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It’s hardly a secret that taxes are due on April 15 every year (unless, of course, the deadline is pushed back due to it falling on a weekend). Yet here we are — it’s April 14, and your tax return still isn’t done.
There could, however, be a good reason for that. Maybe you had every intention of doing your taxes earlier but ran into a medical issue that sidelined you for weeks. Or maybe you’re up against the filing deadline because a company you did work for took forever to issue your 1099 form.
Either way, if it’s the day before the tax-filing deadline and you still have work to do on your taxes, you may feel like you’re in a pickle. And you may be wondering if it pays to try to power through your tax return or get an extension. The answer is, it depends on your situation.
When your tax return is simple
If your tax return is simple and you have all of the documents and information you need to file it, then it may be more than possible to complete the task in time. In that case, you might as well get it done with.
For one thing, it’ll be a stressful task you won’t have hanging over your head. And if you’re due a refund, it should hit your bank account sooner.
Just as importantly, if you owe the IRS money, you’ll know what sum to fork over and you’ll have an opportunity to pay it by April 15. Paying a tax bill late results in interest and penalties.
When your tax return is more complicated
If your tax return is complicated and you’re not confident in your ability to tackle it quickly, then at this point, your best bet is to request an extension. The last thing you want to do is make an error on your tax return that either delays your refund or increases your audit risk.
Also, if you rush through the tax-filing process, you might miss out on credits or deductions you were entitled to take. The result? A smaller refund than you’re actually entitled to.
If you’re going to request an extension, try your best to estimate what you owe the IRS from 2023 (that is, if you think you underpaid your taxes last year and aren’t due a refund). While a tax extension will exempt you from the penalty that comes with failing to file a return on time, it won’t get you out of paying interest and penalties on the sum you owe.
Of course, it can be a challenge to estimate your tax bill if your tax return hasn’t really been worked on. In that case, if your tax situation is similar this year to last year and you owed $1,500 last year, you may just want to send the IRS that sum if you have the money.
Remember, the IRS is not allowed to just hang onto money of yours it’s not entitled to — hence the whole refund thing. So if you send the IRS $1,500 by April 15 to avoid interest and penalties on that sum when you only owed $1,200, you don’t just lose that $300 — you get it back.
Usually, the IRS will send you a notice informing you of the credit you’ll be getting due to overpaying. You can usually also ask the IRS to hang onto the money and apply it to next year’s taxes.
Completing a tax return in a day isn’t impossible. But it also may not be worth the stress and risk of mistakes when you can get an extension and buy yourself the extra time you need to do things right.
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