Tax-Extensions-Save-Clients-Money

For many tax preparers, April 15 seems to roll around earlier each year. But when clients seem set to
owe the IRS money at tax time, a tax preparer’s failure to timely request an extension can lead the
taxpayer to incur a hefty failure-to-file penalty of 5 percent of the unpaid bill per month.
Once a taxpayer is five months late in paying their outstanding taxes, this penalty is capped at 25
percent of the total tax owed—but this credit card-esque interest rate can seriously increase one’s total
tax liability. To be safe, tax preparers and their clients should request an extension as early as possible.

Benefits of a Tax Extension

Once a client’s tax extension is granted (which most are), any failure-to-file penalty will be waived.
Although the client will still owe interest on your unpaid balance, this interest rate is significantly lower
than the failure-to-file penalty—just 0.5 percent of the total tax owed. This interest charge, like the
failure-to-file penalty, is also capped at 25 percent, but it would take more than four years for a taxpayer
to reach this threshold.


When to Request an Extension

The good news is, as long as a taxpayer (or a preparer on the taxpayer’s behalf) has submitted your
extension request by the original tax filing deadline, usually April 15, they’re in the clear (as long as this
extension is granted). While it's always a good idea to submit an extension request as soon as it’s ready,
just to avoid any last minute shake-ups, getting it in before the April 15 deadline is generally good enough.

Source
https://www.fool.com/retirement/2019/01/09/3-things-about-taxes-americans-are-getting-wrong.aspx