5 Common Myths About Income Taxes
Updated: Nov 3, 2021
It is important to understand your taxes as a business owner or individual. Whether you are running a company or just filing for yourself, there are some myths that surround the topic of income taxes. These are worth mentioning so that you fully understand the ins and outs of tax filing during tax season.
Myth #1: You Actually Need A Good Reason For Why You Need To Request A Filing Extension
When requesting a file extension, you do not need to have a reason or provide any information to the IRS. Common causes for extensions include missing records required for return preparation, overburdened CPAs or other tax preparers, or just procrastination. Whatever causes a company has for requesting an extension is irrelevant to requesting and receiving extra time to file.
Myth #2: You Don't Need To Take Any Action To Receive An Extension
While there are rare circumstances that result in automatic extensions, in most cases, you must submit for an extension no later than the original due date of the tax return.
Myth #3: You Get More Time To Pay Off Your Taxes With An Extension
A file extension prevents late-filing penalties but does not extend the deadline for tax payments. For example, if a taxpayer's return is due on April 15, 2021, he or she may request an extension to file the return by October 15, 2021, avoiding late filing penalties. However, any taxes that he or she owed as of April 15 are subject to late payment penalties, which accumulate until the taxes are paid in full.
Myth #4: You Increase The Odds Of Being Audited For Requesting An Extension
There is no empirical evidence that requesting a return extension raises the risk of an audit. Extension returns are processed in the same manner as regular filing deadline returns. While the IRS has not said so, it appears that an extension does not raise — or lessen — the likelihood of being audited.
Myth #5: A Federal Income Tax Filing Extension Also Extends State Income Tax
More often than not, state and federal returns work on their own schedules. However, restrictions differ by state, necessitating separate state-level action. In some rare circumstances, the federal filing extension extends the deadline for state income tax returns. Check state-level filing deadlines and the regulations for requesting extensions, if necessary.
Income Tax Relief
Paying back taxes is never fun, especially when you're not able to pay them off. For individual and business taxpayers who have fallen victim to the IRS' collection process and have accumulated an absurd amount of tax debt, the IRS understands that many people simply cannot afford to pay the high tax bills that they impose. There's a relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program. Our clients are referred to our Fresh Start Program in order to avoid bankruptcy, acquire debt relief, and settle their debts in a quick manner. Let us give you a helping hand today!
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