Filing For Extension?

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jimcrawford01
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Filing For Extension?

Post by jimcrawford01 »

I am uncertain that I can complete my taxes prior to APR for Tax year 2016.

If I file for an extension and subsequently succeed in being able to file normally, can I go ahead and file normally, even though I filed for the extension?

Also, I paid estimated tax in the amount of 2015 tax for the safe harbor provision. Can I assume that the safe harbor applies to extensions?

Thanks.
jebmke
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Re: Filing For Extension?

Post by jebmke »

jimcrawford01 wrote:I am uncertain that I can complete my taxes prior to APR for Tax year 2016.

If I file for an extension and subsequently succeed in being able to file normally, can I go ahead and file normally, even though I filed for the extension?

Also, I paid estimated tax in the amount of 2015 tax for the safe harbor provision. Can I assume that the safe harbor applies to extensions?

Thanks.
Yes, you can file any time between now and October; the extension merely advises the IRS of your intention to wait.

When you file for an extension and delay filing until after the April 18 deadline, you are responsible for making full payment by April 18. Any shortfall will start the meter running on interest and possibly a penalty. Thus, the extension is an extension of time to file, not time to pay.
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HueyLD
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Re: Filing For Extension?

Post by HueyLD »

A late payment penalty applies if you didn't pay additional taxes owed by April 18, 2017. The late payment penalty is 0.5% of the balance due per month, up to a maximum of 25%.

The late payment penalty applies with or without extension. In addition, interest accrues on any unpaid tax from the due date of the return until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent.
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nisiprius
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Re: Filing For Extension?

Post by nisiprius »

I'm not a tax expert, this is not tax advice. I'm looking at the two tax forms I think are involved:
Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return and
Form 1040, US Individual Income Tax Return

On the form for filing for an extension, form 4686, you need to estimate how much you owe in taxes, and pay it when you file. It gives you more time to finish the paperwork, not more time to pay.

You then follow up with the final tax filing. On your main tax form--line 70 on Form 1040 there's a line, "Amount paid with request for extension to file." That is included in the total taxes you've paid. If your estimate on form 4686 was exactly right, your "amount you owe" will be zero. If you overestimated on form 4686, you end up with a refund. If you underestimated on form 4686, you have to pay more, and depending on the rules and details, you might need to pay late interest and penalties: "The late payment penalty is usually 1⁄2 of 1% of any tax (other than estimated tax) not paid by April 18, 2017."

The instructions for form 4686 say: "You can file your tax return any time before the extension expires." To me, just reading that, that means you don't need to wait until after April 18th. You could file for an extension and then file your 1040 whenever you get it done, even if it happens to be before April 18th after all. Personally, if I were in your situation, and ended up finishing my taxes before April 18th, I'd call 800-829-1040 and ask them, just to be sure.

I think the automatic extension of time to file is great. I don't know why people get frantic if they can't quite make the deadline.
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Epsilon Delta
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Re: Filing For Extension?

Post by Epsilon Delta »

I routinely file for an extension, because I expect certain information I need to complete my return to be delayed. Some years I have received all the information to file by April 15th and have done so. I have never heard a word of complaint from the IRS.
pshonore
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Re: Filing For Extension?

Post by pshonore »

You can use most software (Turbo Tax as an example) to file the extension and schedule any necessary payment. You do need a good estimate of tax liability though.
livesoft
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Re: Filing For Extension?

Post by livesoft »

jimcrawford01 wrote:I am uncertain that I can complete my taxes prior to APR for Tax year 2016.

If I file for an extension and subsequently succeed in being able to file normally, can I go ahead and file normally, even though I filed for the extension?
Absolutely, yes.

Also, I paid estimated tax in the amount of 2015 tax for the safe harbor provision. Can I assume that the safe harbor applies to extensions?
Yes, if you overpaid your tax owed. No, if you did not overpay your tax owed. That is, one must pay all taxes due on/before April 18, 2017 even if one files for an extension and it later turns out one gets a refund. If one owes more taxes for 2016 because they did not pay all the taxes owed for 2016 by April 18, 2017, then there will be an underpayment penalty to deal with.


Thanks.
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jebmke
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Re: Filing For Extension?

Post by jebmke »

nisiprius wrote:I think the automatic extension of time to file is great. I don't know why people get frantic if they can't quite make the deadline.
I had to delay filing until January of the following year once. The IRS approved a second extension. They are pretty reasonable if you have a compelling reason and you are current with payments.
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MarkNYC
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Re: Filing For Extension?

Post by MarkNYC »

If a federal extension is filed and tax is due with the eventual filing of the tax return after April 15th (18th this year), the late payment penalty of 0.5% per month will be charged on the additional tax due unless there is reasonable cause for failure to pay enough tax by April 15th. The taxpayer will be deemed to have reasonable cause if:

1. At least 90% of the total tax is paid by April 15th
2. The balance of tax due is paid in full with the filing of the tax return.

