Deadlines Approaching: Mastering Tax Extensions and Payment Options

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Are you worried about filing your tax return on time or paying your tax bill?

In this episode, Mike Jesowshek discusses tax extensions and strategies for paying tax bills, addressing common misconceptions and providing practical advice. He clarifies that filing an extension does not increase audit risk and emphasizes the importance of timely filing and payment. Mike outlines options for those who can and cannot afford their tax bills, including installment agreements and offers in compromise. Throughout the discussion, he stresses the significance of proactive tax planning to avoid financial strain in the future.

[00:00 - 05:21] Understanding Tax Extensions and Their Importance

• Filing an extension doesn't increase audit risk, can lower chances of audit.
• The reasons for filing an extension include waiting on documents or incomplete bookkeeping.
• Extensions extend time to file, not time to pay; taxes are still due on original deadlines.
• Failure to file penalties is more severe than failure to pay penalties.
• Make estimated payments with extensions to avoid penalties and interest.

[00:05:33 - 00:18:12] Strategies for Paying Tax Bills

• For those who can afford tax bills, options include automatic withdrawal, online payments, or credit/debit card payments.
• For those who can't afford tax bills, filing returns is crucial; failure to file penalties are harsher.
• The options for payment include borrowing funds, short-term payment plans, or offers in compromise.
• Installment agreements with the IRS require timely payments to avoid complications.
• Proactive tax planning and estimated tax payments can prevent future financial strain.

Direct Quotes:

"Filing an extension is simply an extended time to file your tax return. The taxes are still due on that original due date." - Mike Jesowshek

"Extensions extend time to file, not time to pay." - Mike Jesowshek

Resources Mentioned:

• IRS Direct Pay: https://www.irs.gov/payments/direct-pay 

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

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