-Even though many believe the best time to file for an income tax filing extension is when there isn’t enough time to get taxes done before the deadline, there are many very good reasons for filing an extension. Robert Borish from North County Tax & Accounting in Atascadero, CA has recently released a list of situations for filing for an extension.
Maybe one of the better kept tax secrets is that no one really actually needs a reason to get an income tax extension. Neither the Internal Revenue Service (IRS) nor the California Franchise Tax Board (FTB) require a specific reason and income tax extensions are automatically accepted as long as it is filed on the correct form and no later than the required filing date. The tax deadline for filing is usually March 15 for businesses and April 15 for individuals, unless that day falls on a weekend or holiday.
Check with an accountant at the Atascadero tax firm to know which form to file. Both the IRS and FTB have different forms for individuals and for businesses.
Reasons to file the extension include:
- If you are a business with a PPP loan, as it stands now, California does not allow the deduction of expenses paid with forgiven PPP loans. The legislature is considering changing this to conform to Federal rules, but as of March 15, 2021 we still do not have an answer.
- If you received Unemployment Compensation in 2020, Congress is considering making this income non-taxable. This has not passed as of March 15, 2021.
- Changes in the family including marriage, divorce, death of a spouse or a new baby, a major illness or death of a dependent parent, or retirement.
- Receiving a large inheritance.
- Changes to a trust or estate plan.
- Proof of income documents such as 1099 or W-2 have not yet been received.
- Buying or selling a business or taking on a new business partner.
- First time filing as a new American citizen or a wage earner and extra time is needed.
- You are in the military and have been deployed with no time to pay attention to taxes.
- Complicated business structures, with smaller businesses operating under a larger holding company.
- You are going to be out of the country and unable to file on time.
- COVID-19 has complicated everyone’s life and brought significant changes to many people’s tax liabilities.
An extension is an automatic six month postponement for filing tax returns, but any taxes due must be paid by the March or April deadline. Extensions are easy to file but it is important to use the correct form.
The accountants at the Atascadero tax firm are highly knowledgeable and can make sure you use the correct forms for filing an extension. If taxes are due but the money to pay isn’t available, they can also help you setup a payment plan.
North County Taxes & Accounting is a full service CPA accounting firm providing services for individuals and businesses. Services include tax preparation, bookkeeping, accounting, payroll and customized QuickBooks services. The firm’s clients are the most important asset and the firm is committed to maintaining the highest standards of integrity and professionalism to make sure that every client is served by the best expertise.