FILING A TAX EXTENSION

FILING A TAX EXTENSION

The 2011 Tax deadline is near and many are dreading filing their income taxes or dealing with the IRS.

The biggest fear for filing a tax extension are thoughts of being flagged as a late filer, being assessed penalties, or triggering an audit. Learning about filing a Tax Extension can ease these common concerns.

FILE EXTENSION

Not being able to file your taxes on time is actually not a big deal. By law, if you’re unable to meet the April tax-filing deadline, simply request a tax filing extension. Fill out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return and you can get an automatic Six-Month extension of time to file when the application is accepted. The IRS does not charge for filing an extension. Using only a partial amount of tax information, Tax Professional’s can assist by electronically filing (e-file) the Form 4868 application. It is important to know that a tax extension is an extension of time to FILE an income tax return, not an extension of time to PAY the tax due.

The Internal Revenue Service prefers that you file a complete and accurate return. A return you have to rush through, do not have all information for, or make estimates of figures for is likely to be incomplete and inaccurate. It is better to file an extension if you are approaching April 15th and you do not have all information needed or otherwise cannot file complete and accurate returns.

Filing an extension in and of itself is not going to raise any “red flags” or cause problems as long as your extension is timely filed and the tax due is paid by the April deadline. As for being audited, you are more likely to be audited if your return is incomplete, includes estimated figures, or is inaccurate.

REQUIRED ITEMS FOR FILING

To file an extension you will need your general taxpayer information, which includes your name, name of your spouse if married and filing a joint extension, your social security number, your spouse’s social security number (if applicable), and your complete address and an estimate of your total tax liability plus the total tax paid. For the estimate of the total tax liability you need to come up with your best estimate of what the tax liability is. The IRS instructions for the completion of Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return” clearly state: “Make your estimate as accurate as you can with the information you have. If we later find that the estimate was not reasonable, the extension will be null and void.” If that were to be the case, your return would be considered late. A late filed return is subject to late filing and late payment penalties and interest.
If you use a Tax Professional and you are getting your tax information to him or her just a few weeks or so before April 15th, he or she may indicate an extension will need to be filed. You are more likely to have a complete and accurate return if your tax professional is not trying to rush to make the April deadline, plus a Tax Professional can assist in calculating accurate estimates of your tax liability.

Steven Z. Freeman, CPA  provides IRS Tax Preparation Services and can assist you with any actual calculations on your Tax Returns.  To learn more about preparing your Business or Individual Tax Return or to schedule a complimentary initial consultation, Please call us at (805) 495-4211.

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