Pros And Cons Of Filing A Tax Extension

If you want to obtain a 6-month extension to file your taxes and you have legal reasons for doing so, your tax accountant might be able to help you. But remember that, like everything else, filing for a tax extension has its advantages and disadvantages.

Here's an overview of a few pros and cons of filing a tax extension.

Pros

• If you file a tax extension, it can help you prevent a late-filing penalty. If you file your taxes late, the CRA will charge you 5% of the tax owed and an additional percentage for every month it's late.
• You can also avoid failure to file taxes with an extension.
• A tax extension helps you file a complete and accurate tax return. Instead of hurrying up and making mistakes as you go along, a tax extension gives you more time to gather all the necessary documents and ensure that your return is accurate. This is even more helpful if you have a lot of deductibles or if you're self-employed.
• If you have a complex tax return, your tax accountant will have more time to work on the tax planning and paperwork to ensure you make the most out of every tax deduction and credit.

Cons

• Filing a tax extension will make things challenging if you expect a refund. You'll be made to wait longer. Your tax accountant can help you avoid this if you file an extension on time.
• Just because you're filing a tax extension doesn't mean you get extra time to pay your taxes. It only extends the deadline to complete the paperwork. You still have to pay a certain amount to avoid penalties.
• If you decide to file an extension at the last moment before the deadline, your request will likely be denied, and then you'll owe late penalties.
• Your tax paperwork won't be reduced a few months from the deadline. You'll still need to gather all the important documents, such as retirement statements, bank records, receipts, and the rest of the tax documents.

Hire Tax Planning Services In Toronto

Filing a tax extension may have its benefits, but the best practice is to plan ahead with tax accountants at Accounting Plus. 

Whether you're looking for a personal or a corporate tax accountant Markham for tax planning services, the experts at Accounting Plus can help you with all of it. They offer exceptional personal tax, corporate tax, and accounting and bookkeeping services to all their clients in Toronto, Richmond Hill, Markham, and nearby areas. Their team of accountants uses top-notch software Xero for cloud-based accounting services.

So hurry up and contact their team to start your tax planning in time.