Filing for and receiving a six-month tax extension is an easy process and there are many valid reasons that you might consider filing an extension for your optometry clinic.
There are also authentic reasons to avoid doing so. Your optometry bookkeeping experts at Caro & Associates can help you navigate the pros and cons of filing for a tax extension this year, and the following questions can help you decide if filing might be the right choice for your optometry clinic.
What is an extension?
By filing an extension of time to file, you are formally requesting that the IRS grant your clinic additional time to file taxes past the deadline. For the year 2019, that deadline falls on April 15th.
All citizens can apply for an extension without presenting a reason and are automatically granted an additional six months upon filing, making the extended due date October 15th.
As you are probably aware, businesses may also file for an extension. For the 2019 filing year, the deadline for C-corporations is October 15th, and for S-corporations and Partnerships, it is September 16th.
What are the pros of filing for an extension?
There are a few pros associated with filing for an extension for your optometry clinic. These include:
1. Avoiding late filing penalties
Filing late is subject to a 5% penalty per month on taxes due, not including a 1/2 % per month late penalty. However, if you are owed a refund after filing, you will not be penalized for late filing.
2. You can file a more accurate return
Sometimes, filing late gives you the time you need to file your tax returns more accurately.
As a private optometrist, you are understandably busy running your clinic. Often, without the help of an optometry accounting specialist, many clinics find themselves rushed to file and end up making costly mistakes as a result.
With an extension, you have extra time to gather the materials you need to file a complete return, particularly in the case that you are still waiting for tax documents that have not arrived and are necessary for applying for certain deductions.
3. More time for complicated tax returns
For private optometrists and businesses in general, filing tax returns is complicated. Filing for an extension gives your accountant more time to ensure you are taking advantage of every possible deduction and tax credit you are eligible for.
4. Retirement funds
For self-employed optometrists, filing for an extension gives you extra time to fund your retirement fund. In fact, it is possible to fund your SIMPLE as late as the extended due date.
What are the cons of filing for an extension?
This all sounds pretty good, but there are also a few cons to consider when deciding whether to file for an extension, including:
1. Longer waiting time for refunds
For optometry clinics that are expecting to receive a refund on their tax return, you will have to wait longer to receive that refund than you would if you were to file on time.
2. Extra time to file does not mean extra time to pay
This is one of the biggest mistakes that filers make when seeking an extension.
If your clinic fails to pay a minimum of 98% of taxes due by the deadline, you will be penalized with late-payment fees and interest, which can add up to some hefty fines.
When considering whether to file for an extension for your optometry clinic, ask yourself if doing so will give you more time to file a complete return, or if it is simply a means of putting off doing so. Remember, filing won’t be any easier six months from now.
For questions concerning your tax filing options for your optometry clinic, speak with the experts at Caro & Associates today.
Tax season creates additional stress on top of trying to run your business and keeping it afloat. Outsourced accounting services are always the best option for a small business as it allows experts to handle this maze of tax laws without you having to pay a full-time tax accountant.
There are many benefits to outsourcing the accounting processes for your business. From being able to spend more time on the goals of your company, to averting costly mistakes, having a team of experts on your side helps your business grow. They can also help reduce instances of fraud.
It’s hard to believe that we are already into July. Even with the deadline for filing your return and making a payment (if you owe) being extended to July 15, 2020, it still seemed like it came upon us fast. With only a few weeks left, be sure to get any final documents to us and answer any outstanding communications immediately.