So, assuming a timely-filed extension, if at least 90% of tax is paid-in by 4/15, there will not be a federal late payment penalty on any additional tax owed, only interest. States have their own rules regarding the late payment penalty.
rudycreat
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Re: Filing For Extension?

Post by rudycreat »

Glad to find this post.

I have this question as well, but my situation is a bit complicated.

Long story short: I used TurboTax to file 4868 for an extension, but I believe that the TurboTax estimate is wrong. I pretty much know I don't owe any fed tax, I don't know about the state tax. How do I make sure that I pay owed state tax (if any) before finally filing? Is there a way that I deposit a few hundreds somewhere and let IRS deduct whatever?

Long story long: To begin with, I changed my residency status in 2016 (J1 to H1B), and had a hard time figuring out whether I file 1040NR or 1040 for 2016. I'm a dual-status in 2016. In my understanding, by defaut I file 1040NR. But given that I will pass the substantial presence test in May 2017, I can opt in for first-year choice to file 1040 for 2016.

It's complicated enough that my old HR (my J1), my new HR (my H1B), tax software hotline, forum posts all say different things regarding whether I file 1040NR or 1040. I called IRS, and after several calls they told me they were not responsible to tell me about my residency status, and I should hire professionals.

The thing is that I'm single, and it should make no difference regardless (because 1040 gives some benefits only for joint filing). I have no standard deductions regardless (dual-status has no deductions), so in principle it should not matter at all.

However, the major difference if I understand correctly is that 1040NR is supported only by a very few online preparers (I only know Glacier and Sprintax), and their estimates vary:
- I use Glacier (provided by work for free), and it estimates that I have $2600 fed tax refund (no mention of state).
- I use Sprintax (partnered with TurboTax), and it estimates that I have $3000 fed tax refund but owe $300 state tax.
- I use TurboTax (as if I filed 1040), and it estimates that I have $3500 fed tax refund but owe $250 state tax.

Eventually, I used TurboTax (which only handles 1040) to file 4868 for an extension.

I actually have no idea why I'm going through all these troubles to file tax. I only have two W-2, one 1099INT for $300 bonus that I got when I opened a bank acc, and no property or whatsoever. IRS knows better how much I paid/ owed, and it's like I'm painfully finding a way to figure out that exactly number IRS already knows....

Tax Newbie :(
Silk McCue
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Re: Filing For Extension?

Post by Silk McCue »

Rudycreat, You would have been better served by creating a new post with a title that matches your unique situation. This post was last used February 24th. It sounds to me like you are a prime candidate for hiring a professional to do your taxes this year. The IRS doesn't tell you how much you owe, you tell them and then they tell if you are right with silence or wrong with a thick envelope of instructions. BTW, I hate receiving unexpected thick envelopes from the IRS.
livesoft
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Re: Filing For Extension?

Post by livesoft »

One doesn't need to use tax software to file taxes and certainly not to fill out and mail in form 4868 to get an extension. I saw that hr block wanted $20 to send an extension which costs less than a 50 cent stamp on an envelope.

But one does need to read the instructions to fill out tax forms.
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pshonore
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Re: Filing For Extension?

Post by pshonore »

Note if you efile the extension (free at Turbotax), you will need last years AGI or the IRS will reject it. DAMHIKT. And they ask for both the filer and spouse AGI for MFJ status. Use the same AGI for both if you filed MFJ last year.
rudycreat
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Re: Filing For Extension?

Post by rudycreat »

pshonore wrote:Note if you efile the extension (free at Turbotax), you will need last years AGI or the IRS will reject it. DAMHIKT. And they ask for both the filer and spouse AGI for MFJ status. Use the same AGI for both if you filed MFJ last year.
I tried to efile the extension through a website found on IRS web, and they required AGI that I did not have (I couldn't find the 1040NR from last year). Then I turned to Turbotax, and the 4868 was straightforward, almost 2 clicks away. Sent it, and TurboTax later sent a notification saying that 4868 was accepted and I have until Oct to file it. Not sure if TurboTax's extension is legit though.
rudycreat
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Re: Filing For Extension?

Post by rudycreat »

Silk McCue wrote:Rudycreat, You would have been better served by creating a new post with a title that matches your unique situation. This post was last used February 24th. It sounds to me like you are a prime candidate for hiring a professional to do your taxes this year. The IRS doesn't tell you how much you owe, you tell them and then they tell if you are right with silence or wrong with a thick envelope of instructions. BTW, I hate receiving unexpected thick envelopes from the IRS.
Thanks, will do it.

In the ideal world, I'd have preferred that IRS tells me how much I owe, then I tell them if it's correct. If not, I'll send in the tax forms, and that is it.
But I know, it's not how it works : (
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