By Dave Horwedel, CEO Torchlight Tax
If you’re feeling the pressure of the April 15 1120 Corporate tax deadline, filing an extension is a smart strategy.
The main disadvantage is that your NECESSITY LEVEL may drop if you get a six month extension. Then six months later you are in the same situation, except now you cannot file for an extension!
There are a lot of advantages in having your bookkeeping, accounting and corporate tax returns all done and filed on time. Indeed, I would recommend that as an ideal scene you compute your Profit and Loss on a monthly or even weekly basis. This allows you to easily see when your profit is doing well or badly and take quick action to re-enforce successful profit-making actions or to correct things that are driving profit down.
But, what if you are part of 90% who have not achieved this ideal scene.
Well, if you are approaching 15 April and rushing to get it done, you should get an extension.
We will help you file an extension for a nominal fee, if you intend to do your taxes with us. Just contact us at 877-758-7797 or email info@torchlighttax.com
Every year, millions of Americans scramble to file by the deadline. This can result in:
- EXCESSIVE STRESS—This is self-explanatory.
- FILING A RETURN WITH MISSING TAX FORMS–Sometime taxpayers file taxes not realizing that they are missing a tax form. This can result in an IRS Examination Letter (and who needs that!) or the need to amend a tax return,
- MISSING DEDUCTIONS AND CREDITS-. Also, rushing to meet the deadline can result in missed deductions and credits` that result in overpaying taxes.
- OTHER MISTAKES THAT INCREASE AUDIT RISK– This rush can also result in other mistakes that increase audit risk.
Filing a tax extension can be a winning strategy. Consider this:
- An Extension Buys You Time to Do It Right
Filing an extension gives an individual taxpayers an extra six months (until October 15) to finalize your C Corporation tax return. This added time allows you to:
- Gather missing documents.
- Organize your finances.
- Catch overlooked deductions and credits
- Review your return more carefully.
The IRS doesn’t penalize you for filing your return late if you file a proper extension. The penalty only applies to unpaid taxes, so estimating and paying what you owe by April 15 helps you avoid additional charges.
- Rushing Increases Your Risk of Audit and Overpaying taxes.
When you’re rushing to beat the clock, it’s easy to overlook tax-saving opportunities. Also, any time your reports conflict with reports the IRS has received, your audit risk increases. This can result in a computer spotting a discrepancy and generating an examination, aka audit, letter. That’s right. A computer sends you an audit letter because you did not report income that was reported to the IRS. That adds insult to injury. It is bad enough to risk having an IRS employee catch you on something. Maybe they will miss it. But a soulless computer sending you an examination letter. That’s not fair!
An extension gives you time to:
- Review expenses more thoroughly
- Clean up your bookkeeping.
- Receive delayed tax forms like K-1s.
- Ensure accuracy on complex returns
- Filing Later May Reduce Your Audit Risk
Believe it or not, filing an extension may reduce your chances of an audit.
Reportedly, the IRS audits in waves based on early filings. By filing in August or September, your return may miss that initial audit wave entirely. This isn’t a guarantee, but some believe that
filing your tax return a month before the extension deadline decreases audit risk.
Whenever you complete your tax return, payment is due on April 15 for a calendar-year C Corporation. Suppose the accounting is all done, and you have calculated your tax balance due to be $44,482 as of 15 April. You can file your taxes and pay $44,482 on April 15. There is 0 penalty. Or, you can file an extension and pay $44,482 on April 15. There also is Zero penalty!
If you need more time to review the return or find extra deductions, pay $44,482 and file an extension.
- You Still Need to Pay—But You Have Options
Let’s be clear. A tax extension gives you more time to file, not more time to pay.
To avoid penalties, estimate your total tax liability and submit payment by April 15. The penalty for not paying is .5% per month of the taxed was not paid by April 15. The penalty for not filing your tax return is 5% of the taxes owed—that’s 10x higher than the penalty for not paying. You avoid the late-fling penalty by filing on time or filing for an extension! So always file a return or extension by April 15, even if you can’t pay the full amount right away.
You should estimate your tax liability and balance due, pay what you can, and get an extension. We can to assist you by estimating your liability and balance due.
CONCLUSION:
Tax extensions aren’t just for losers, sloppy accountants or lazy CEOs or CFOs. They are also for those who use the time to do it right and save tax dollars.
Filing an extension potentially lowers your audit risk, helps you avoid mistakes, and gives you time to talk over tax strategies with a pro. Sure, we at Torchlight Tax
consult during tax season. But our time on April 14th may be a little limited. Filing an extension to buy yourself –and us–a little time might be the most financially savvy move you make all year.
One last point. FAILING TO FILE AN EXTENSION BEFORE THE DUE DATE IS THE MOST COMMON AND UNNECESSARY MISTAKE IN THE WORLD OF TAX. Ok. Maybe you don’t know all the advanced tax strategies and maybe hiring your party-going cousin to do your bookkeeping may have been a mistake.
But 10Xing your penalties by not filing an extension or filing your tax return late is RIDICULOUS. Just call us.
CONTACT TORCHLIGHT TAX FOR A FREE CONSULTATION OR An EXTENSION AT 1-877-758-7797 OR EMAIL info@torchlighttax.com.
We will help you. You can also visit our website at www.torchlighttax.com or visit our Torchlight Tax YouTube channel for more tax saving information.
We have HUNDREDS of useful blog articles and videos on tax and asset protection strategies at these locations.
We also have over 50,000 YouTube subscribers.
We consider making good tax information data available for part of your job here at Torchlight Tax.
So you are a shareholder or manager of a C Corporation. That is pretty good. Maybe you are the CEO of a C Corporation. That is pretty good.
Now, let’s maximize the profits of your corporation while minimizing the tax. You mainly handle the profits. We mainly handle the accounting and taxes.
