Sure, I know you’re thinking filing a tax extension or amended return couldn’t really be ‘fun’, but it can be profitable. I can think of at least two reasons why.
Making Estimated Tax Payments with a big refund to meet Credit Card spend
First, read this blog from The Wealthy Accountant: http://wealthyaccountant.com/2017/05/05/the-ultimate-credit-card-rewards-hack/
In his blog he talks about how even W-2 wage earners can enter an ‘Exempt’ status on their W-4 and make estimated tax payments if you plan to have no tax liability. You can meet this qualification when you make your estimated payments on time (to avoid the penalty) and you plan to have no taxes due by Jan 15th of the following year, meaning you pay your estimated taxes to meet your full tax liability. The ‘profit’ part comes in when you use a credit card to make your estimated tax payments to earn CB on your Citi Double Cash or other rewards credit card and earn a small profit after the processor fees. Even better, if you itemize you can receive a deduction for your processor fees for filing taxes.
The ‘fun’ part with the real benefit is the ability to file an extension (make sure you meet your tax liability by Jan 15 for your last quarter or you will get a penalty). You can time a large overpayment during the following year before the Oct 15th extension deadline to coincide with meeting minimum spend on a credit card signup bonus or two. At that time, you file your extended return and within two weeks should receive your overpayment from the IRS in plenty of time to pay your credit card. I would warn not to go too crazy with your overpayment at the risk of the IRS’ wrath (nobody wants that), but there is no penalty or set maximum to the overpayment you can make. A couple thousand overpayment shouldn’t be a big deal. Meet your credit card minimum spend for your signup bonus for fun and profit.
Filing An Extension for Backdoor Roth IRA Horse Race
With credit to therivler1 in his thread Roth IRA Horse Race, you can convert from a Traditional IRA to a Roth IRA with the option of undoing the conversion before you file your tax return. This strategy is best used when you start your conversion from your IRA to multiple empty Roth IRA accounts in January of year 1. You then recharacterize the ‘losers’ of your Roth accounts back to your Traditional IRA before October 15th of year 2 when you file your extended return. You keep your best conversion ‘horse’ in your Roth and pay no taxes on your gains. Any losses you recharacterize back to your Traditional IRA are shared with Uncle Sam when you go to withdraw after retirement.