Announcement

Extension - Extra Time to File Your Tax Return

The first thing to know about an extension is that it is an extension of time to file your tax return vs. an extension of time to pay any tax that is due. There is no free extension of time to pay the tax due (otherwise we'd all do it!). The second thing to know about extensions is that it makes your tax preparation fee increase.

When we file an extension for you, we must use best information provided by you to estimate your tax due, so you can pay any 2016 tax due with the extension Form 4868 which is due no later than April 18, 2017. This generally means more or less preparing your tax return twice, once with the estimated information and again with final information, which means more time and a higher preparation fee. Therefore best to avoid extensions if possible.

The IRS will grant a six month extension to October 16, 2017 for personal tax returns without needing any specific reason. Extensions of time to file are useful in situations where you know most of your information, but haven't received all your documents in time to file a complete and accurate tax return. For example, you may be waiting on a slow K-1 or corrected investment income Form 1099. Better to file an extension rather than file an incorrect tax return which would need to be amended later.

Four choices on next steps if you need an extension: In all cases, the extension must be filed by April 18,2017. For #1, #2, and #3, the time we incur to prepare the estimate and extension doesn't necessarily carry well into the final tax return. At this point in the tax season, we are really short on time, so we prepare the estimate for the extension with broad strokes and encourage you to buffer the amount you are going to pay. Any underpayment will be subject to .5% per month penalty plus 4% interest and you will get any overpayment back when we file the actual tax return. However, filing the extension timely, with or without payment, allows you to avoid failure-to-file penalties.

We circle back to work on extended tax returns in June. We have to turn to business quarterly tax returns the latter half of April, then we take a bit of time off, then we're back at it second half of May.


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