No need to file a tax extension form?

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Topic Author
AQ
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No need to file a tax extension form?

Post by AQ » Sat Apr 13, 2019 6:28 pm

For the first time I am unable to finish my tax return on time, so I spent some time to figure out how to file a tax extension form. But I found there is no benefit to file an extension form per se. Is the following reasoning correct?

1. If I am own a tax refund, IRS won't charge me a penalty simply because I file my tax return late.
2. If I am due some tax payments, IRS will charge me interests, as well as underpayment penalty anyway. IRS won't reduce them because I file an extension. (I did my best to estimate my tax liabilities, and paid estimated taxes already through eftps. But there is a small chance I underestimated though I don't plan to simply overpay to avoid a potential penalty)

So what is to gain by filing a tax extension form? What did I miss?

p.s. I am using TurboTax desktop version to prepare my tax. I was surprised Turbotax asked me to print and mail a form without an electronic version.. Probably I missed something here as well.

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dodecahedron
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Re: No need to file a tax extension form?

Post by dodecahedron » Sat Apr 13, 2019 6:35 pm

AQ wrote:
Sat Apr 13, 2019 6:28 pm
For the first time I am unable to finish my tax return on time, so I spent some time to figure out how to file a tax extension form. But I found there is no benefit to file an extension form per se. Is the following reasoning correct?

1. If I am own a tax refund, IRS won't charge me a penalty simply because I file my tax return late.
2. If I am due some tax payments, IRS will charge me interests, as well as underpayment penalty anyway. IRS won't reduce them because I file an extension. (I did my best to estimate my tax liabilities, and paid estimated taxes already through eftps. But there is a small chance I underestimated though I don't plan to simply overpay to avoid a potential penalty)

So what is to gain by filing a tax extension form? What did I miss?

p.s. I am using TurboTax desktop version to prepare my tax. I was surprised Turbotax asked me to print and mail a form without an electronic version.. Probably I missed something here as well.
What you missed is that there are two separate penalties: failure to pay on time and failure to file on time. Both penalties are a percentage of the balance due, so you are correct that they are both zero if you have a refund coming to you. However, if you have a balance due to the IRS, the failure to file penalty is 5% of the balance due per month, (up to a maximum of 25% after five months) and you can avoid that by filing the extension.

If you file an extension but do not pay your balance due with the extension, you will still owe the penalty for failure to pay on time plus interest on the late payment, which is roughly 1% per month, but that pales next to the failure to file penalty, which you can easily avoid by filing for the extension.
Last edited by dodecahedron on Sat Apr 13, 2019 8:20 pm, edited 1 time in total.

Trader Joe
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Re: No need to file a tax extension form?

Post by Trader Joe » Sat Apr 13, 2019 7:25 pm

AQ wrote:
Sat Apr 13, 2019 6:28 pm
For the first time I am unable to finish my tax return on time, so I spent some time to figure out how to file a tax extension form. But I found there is no benefit to file an extension form per se. Is the following reasoning correct?

1. If I am own a tax refund, IRS won't charge me a penalty simply because I file my tax return late.
2. If I am due some tax payments, IRS will charge me interests, as well as underpayment penalty anyway. IRS won't reduce them because I file an extension. (I did my best to estimate my tax liabilities, and paid estimated taxes already through eftps. But there is a small chance I underestimated though I don't plan to simply overpay to avoid a potential penalty)

So what is to gain by filing a tax extension form? What did I miss?

p.s. I am using TurboTax desktop version to prepare my tax. I was surprised Turbotax asked me to print and mail a form without an electronic version.. Probably I missed something here as well.
File the extension if you will miss the deadline.

J295
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Re: No need to file a tax extension form?

Post by J295 » Sat Apr 13, 2019 8:00 pm

If you owe the IRS and state and don't file for an extension (as noted by other response) you will not only have late payment penalties and interest, but also failure to file penalties. Two separate items. File the extensions (check to see if one is required by your state).

spectec
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Re: No need to file a tax extension form?

Post by spectec » Sat Apr 13, 2019 10:24 pm

I agree completely with the well-written advice above. A third possible complication exists even if you are due a refund and file to file an extension. It is true that IRS will not assess the Failure to File penalty since you have a refund coming. However, the return is still logged as "late-filed". If you are later audited for some unrelated reason and IRS determines that you initially owed tax, they will assess the Failure to File penalty (usually maxed out) as a normal part of the final audit computation.

Bottom line is that the extension is so easy to prepare and approval is virtually automatic, there is absolutely no excuse to skip filing the extension in any circumstance. And don't forget to check out your state's extension rules - they aren't necessarily the same as the Federal.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

jacoavlu
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Re: No need to file a tax extension form?

Post by jacoavlu » Sun Apr 14, 2019 8:36 am

I believe if you have tax due and make a payment electronically via IRS Direct Pay or EFTPS and apply the payment to an extension, that’s all you have to do. No paper form to send in, and no additional form to e-file.

https://www.irs.gov/taxtopics/tc304

If you think you will get a refund, you could just pay $1.

ivk5
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Re: No need to file a tax extension form?

