Avoid Last-Minute Stress with These Tax Extension Tips

If you filed for a 6-month federal tax extension, congratulations you now have until October 15 to submit your return. But how you use this extra time matters. With the right approach, you can stay organized, avoid penalties, and file a complete and accurate return without stress.

Here’s how to make the most of your tax extension period.

A Tax Extension Gives More Time to File, Not More Time to Pay

First, it’s important to understand what a tax extension really covers. A federal tax extension gives you more time to file your paperwork, but it does not give you more time to pay any taxes owed. If you had a balance due, it was still required to be paid by April 15 to avoid late-payment penalties and interest.

If you did not pay the full amount by April 15, the IRS now charges interest and monthly penalties on the unpaid balance. However, filing an extension helps you avoid the much steeper failure-to-file penalty, which can add up faster than the failure-to-pay penalty. Even if you couldn’t pay everything by April, your extension still protected you from worse penalties.

Get Organized During the Extension Period

Now is the perfect time to gather all your documents and organize your financial records. Small business owners often need time to gather income statements, expense records, 1099 forms, payroll reports, and other supporting documentation.

Set up a clear filing system, either digitally or on paper, and create a checklist of everything you need for your return. Use this time to track down any missing paperwork or corrected forms. Having everything organized now will make your actual filing process much smoother and help you avoid mistakes or missed deductions.

Review Your Estimated Taxes and Cash Flow

Next, review your estimated tax situation. You are ahead of the game if you paid some or all of your expected taxes by April 15. If not, now is the time to estimate how much you still owe and plan accordingly.

Use the next few months to set aside enough cash to cover your tax bill before the October deadline. Treat it like a short-term savings goal. The earlier you plan, the less stressful it will be when it’s time to file and make the payment.

If you can, consider making an additional estimated payment now. Even paying part of what you owe can help reduce the penalties and interest that continue to grow until your balance is fully paid.

Make Estimated Payments to Reduce Penalties

If you know you owe a significant balance, sending an estimated payment to the IRS before the October deadline can save you money. Every dollar you pay reduces the amount that is accruing interest and late-payment penalties.

Payments can be made online through IRS Direct Pay, by check, or by using the Electronic Federal Tax Payment System (EFTPS). Even partial payments can make a big difference. Reducing your balance now means a smaller penalty bill later.

Use the Extra Time to File an Accurate Return

The biggest benefit of a tax extension is the opportunity to file an accurate, thorough return without rushing. Take advantage of this extra time to double-check all of your information. Review your income, deductions, credits, and supporting documents carefully.

Rushed returns are more likely to contain errors, which could lead to IRS notices, audits, or missed savings opportunities. With a careful, unhurried review, you reduce your risk of mistakes and maximize your eligible deductions.

An extension gives you a second chance to get everything right. Treat it as an opportunity, not a delay.

Avoid a Last-Minute Rush

It’s tempting to wait until the fall to start thinking about taxes again, but that would be a mistake. Don’t treat October 15 as your starting line. Instead, set internal deadlines for yourself:

• Aim to have all documents organized by the end of August.
• Complete a draft return or submit information to your tax professional by early September.
• Leave enough time in September and early October for review, questions, and any corrections.

Work With a Professional for Peace of Mind

If you’re feeling unsure about any part of the process, this is a great time to bring in a tax professional. Whether it’s double-checking your numbers, maximizing deductions, or helping you manage any taxes still owed, working with an experienced advisor can save you time, money, and stress.

Getting expert help now ensures you meet the October 15 filing deadline with confidence, accuracy, and the lowest possible penalty exposure.

Need Help? Let’s Talk

If you have an extension in place and want to be sure your taxes are filed correctly, we are here to help. Our firm specializes in helping small business owners organize their finances, prepare accurate returns, and minimize penalties.

We can help you use your extension wisely and get your tax obligations wrapped up smoothly, so you can move forward without stress. Contact seasoned tax attorney Todd S. Unger for a confidential consultation.