin to accrue.

If you file it, you will not be able to file electronically. All filing after April 15 must be done through the standard postal service and cannot be done electronically.

The Internal Revenue Service will most likely not notify you that they have received your extension. You will need to contact them if you wish to receive acknowledgment that your extension filing was received.
Delaying the inevitable is not always a good idea. If you are the kind of personality type who tends to put things off, it might be better just to file on April 15 with the rest of us. You are going to have to deal with it by October anyway, and you cannot put it off again unless you want to get in serious back tax trouble with the Internal Revenue Service.

Let's say it once more. You still must pay your taxes by April 15, extension or not! Too many people make this mistake and find themselves owing much more to the IRS than their initial liability. You have got to send a tax payment check with your extension. The extension delays the due date of the paperwork for six months. Your payment obligation is not extended.

Nobody wants to file income tax return with great enthusiasm. In fact many people want to postpone it with one pretext or the other. So they apply for an extension. Well, IRS allows you to apply for an extension and you can get some more time. But if you feel you can postpone the payment of your taxes by applying for an extension, you are wrong there. Use this facility to file your return late if you really need it. Chintamani Abhyankar explains.

Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.