The thing about the US tax system is, it has a lot of flaws. We are HUGE advocates for our clients and make it our job to know all the loopholes of taxes. The power of tax extensions is one of those loopholes. Did you know that extensions actually reduce your audit risk?? And did you know that nearly all big name companies purposefully file extensions and wait until fall to file their returns because of this fact? Extensions are one of the most underrated tax planning strategies.

The US tax code is so complex, that you basically have to use a tax accountant otherwise you’ll shoot yourself in the foot. And then the government asks everyone to file their taxes within 2.5 months. They know they have impossible standards and that’s why they created extensions.

The one and only con to filing an extension is that taxes are due by April 15th, so an extension gives you more time to file but not more time to pay. Thing is, taxes are a pay as you go system meaning you should be making estimated tax payments all year round and not waiting until April 15th anyway so if you’re doing it right, this con won’t throw you off your game because you’ve already paid up by the time tax deadline rolls around!

Another pro that we haven’t listed yet: you have more time to beef up your retirement contributions and save money on taxes 💪

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There are a lot of things we would change about taxes if we had a magic wand. But you might be surprised what one of our first wishes would be…

🧚💫 We wish that there wasn’t a stigma around tax extensions 🧚💫

There are plenty of good reasons to extend your tax deadline. And believe it or not, these are reasons that benefit YOU. Not the government, not the tax firm, not your sister’s friend’s girlfriend. YOU.

So first of all let’s address some things: 

1. Deadline is a loose term here. 

Because filing extensions is so easy (and sometimes recommended) the April 15th deadline is only a deadline to submit your extension. You get to decide when the best time to file your taxes is. And, you get to do it based on what works for you, your business, and your schedule. The important part is that you do it. Not so much when you do it. Hint: Dawn (our CEO) has personally filed extensions every year since starting this business 🤫

2. There’s no reward for filing early. 

Not even a gold star! And before you say it…the argument that your return is your reward is flimsy when you’re a business owner. Not just because it’s more likely that you owe, but also because sometimes the reward of time (by extending) is more valuable. Again, you get to decide. 

3. YOU are the main character here

Like we mentioned before, you get to decide where you are most valuable. If March is a busy month for your business, it’s unnecessary to spend valuable money-making time gathering tax documents. File the extension and wait until your schedule is free (er. Free-er. We know the truth. An entrepreneur’s schedule is never free)

4. There’s no penalty for extending. 

Just like there’s no reward for filing early, there’s no penalty for extending. So eliminate that thought that’s been ingrained in you since grade school. This isn’t a test. There’s no punishment for an extension. And isn’t that wonderful?

4. In fact, there’s a huge incentive to extend..

Less audit risk. Better tax prep because your preparer has more sanity and more time to comb through your return and cross their t’s dot their i’s looking for tax strategies that may have gotten overlooked when their eyes are glazed over from working 80 hours during tax season (fun fact: no one on our team has ever worked 80 hours in one week. The most we had was an employee who worked 55 hours. But that was one time! Usually, we call it a day after 40 hours. We don’t subscribe to the typical tax accounting firm model that says you must be a slave and never see your family or sunlight from the months of Feb-May)

So these are some facts around filing for extensions. We thought we’d share them with you because well…it’s time someone said something. Now take this load off and pick it back up when you can. You’re in charge here! 

Sincerely,

 your brutally honest accountants