How Do Tax Extensions Work?

In the great state of California, millions of people should be hard at work preparing their annual state taxes. Yet, if you’re like many San Diego citizens, the last year has been tough on your personal or business finances. From lost work to company closures, there might be a few reasons you cannot collect all the tax documents you need this year. We’re here to help. Let’s learn more about tax extensions and how they work.

What is a Tax Extension?

A tax extension is often requested when a citizen or business struggles to complete their taxes, find receipts or locate personal tax information. In most cases, a tax extension will give you an extra six months to complete your taxes. Depending on what state you live in, you might have to complete different forms in order to be considered for an extension.

How Does a Tax Extension Work?

In most cases, you would have to apply for a tax extension, but in California, that extension is granted automatically for you when it comes to your 2021 taxes. That means that even though your taxes are usually due by April 18th this year, you have until October 17th, 2022, to complete them. There are no forms to fill out and no extra steps you have to take in order to qualify.

What if I Owe Money?

Now, this is where you have to be careful. While your taxes may not be due until October 17th, 2002, if you’re going to owe money on your taxes for 2021, you are still required to pay them by the original due date of April 18th, 2022. If you don’t pay what you owe by this deadline, you could be looking at an extra 25% late payment penalty being added to the amount you owe.

How Do I Know How Much I Owe if My Taxes Aren’t Completed Yet?

Before you start making educated guesses at what you may or may not owe the government, you can do a couple of things to determine what you owe.

Talking to a trusted Certified Public Account like SD Bookkeeping Solutions can give you an accurate look at what your refund or payment will look like once your taxes are completed. Like most of your fellow Californians, tax time can be a stressful experience, especially when you feel like you’re falling behind. Lucky for you, SD Bookkeeping Solutions has your back.

Filing for a tax extension has never been easier, and it can help you get the time you need to make sure that all your tax information has been collected and submitted without any issues. Contact us today to find out more information on tax extensions and IRS tax problems and to discover our accounting and bookkeeping services for the city of San Diego.