What is a tax extension and how does it work? Most people really don’t like doing their taxes, and some wait until the very last minute. “Oh, I’ll just get an extension”, they say. Is this okay? Well, like most tax questions, the answer is it depends. If you’re simply getting an extension because you want to procrastinate, that’s probably not a good reason.
You still have to calculate if you’re going to owe tax and pay that amount which really takes just as long as doing the whole tax return. Some taxpayers, however, don’t have all the information that they need when the tax due date comes up. So what we do is we take all the actual information we already have and we do estimates for the things that are missing and we calculate how much tax we think they’re going to pay. We pay in this estimated amount. Often we will pad it and pay a little bit extra just in case. And if they are overpaid, when the actual tax return gets filed months later, they just get a refund.