Today is the final deadline for filing extended 1040s (and 1040As). If you filed for an automatic extension back in April be sure to get your tax return in the mail today (see my note prefacing yesterday’s BUZZ edition).
I hate GD extensions!
For the first 20 or so of my 38 tax seasons I didn’t have to worry about GDEs. Neither my mentor nor I filed any. When April 15th came the tax season was truly over. We would work through the night on April 15 to make sure that all the returns that were in our hands were done. As I believe I have mentioned before, one April 15th the last client walked out our office door at 3:00 AM on April 16! As he left he promised to be earlier the next tax season.
Actually for the first 20 or so tax seasons I also did not have to deal with the dreaded Alternative Minimum Tax. It wasn’t until the 1990s that a client first became victim of AMT!
To be honest there is really no good reason to have to file an extension. I know that many are filed because of late K-1s, which are either received on April 15th or, due to extended partnership returns, not received until September 15th. But this is easy to fix – don’t invest in limited partnerships! As I have said many times before the minimal “return on investment” from LPs are not worth the additional work and aggravation involved with properly placing K-1 info on the various components of the 1040. But then brokers must get a higher commission from selling LP investments – so they continue to push them on their clients.
Actually there is a good reason for a self-employed person to file an extension. Extending the return also extends the time to make a contribution to a SEP or other self-employed pension plans. However you can have the return completely and properly prepared “on time” and just wait until you have actually made the contribution to mail it in.
Filing a GD extension extends the time to file the return. It does not extend the time to pay the tax. So filing an extension doesn’t help if you can’t pay the tax due by the April 15th deadline. As I advise my clients, file the return and pay whatever you can, if you can pay anything at all, and send the balance due when you raise the money or arrange for an installment payment plan with the IRS.
There is an “urban tax myth” that extending your return will help to avoid an audit. In my opinion, if you are going to be audited you are going to be audited based on the information reported on the return, regardless of when it is actually submitted. But even if you believe in this tax myth you can still have the return prepared “on time” and just not mail it in until October.
I long for an extension-free tax season. But, however much I admonish my clients to get their “stuff” to me on time, I expect I will continue to have GDEs each year.
Oh well – I can dream, can’t I.
TTFN
I hate GD extensions!
For the first 20 or so of my 38 tax seasons I didn’t have to worry about GDEs. Neither my mentor nor I filed any. When April 15th came the tax season was truly over. We would work through the night on April 15 to make sure that all the returns that were in our hands were done. As I believe I have mentioned before, one April 15th the last client walked out our office door at 3:00 AM on April 16! As he left he promised to be earlier the next tax season.
Actually for the first 20 or so tax seasons I also did not have to deal with the dreaded Alternative Minimum Tax. It wasn’t until the 1990s that a client first became victim of AMT!
To be honest there is really no good reason to have to file an extension. I know that many are filed because of late K-1s, which are either received on April 15th or, due to extended partnership returns, not received until September 15th. But this is easy to fix – don’t invest in limited partnerships! As I have said many times before the minimal “return on investment” from LPs are not worth the additional work and aggravation involved with properly placing K-1 info on the various components of the 1040. But then brokers must get a higher commission from selling LP investments – so they continue to push them on their clients.
Actually there is a good reason for a self-employed person to file an extension. Extending the return also extends the time to make a contribution to a SEP or other self-employed pension plans. However you can have the return completely and properly prepared “on time” and just wait until you have actually made the contribution to mail it in.
Filing a GD extension extends the time to file the return. It does not extend the time to pay the tax. So filing an extension doesn’t help if you can’t pay the tax due by the April 15th deadline. As I advise my clients, file the return and pay whatever you can, if you can pay anything at all, and send the balance due when you raise the money or arrange for an installment payment plan with the IRS.
There is an “urban tax myth” that extending your return will help to avoid an audit. In my opinion, if you are going to be audited you are going to be audited based on the information reported on the return, regardless of when it is actually submitted. But even if you believe in this tax myth you can still have the return prepared “on time” and just not mail it in until October.
I long for an extension-free tax season. But, however much I admonish my clients to get their “stuff” to me on time, I expect I will continue to have GDEs each year.
Oh well – I can dream, can’t I.
TTFN
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