It may seem strange why some taxpayers file tax extensions even though the IRS still requires them to pay their tax liability on April 15th. You would think that if you have to pay taxes on April 15th anyway, then why not file your tax return now as well? You may be surprised in what you read below but filing a tax extension can actually make a lot of sense.

Scenario 1 – Documentation Complete
If you have your documentation and books complete and are comfortable that you claimed all the right tax credits and deductions then by all means – file now.

Scenario 2 – Books Incomplete & Review Credits
But, what if you don’t have all of your documentation together and need to investigate further about taking certain tax credits and deductions?

If this is the case, then your options are to either file now and make changes later by filing an amended tax return or just file a tax extension now even if you have to pay an estimated tax liability. So, that’s the real question – should I file now and amend it later on should I file a tax extension?

Why Filing a Tax Extension Makes Sense
In most cases, filing an extension is better than amending it later. When you file an extension you can still do it electronically whereas an amended return requires paper filing and takes longer for a refund. An amended return is also more likely to raise a red flag from an audit perspective than filing an extension.

You Should Still File Even If You Can’t Pay Your Taxes
Let’s suppose that you don’t have the money to pay your taxes right now. You should still file your tax return or tax extension and pay what you can. The IRS charges you interest and penalties for failure to pay your taxes and you are required by law to file a tax return unless you are tax exempt.

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