Pros and cons of filling an Extension

[Mhalkowitz]

What are the pros and cons to filing an extension?

[MarionH]

If you can't file your tax return by the due date (typically April 15), filing an extension is a smart option. Here's why:

1. More Time to File Accurately: An extension gives you extra time to prepare your return, reducing errors, omissions, and the risk of an audit.

2. Avoid Failure-to-File Penalty: Filing late incurs a penalty of 5% of unpaid taxes per month (up to 25%) for 2024. Filing an extension avoids this penalty.

3. Extended Deadline for SEP IRA Contributions: Self-employed individuals can use the extended filing time to contribute to a SEP IRA, reducing taxable income and funding retirement.

4. Tax Payments Still Due: An extension doesn't give more time to pay taxes owed. Payments not made by April 15 will incur late payment penalties and interest.

Filing an extension ensures you're not penalized for missing the deadline while giving you time to file an accurate return.