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Courtesy of Jackie Lam
- Because I got a tax extension, I was able to work more closely with my CPA and go over all my questions.
- I didn't have to scramble to find all my documents and had more time to check my bookkeeping.
- When I got my refund, I was able to use the money to cover my taxes for the next year.
I usually pride myself on staying on top of my tax returns and filing on time. However, last year, life got super busy, and I fell behind on all things financial housekeeping. It was the first time I had to request a tax extension and file in the fall. There turned out to be some advantages to waiting.
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Filing late meant more attention from my CPA
As a former DIY tax filer, I've since gone from using TurboTax to working with a tax professional. And with the luxury working one-on-one with an experienced CPA comes higher expenses for tax preparation services. Those extra months to save made a difference, and I was able to shore up funds to pay for both my corporate and individual tax returns.
While my tax person was still fairly busy with handling late filers, we had more time to chat, go over any questions I had, and make sure I didn't miss out on any deductions. I was working with a new tax professional, and in turn there was more back-and-forth for her to fully understand my situation. Plus, we spent a fair amount of time going over tax deductions for self-employed folks. My CPA clued me in on some I wasn't aware I qualified for.
I had more time to gather my documents
This might go without saying, but having those extra months to gather my various documents to file my tax returns — think 1099s, retirement contribution statements, and bank documents — made a big difference.
At times, prepping for tax season can feel like a scramble. And since I work with a tax professional, they usually require that I submit all my financial statements and tax documents well before the mid-April deadline.
Because I had until the fall, I made sure I had everything I needed for an accurate and smooth filing. Plus, I was able to check my bookkeeping records for any mistakes. As I do my own bookkeeping, it was super important that I double-checked my transactions and reconciled my accounts to make sure everything was in good order.
I received a surprise refund later in the year
I rarely get much of a refund. In fact, I usually need to pay quarterly estimated tax returns, plus I usually owe state and federal returns each year. But last year, I received a hefty refund.
This was probably because there were more tax credits, relief payments, and stimulus checks, which didn't need to be reported on a federal tax return. Coupled with new self-employed tax deductions and other changes in my financial situation, that meant I was due for a higher-than-usual check from Uncle Sam. I decided to use that "bonus" money toward my savings and a tax savings account, which helps cover my annual franchise tax fee and estimated quarterly taxes.
While I don't recommend doing anything last-minute or late, filing my tax returns in mid-October last year did have some unexpected perks. Ironically, because I live in California and reside in a part of the state that was affected by the severe winter storms, I'll automatically receive an extension until October for 2023. I hope others might be able to take advantage of the extra time and enjoy the lesser-known perks.