Many individuals have filed extensions for their 2008 tax return. This means that folks have officially notified the IRS that they are choosing to extend their filing date. Importantly, I want to emphasize that an extension to file is not an extension to pay your tax. When the extension is filed by April 15th, any tax due for 2008 must be paid in with the extension to avoid late payment penalties and interest. There can be many reasons why one may extend, and I am going to hit on a few key points.

First, if you have filed an extension, the new due date to file your 2008 tax return is October 15, 2009. Generally, extensions are filed when a taxpayer is waiting on key tax information that was not available by the April 15th deadline. Partnership K-1’s are what most taxpayers are waiting on in order to file their returns, and sometimes these K-1’s do not get issued until September.

Also, many individuals that file an extension do so because they are not prepared to file or they have not gathered all of the tax information by the April 15th deadline. For those taxpayers that fall into the “not prepared to file” category, it is very important that you do not wait until the October 15th extension deadline to file your 2008 tax return—when it comes time to file the return, there is no real sense of what your tax liability might be. In plain words, if you have extended, you should file that return once you receive the missing information. And, if you have been avoiding the shoebox of receipts, I strongly urge you to dive in and get them sorted and organized as soon as possible to help mitigate any potential penalties and interest on the tax you owe. You can find helpful organizers on our Financial Tools page.

Lastly, please do not hesitate to contact us with any questions or concerns.

DG