Getting an extension is a great solution for a variety of reasons, not just because it can save you from the late filing fee. First of all, it doesn't cost you anything. If you're already worried about not being able to pay your taxes or getting a late filing fee, you're probably wondering, does filing an extension cost money? But filing the IRS Form 4868 is completely free.
Receiving the extension is also automatic. You only have to follow the steps to file for a tax return file extension. You don't even need to explain why you're filing late or want an extension.
More importantly, if the extension can give you the time you need to get the
1099s or other tax forms you're still waiting for, take it. It's better to have the info you need to accurately calculate your taxes than to estimate and risk the possibility of overpaying. Plus, if you get something wrong, you might have to go back and file a corrected tax return later, which costs money, not to mention time and mental space.
Speaking of 1099s, if you're still waiting for clients to send you copies of the forms they're sending to the IRS to report what they have paid you, an extension might be your best option.
Maybe you're even ready to file, but you just need one last 1099 from a client. Can you file a 1099 extension? No, but you can request a tax filing extension. Or you can estimate the payment and file your taxes, then file a correct return later. See above for why that's a bad idea.
There's also the reality that when you're rushing to meet a deadline, you're much more likely to make mistakes. But if you have the time to carefully examine your records and financial information, you make better decisions on important tax matters – like whether to
itemize your deductions or take the standard deduction. With the first option, you'll have the time to thoroughly look at what you can deduct from your taxes so you don't overpay. You can also use a
1099 tax calculator if you want to itemize your business expenses.