The Truth About Extensions
Many people believe that if you extend your returns, you have a high risk of being audited. This is incorrect!! Extending your returns will not cause you to get audited. A lot of people have in their head that if you extend your return, you automatically have a red flag on your return for the IRS. The extension process is just to help with gathering items and assuring your return is correct. Businesses and individuals have different extension due dates.
The original due dates for tax returns are below:
03/15: Partnership(1065) and S- Corporation(1120S)
04/15: C-Corporation(1120) and Individual(1040)
The extension dates are six months after the original due date. See below for those dates:
09/15: Partnership(1065) and S- Corporation(1120S)
10/15: C-Corporation(1120) and Individual(1040)
The extension is helpful for people that have a bigger return or have multiple companies or documents. For example, if you have multiple businesses that you get filed by the due date of 03/15, but you cannot get the K-1 from those businesses on time, you might not be able to file your individual return by the 04/15 deadline. There are several factors that could create a scenario like this because the K-1’s might come from different people or just an unforeseen issue. You can always file the business returns on time but extend your individual return. This will not cause any issues. It just assures that you do not pay any penalties for filing your individual taxes late because you were waiting on a piece of information from the business. If you have a small business that goes on your individual return, such as a Schedule C, you can extend your individual return and that extends the Schedule C as well.
We have a lot of clients, and employees, that file an extension. People and businesses are not audited because of extensions. We understand you want to file your return before the due date, but if you extend your return, it assures that you have more time to gather any information you might still need and allows us to be more detailed with your return. It also ensures that it is less likely for there to be any mistakes made on your return because there was more time to prepare it.
To file an extension is truly nothing more than what it seems. It is just an extension of your original due date.
By: G.G. Burkhalter, Tax Senior at CROFT & FROST