The government finally passed the American Taxpayer Relief Act of 2012 at the last minute. So, we have avoided the Fiscal Cliff…for now.
Now it’s time to file your 2012 tax return. Or is it?
Here are 3 Reasons You Should Be Prepared to File a Tax Extension This Year:
1) The Tax Forms Aren’t Ready
The late passage of this law has put pressure on the IRS. Normally they would have published draft forms in the fall in anticipation of their final forms. That wasn’t the case this year for many forms. The delay in legislation caused the IRS to put much of this activity hold.
2) Your Tax Preparer Will Be Backed Up
It’s not just the IRS that is backed up. Your tax preparer will be in a similar boat. Tax season can be challenging. The last thing you want is to have your return be prepared under more pressure.
3) You May Be Receiving Amended Tax Forms Later
This has happened in the past. It will happen this year. It will likely continue to happen in the future. Financial institutions that produce 1099’s and other tax documents have a very short time period to produce these documents. The complexity of the various investments and categorization of them is becoming more and more challenging. Leading many financial istitutions to file amended returns.
You can file an extension on Form 4868. It is due before April 15, 2013. The extension extends the time to file the return. It does not extend the time to pay the tax. Any tax that is due needs to be paid with the extension. Failure to pay the tax will result in interest and penalty. If the request is timely and complete an automatic extension will extend the time to file the return until October 15, 2013. Many states also require an extension to be filed if the federal return is on extension. In Connecticut this is done on Form CT-1040-EXT. If the extensions are being mailed it is recommended they be sent certified mail return receipt requested to document the filing.
Carpenters have a saying, “Measure Twice, Cut Once.”
Will you be filing an extension this year?
Photo From Creative Commons