The most commonly prescribed flawed tax advice is most often not given with any malicious intent. That being said, isn't the proverbial road to hell paved with good intentions? Let's go down that road and repair a few potholes you're likely to encounter.
Pothole #1: "Get an extension...you have more time to pay your taxes." Why it’s flawed: It’s dead wrong. Getting an extension gets you more time to file, not more time to pay. If an extension meant you didn’t have to pay your taxes until October, the April 17th tax deadline wouldn't mean anything. No Americans would file their taxes in April if that were the case. Corrected advice: If you don’t have enough money to pay your taxes, hand over what you can by April 17, then get on a payment plan with the IRS. As long as you’re responsive and provide information when requested, the IRS typically doesn’t resort to wage garnishment or other scary stuff, Gibbons says. “They do that when you just ignore them,” he says.
Pothole#2 : "Don’t get an extension — you’ll get audited." Why it’s flawed: It’s bogus. The result is that people rush and throw together a tax return in April even if they don’t have everything in order. Corrected advice: Get an extension if you need it; its better to file later and correctly than to file in a hurry and make mistakes. You also can get a sense of your situation now by putting your numbers into a tax calculator.
If you need to file an extension, have questions, or would like professional assistance, you can reach me at 423-622-3156. Tax Preparation shouldn't be a sprint, and but it doesn't have to feel like a marathon either. We can help.