Post by ivk5 » Sun Apr 14, 2019 8:51 am

jacoavlu wrote:
Sun Apr 14, 2019 8:36 am
I believe if you have tax due and make a payment electronically via IRS Direct Pay or EFTPS and apply the payment to an extension, that’s all you have to do. No paper form to send in, and no additional form to e-file.

https://www.irs.gov/taxtopics/tc304

If you think you will get a refund, you could just pay $1.
^ this is what I do. You could have gotten it done faster than posting this thread.

Katietsu
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Re: No need to file a tax extension form?

Post by Katietsu » Sun Apr 14, 2019 9:14 am

TurboTax Easy Extension would have taken you less time than posting the question here.

nexesn
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Re: No need to file a tax extension form?

Post by nexesn » Sun Apr 14, 2019 9:22 am

ivk5 wrote:
Sun Apr 14, 2019 8:51 am
jacoavlu wrote:
Sun Apr 14, 2019 8:36 am
I believe if you have tax due and make a payment electronically via IRS Direct Pay or EFTPS and apply the payment to an extension, that’s all you have to do. No paper form to send in, and no additional form to e-file.

https://www.irs.gov/taxtopics/tc304

If you think you will get a refund, you could just pay $1.
^ this is what I do. You could have gotten it done faster than posting this thread.
Katietsu wrote:
Sun Apr 14, 2019 9:14 am
TurboTax Easy Extension would have taken you less time than posting the question here.


I believe the OP was just asking a general question. Not asking how they can file an extension differently than mailing an extension form. :beer

ivk5
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Re: No need to file a tax extension form?

Post by ivk5 » Sun Apr 14, 2019 9:37 am

nexesn wrote:
Sun Apr 14, 2019 9:22 am
I believe the OP was just asking a general question. Not asking how they can file an extension differently than mailing an extension form. :beer
The "how" responses seem responsive to at least the PS in the OP, if not the "so I spent some time to figure out how" comment. :sharebeer

livesoft
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Re: No need to file a tax extension form?

Post by livesoft » Sun Apr 14, 2019 9:45 am

Clearly, those folks with bank accounts who mail in an extension or file it electronically via TurboTax are not the sharpest tool in the shed (Smash Mouth, "All Star") since the IRS makes DirectPay trivially easy and free.
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Topic Author
AQ
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Re: No need to file a tax extension form?

Post by AQ » Sun Apr 14, 2019 12:03 pm

Thanks for all the responses!

Actually I have been paying quarterly estimated payments, and the latest payment was made last January. Some have suggested as long as I'm using EFTPS, then I'm already got an automatic extension? Is this understanding correct?

jacoavlu
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Re: No need to file a tax extension form?

Post by jacoavlu » Sun Apr 14, 2019 12:22 pm

^^

No. The payment needs to be applied to form 4868.

Topic Author
AQ
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Re: No need to file a tax extension form?

Post by AQ » Sun Apr 14, 2019 12:31 pm

jacoavlu wrote:
Sun Apr 14, 2019 12:22 pm
^^

No. The payment needs to be applied to form 4868.
I log in to EFTPS now, but couldn't find form 4868 there? Did a search on the site and returned an error message :(

ivk5
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Re: No need to file a tax extension form?

Post by ivk5 » Sun Apr 14, 2019 12:47 pm

You need to select 1040 and then tag as extension payment rather than estimated payment in the drop down.

Topic Author
AQ
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Re: No need to file a tax extension form?

Post by AQ » Sun Apr 14, 2019 12:52 pm

ivk5 wrote:
Sun Apr 14, 2019 12:47 pm
You need to select 1040 and then tag as extension payment rather than estimated payment in the drop down.
Get it. Thanks very much!

Topic Author
AQ
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Re: No need to file a tax extension form?

Post by AQ » Sun Apr 14, 2019 12:54 pm

Now I filed an extension by making a payment through EFTPS, do I expect an approval notice from IRS? Or more importantly, is there anything I need to use when I file my tax later? Or just file my tax like a regular tax filing?

jebmke
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Re: No need to file a tax extension form?

Post by jebmke » Sun Apr 14, 2019 1:04 pm

AQ wrote:
Sun Apr 14, 2019 12:54 pm
Now I filed an extension by making a payment through EFTPS, do I expect an approval notice from IRS? Or more importantly, is there anything I need to use when I file my tax later? Or just file my tax like a regular tax filing?
You will get nothing from the IRS; nor would you if you filed for an extension with a paper form.

Just file your return normally when you are ready. The due date is October 15.
When you discover that you are riding a dead horse, the best strategy is to dismount.

ivk5
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Re: No need to file a tax extension form?

Post by ivk5 » Sun Apr 14, 2019 1:15 pm

AQ wrote:
Sun Apr 14, 2019 12:52 pm
ivk5 wrote:
Sun Apr 14, 2019 12:47 pm
You need to select 1040 and then tag as extension payment rather than estimated payment in the drop down.
Get it. Thanks very much!
:sharebeer

livesoft
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Re: No need to file a tax extension form?

