Never File Your Tax Return Before August 15 - File An Automatic Extension Instead

By John Adams

It’s the first week in April, and you’re getting that slightly nauseous feeling. Uncle Sam is expecting to hear from you, and April 15 is the deadline. Your accountant won’t return your calls, and your dog ate your W-2. What should you do? The answer is FILE AN EXTENSION. Another scenario: Still first week in April. You finished your return weeks ago, and you are due a sizeable refund. You are sure it’s all correct, and you have documentation for everything. The stamp is already on the envelope to the IRS. What should you do?

The answer is FILE AN EXTENSION. From a practical standpoint, no one should file their tax return on or before April 15th, because that is exactly what the IRS hopes you will do. In every situation, you are better off filing form 4868 and getting an AUTOMATIC EXTENSION. Here’s why:

1. The IRS hires a large number of seasonal employees to assist with tax return processing beginning in April of each year. As the summer wears on, funding for these seasonal employees runs out, and they are let go. In August, there are fewer employees to look closely at your return.





2. Each year, the IRS establishes quotas for the number of returns they will audit in specific categories. As the year goes by and more and more returns present themselves to be reviewed, these quotas tend to get filled. By August, some or all of the quotas may have been met.





3. Former IRS auditors tell us that IRS computers assign a numerical value to each return predicting the probability of recovery based on an audit, then choose to audit based on those numbers. In past years, the parameters for falling into an audit category have been adjusted downward as the year progresses, perhaps reflecting items 1 and 2 above.

Furthermore, if you have any self-employment income, the extension gives you another four months to contribute to a SEP-IRA or KEOGH PLAN. This fact alone makes filing an extension worthwhile for real estate agents with commission income and investors with flipper income. The maximum contribution to a SEP-IRA is 20% of income, while a Keogh allows a contribution of up to 25%. Both carry a limit of $40,000. All of that is tax deductible, and can make a huge difference in your tax bill. Set these accounts up for free at Charles Schwab or any discount brokerage house.

The IRS has a simple form that allows you an automatic four-month extension to file your taxes. It’s Form 4868, and it’s easy to complete, even without an accountant. All the form asks is your name, address and Social Security number. It asks you to estimate your tax liability and send any balance due. If you make this payment and hit at least 90% of your real liability, you win. You don’t pay a late filing or late payment penalty.

You may cut out and use the form on this page if you like. FORM 4868 and instructions are available at the local post office, or on my website at www.money99.com under FREE DOCUMENTS. Make your check out to the US Treasury, and mail it, along with Form 4868, to IRS, PO Box 105073, Atlanta, GA 30348-5073.

You can also file for an extension over the phone. You’ll need last year’s return and this phone number: 1-888-796-1074. If you need help, try calling IRS at 800-829-1040.

You must file it by midnight April 15. (This year, that's a Tuesday. So you'll have the weekend before to get the paperwork done.)

My advice: Whatever your income or your financial situation, do not file your income tax return on or before April 15. Instead, file an AUTOMATIC EXTENSION form 4868, then mail your return to the IRS on August 14.

Good luck!

Below is a form 4868 that can be filled out and mailed to the IRS. For more complete instructions please visit the official IRS website: www.irs.gov or call 1-888-796-1074.