3 Reasons Why You May Want to File Your Taxes Late

File your taxes late? Yes, some tax rules are made to be broken. The rule I am talking about is filing your taxes by April 15th. Some people can prosper by not filing timely. Here is #2 of 3 of those situations:

1. Roth IRA Conversion: If you are making a Roth IRA conversion, filing an extension can juice returns. The rules allow taxpayers to reverse their conversion until October 15th, either with an extension or an amended return.  All taxpayers qualify for an automatic 6 month extension (From 4868) but it is not an extension of payment. If you owe tax and don’t pay it, the current rate of interest (4%) will be charged from April 15th till paid.

2. Multiple Roth IRA Conversion: Many taxpayers are setting up multiple Roth Conversion accounts in early January with a separate account for each asset class, and then waiting the maximum 22 months (until October 15th of the following year) to see which assets have prospered and which haven’t. They plan to undo the conversions for each account that declines in value (called a re characterization) after conversion so that they don’t have to pay tax on the higher value.

3. Homebuyers: Home buyers who haven’t completed their purchases but plan to take one of the two federal tax credits that they qualify for -one for first time buyers and the other for repeat buyers.

All taxpayers qualify for an automatic 6 month extension (From 4868) but it is not an extension of payment. If you owe tax and don’t pay it, the current rate of interest (4%) will be charged from April 15th till paid.

About the author

Fern Alix LaRocca CFP® EA

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