Post by livesoft » Sun Apr 14, 2019 1:19 pm

Did you read the Instructions for Form 4868 and the part about using EFTPS?
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Greenman72
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Re: No need to file a tax extension form?

Post by Greenman72 » Sun Apr 14, 2019 1:24 pm

You’re right. If you don’t owe, there’s no penalty.

But how do you know you don’t owe? You haven’t finished your return.

Think of Filing a 4868 as your insurance. That insures you against having to pay the 5% per month penalty. And it’s free. There’s no reason NOT to do it.

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obafgkm
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Re: No need to file a tax extension form?

Post by obafgkm » Sun Apr 14, 2019 1:32 pm

Somewhat related questions:

If I want to get some paper I Savings Bonds (and I would otherwise not be getting any refund), is it okay to request an extension as early as January, send in a deliberate overpayment, and then file a 1040 by April 15 anyway and get the refund in bonds?

Is there any reason the Internal Revenue Service would have a problem with this? It seems a bit like gaming the system.

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nisiprius
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Re: No need to file a tax extension form?

Post by nisiprius » Sun Apr 14, 2019 8:35 pm

The extension doesn't give you any extra time to pay. It's not a free way to defer taxes.

What the extension does is let you pay based on a good-faith guesstimate, perhaps with a decent safety margin to make sure the errors are on the side of overpayment. And then it takes all the pressure off to finish all the detail work. It doesn't give you more time to pay, but it does give you months and months to deal with things like "oops, I lost the 1099, now I have to ask them to mail me a new one which might take a week or so." Or not receiving some darned K1 until April 14th.

P.S. I swear I wrote the above words, based on my personal experience, without even noticing the subject line. Someone in the forum actually did receive a K1 on April 14th.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Topic Author
AQ
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Re: No need to file a tax extension form?

Post by AQ » Sun Apr 14, 2019 11:31 pm

nisiprius wrote:
Sun Apr 14, 2019 8:35 pm

P.S. I swear I wrote the above words, based on my personal experience, without even noticing the subject line. Someone in the forum actually did receive a K1 on April 14th.
I believe you :-) I couldn't do it on time because an expected K-1 has not arrived yet. I suppose no legal requirements on the delivery time of K-1 like for 1099, W-2 form?

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desertbandit442
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Re: No need to file a tax extension form?

Post by desertbandit442 » Mon Apr 15, 2019 4:20 am

AQ wrote:
Sun Apr 14, 2019 11:31 pm
nisiprius wrote:
Sun Apr 14, 2019 8:35 pm

P.S. I swear I wrote the above words, based on my personal experience, without even noticing the subject line. Someone in the forum actually did receive a K1 on April 14th.
I believe you :-) I couldn't do it on time because an expected K-1 has not arrived yet. I suppose no legal requirements on the delivery time of K-1 like for 1099, W-2 form?
Yes there is a requirement for issuance of a K-1. For example, an S-Corp is required to file their business tax return by March 15 and issue the K-1s by then. Unless the S-Corp files an extension, then their business filings and K-1s are due by September 15. This is always my personal income tax situation as the S-Corp always files an extension, so we have to file an extension because we don’t get our K-1 until September 15 every year. So yes there is a time requirement for the Corp to issue a K-1 to their shareholders either by March 15 unless they get an extension until September 15.

Besides quarterly estimated payments, yesterday I went online to irs.gov and made an extension payment for 2018 taxes and the extension is automatic if you do it that way.

TropikThunder
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Re: No need to file a tax extension form?

Post by TropikThunder » Mon Apr 15, 2019 5:05 am

FYI, you don't specifically have to use EFTPS to make the extension-granting payment. You can use Direct Pay or their credit/debit card portal. I used Direct Pay since it takes a few days to get your PIN in the mail for EFTPS. I think these methods are better than mailing a paper form certainly, since you get a confirmation number. I've never filed for an extension via Turbo Tax etc so I don't know if they give you a confirmation number or confirm that the IRS received the extension request (I've used TT and HR Block, just never for an extension before).
You can also get an extension by paying all or part of your estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. This way you won’t have to file a separate extension form and you will receive a confirmation number for your records.
https://www.irs.gov/forms-pubs/extensio ... tax-return

IMO
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Re: No need to file a tax extension form?

Post by IMO » Mon Apr 15, 2019 9:11 am

I habitualy file late, sometimes very late beyond the extension date. To my knowledge since i was always definitively owed a refund, ive never been penalized and never filed extension form 4868.

This year since i owed a little, per 4868 instructions i made an eletronic payment of tax due via one of the official payment sites and that appears to be all that is required.

BE ADVISED, per the form 4868, the IRS does NOT accecpt check payments for over 100 MILLION dollars. If you owe over that you MUST submit 2 checks each under 100 million dollars. I SWEAR that comes from the official form / instructions. Just fyi.

ivk5
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Re: No need to file a tax extension form?

Post by ivk5 » Mon Apr 15, 2019 9:32 am

IMO wrote:
Mon Apr 15, 2019 9:11 am
If you owe over that you MUST submit 2 checks each under 100 million dollars.
Not necessarily. If you owe over 200M, you will need more than 2 checks.

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