How to Prevent the Need for a Tax Extension

One of the ways to prevent the need for filing a tax extension is to quit procrastinating. It may be easier said than done, but there are things that you can do in the beginning of every tax season to prevent you from having to file a tax extension. Here's how to go about preparing your taxes so that you will not need to file a tax extension.

Instructions

Difficulty: Moderately Easy

1. Create a tax file. Create the tax file on January 1 so that you will have somewhere to put all of the tax documentation you receive. When it comes in the mail, put it immediately in the file so that you will have everything in one place.
2. Know which documents you will need. If you keep a list of the documents that you know you will need to file your taxes, such as W-2's, interest statements and itemized expenses, you can check them off of your list as they come in. Once everything is checked off, you can begin your tax process.
3. Get your tax forms early. If you're on the government's mailing list and receive the forms through the mail, then you're halfway there. However, if you use tax preparation software or prefer to download your files from the IRS website, be sure to obtain the forms and software early in the tax preparation season.
4. Start compiling your information. As soon as all of the outstanding documents are checked off of your list and right after you've obtained the appropriate tax forms, start preparing your taxes. Spend a few hours each weekend to accomplish your task.
5. Add the finishing touches to your tax forms and check them for accuracy. After a few weekends of working on your taxes, you should be ready to complete and double-check them for errors. You will have completed your taxes in ample time so as to not require an extension.
6. File your taxes. If you are due a refund, file your taxes immediately. However, if you owe taxes, you probably would want to file your taxes as close to the tax due date as possible.

Tips & Warnings

• Tax extensions are useful if you need them, but they only prolong the inevitable.