Donna Bordeaux says accountants are overwhelmed and raising prices, making tax extensions a smart move. Filing an extension buys time to find deductions and cuts audit risk, but you still owe taxes by April 15. She recommends overpaying slightly if unsure and preparing returns early to review them over the summer.
Hi there. It's tax time and everybody's got April 15th on their mind. But a lot of people say, eh, no worries, I'm going to file an extension. I'm Donna Bordeaux with calculated moves and I want to talk to you about what an extension means. I'm sure that you've probably had a little more trouble this year finding accountants who will handle taxes. Many accountants have decided that the stress and strain it puts on such a tight window is just too much. Many accountants have decided they're not doing taxes anymore or they're scaling them back drastically and increasing the prices a lot on the ones they do offer. And honestly, a lot of tax returns are really underpriced for the knowledge that it takes to complete those returns. I've heard many people say my tax return is just simple. Well, if it's that simple, you wouldn't be seeking the help of an accountant. So with tax returns pressurizing all of the time frame it takes to do the returns and prepare them appropriate appropriately, many accountants have moved to filing extensions. I do this as well. I file a mandatory extension for every client we have. It does a couple of things. First, it eases that pressure to make sure that we have all of the deductions to offer you so you can pay the minimum tax as possible. Secondly, it also reduces your chance of audit. Believe it or not. Now, the IRS is never going to publish this, but through statistics we can see it. They choose who they're going to audit over a period of time, and the further they get down the line, they run out of time and people and energy to do more audits. So it does reduce the possibility of an audit. And the most important reason is we still have uncertainty, believe it or not, on what last year's tax return and tax laws look like. The House and the Senate have been mumbling through tax extender bills now for months. We don't know when they're going to pass, if they're going to pass them. But those things affect a lot of people's returns. So it's a lot easier to not file the original return and add those changes in by the time they get them finalized than it is to file amended returns. That can be very costly and confusing, kind of a mess. So I do suggest everybody file an extension, however, most importantly, and write this down. If you owe money, there is no extension for the time frame to pay the money in. The money is always, always, always due on April 15th. You can't delay that time frame. And for the double whammy the first quarterly payment for the current year is also due on April 15th. So if you're confused about how much to pay, overpay a little bit. If you're a person who has to pay each year, if you're self employed, usually you do. So make that payment in now file that extension, but don't wait again until October to get your stuff together. Go ahead and get it all together. And I like to put the returns in the marinade. We let them marinate over the summer, see if anything comes up. Any tax laws change. If everything's still the same, we'll go ahead and push that button later on and give you the reduced chance of an audit.
