If you haven’t filed your tax return yet, take a deep breath and make sure you read today’s entry on extensions. You can file for an extension for the 2007 tax year for your LLC (taxed as a partnership), Partnership or personal return until October 15, 2008. Not only can you do this, you should. Here are three reasons why it makes sense to give yourself a break.
Reason #1 To Extend: Your CPA Will Be Fresher. The cold hard truth is that most CPAs are swamped right now. If you’re hoping to get some special attention with your tax return, the best thing to do is wait until they have some attention to give you! Face it, you can’t expect a stressed out, exhausted CPA trying to think outside of the box right now. Ask your CPA to file an extension based on your estimated income and expenses and then take the time in a few months to finalize the return.
Reason #2 To Extend: Tax Laws Will Change. I don’t know what’s going to happen with the tax laws, but based on 25+ years of doing this, there is one thing I’m sure of. It’s going to change. There will be something different. And those changes might very well impact how you want to want to report income or expenses on this year’s tax return.
Reason #3 To Extend: You Have a Lower Chance of Audit. It’s always been assumed that you have a lower chance of audit if you extend and lately I’ve heard report of this being confirmed, again and again, by IRS agents themselves. The reason is a simple case of how humans work. Each agent has a certain number of returns that they need to audit. They get a list of all returns filed by the first date – 4/15 (or 3/15 in the case of a corporation with a year end of 12/31). Then, if they don’t file the quota filled, they go to the later lists. Most fill their quota before they get to the extended returns, so the extended returns have a lower chance of being audited.