No, filing a tax extension doesn’t increase your risk of being audited

The tax deadline is fast approaching and if you haven’t filed yet, you’re not alone.

But what happens if you need more time to file your tax return beyond the April 18 deadline? You can electronically request an automatic tax-filing extension.

Over the years, though, some people have claimed that filing a tax extension increases a person’s risk of being audited – that’s when the IRS reviews a person’s filings to be sure they were done accurately. But one Twitter user says that isn’t true – and filing an extension can actually decrease the chance of an audit. 

THE QUESTION

Does filing a tax extension increase your risk of being audited?

THE SOURCES

• Internal Revenue Service (IRS)
• Howard Gleckman, senior fellow at the Tax Policy Center
• Mark Steber, chief tax information officer at Jackson Hewitt Tax Service

THE ANSWER

No, filing a tax extension doesn’t increase your risk of being audited. 

WHAT WE FOUND

About 1 in 10 tax filers get extensions each year for a variety of reasons, a spokesperson for the Internal Revenue Service (IRS) told VERIFY. Some people are missing a key piece of information, like a W-2 or 1099 form, when they need to file their return. 

You don’t need a reason to file an extension, as they are available on a “no-excuse basis,” the IRS spokesperson said. If you qualify and file for an extension, you get one automatically. 

But will filing that extension increase your risk of being audited? The IRS says “that’s one of the oldest urban myths in the books.”

The IRS looks at what people report on their tax returns and isn’t concerned with when a taxpayer files, whether it’s before the deadline, on time or after. 

Other tax professionals agree. 

Howard Gleckman, who is a senior fellow at the Tax Policy Center, said filing for an extension doesn’t make any difference at all in your audit risk.

Mark Steber, chief tax information officer at Jackson Hewitt, said the urban legends about an increased audit risk for those who have filed tax extensions “could not be more untrue.”

“There is no data. There is no official position. There's no correspondence, there's no relational factoid that you can point to that indicates time of filing with IRS audit…ratio or risk or percentage,” Steber said. 

Though it can happen to anyone, many people who are audited are high income earners, Steber said. Other flags for an audit include failure to report income from self-employment, cash or cryptocurrency, among other sources. 

There is one major misconception about filing for a tax extension. It doesn’t give you more time to pay taxes you owe without incurring late fees. Those who get an extension should still estimate and pay any owed taxes by the April 18 deadline to avoid possible penalties, the IRS says.

Taxpayers must also file their extension request no later than the regular due date of their return. 

Steber says there’s “no real taxpayer benefit” in the extension process, other than giving people more time to file their paperwork. 

Whether you file on time or ask for an extension, the IRS says the best thing you can do to avoid an audit is file a return that’s correct and complete.