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A Case for Filing Your Tax Return After April 15th

In a recent Wall Street Journal article, Laura Saunders presented a compelling case for taxpayers to consider filing their tax return late this year.

To clarify, neither Ms. Saunders nor any of us condone the notion of ignoring the federal tax laws.  Instead, the suggestion is to consider doing what 11 million taxpayers do and that is to file an automatic extension and delay the due date of your 2009 Form 1040 to October 15, 2010.  The IRS has streamlined this process so that all taxpayers now qualify by simply filing Form 4868 by April 15th.

An extension to file, however, is not an extension to pay.  You still must estimate and pay your taxes by April 15th to avoid incurring additional penalties and interest for any shortfall.

The most obvious reason for filing an extension is for taxpayers who have not yet received all of their third-party information regarding income and deductions.  Investors who have not received final 1099 forms or do not have K-1 forms from partnerships often have to file for an extension.  In these cases, an extension provides enough time to get final numbers so that the tax return is complete and accurate the first time!

Perhaps the biggest concern we hear about an extension is whether any sort of stigma attaches to the return as a result of the extension.  In other words, does the IRS presume some type of dark motive on the part of taxpayers who apply for an extension?

We certainly don't think so and have no evidence that an IRS examination was ever triggered by an extension.  Instead, the IRS employs a sophisticated (and top secret) software program to "score" tax returns and identify anomalies that would indicate the potential for underreporting.  It would appear the IRS is more interested in what is in the tax return instead of simply when it was filed.


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