If for any reason you are unable to complete your federal tax return by April 15th,  you can apply for an extension . There are some catches, of course (it is the IRS, after all). The extension gives you extra time to file the paperwork, but you still have to pay any money that you expect to owe and send your check along with the extension request, which is Form 4868. And it all has to arrive to the IRS address for your state or region on time.

There are really a few different ways (let’s say three) for taking advantage of this extension. Read about them here, and investigate the matter for yourself, before deciding on the best option for your particular situation. If you have an involved or problematic return, you just might require more help than one of the regular services can provide. Consider consulting a CPA or tax specialist, and don’t wait until the last minute to do so.

Online and offline
The first way is by using one of the filing services, such as TurboTax or H&R Block. They have online and offline tools for figuring your tax, so that you can then apply for the extension. They will also advise you (although you can find the same information elsewhere) as to how to pay by check or credit card, and tell you about the various state extension requests, should you need one.

You can also visit, call or log on over the Internet to take advantage of the extension through what is called a ’service provider.’ The Official Payments Corporation is perhaps the best known of these providers, all of which will charge a ‘convenience fee’ that is a percentage of the tax payment you are making. Choose the service provider that suits you best, adhere to all of their instructions, pay any amount owing before April 15th and file your return by October 15th.

Go it alone
You can also just print the form out, fill it in by hand, write a check and mail it all in yourself. When you get IRS Form 4868, Application for Automatic Extension of Time to File (downloadable from the IRS, or available at banks and post offices), you should read it in its entirety and refer to online or offline information for how to complete it. When you know what to do, you will then fill out the form and mail it off to the IRS address given for your state.

If you are going to owe money on your federal taxes, you must include the payment with the form and have it postmarked by April 15th. If you do not include a payment and you do have taxes due, you will most likely have to pay penalties and interest, despite having filed for an extension. After this first step in April, you will have six months to complete and file your return, making sure it is postmarked on or by October 15th.

Be careful and attentive
Naturally, if the IRS considers your estimated tax liability to be unrealistic, or ‘unreasonable,’ they can simply disallow any extension and begin assessing penalties and adding interest to what will now be a ‘late filing.’ And if you happen to underestimate your taxes, willfully or carelessly, you’ll end up paying interest on the amount you did not remit by April 15th.

The IRS has established something of a ’sliding scale’ for smaller errors. If, for instance, you pay under 90 percent of the tax owing, you will be charged a penalty of of a percent of that underpaid sum for each and every month the balance remains unpaid. So if you send $600 on April 15th but your completed return shows you actually owe $1,000, you will be assessed percent per month on that underpaid $400 that is now considered past-due. This comes to about $2 a month, and will be accrued until the balance is marked ‘paid in full.’

Other considerations
If you are filing U.S. taxes but live outside the United States, you need a different form for requesting an extension, which is IRS Form 2350, Application for Extension of Time To File U.S. Income Tax Return.  If you think you may need special tax treatment or are unsure about your tax liability, you should refer to IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. After reading this publication, you may need to direct further, more involved questions to the IRS directly, or to your tax advisor.

Also, you should make note of the fact that state tax extension guidelines and procedures vary. For up to date, detailed information concerning state extensions, filing deadlines, interest and penalties, and mailing addresses, consult your state tax agency or head online to a tax expert’s site and do some research. The one thing you can count on is that government, at every level, will do its best to make clear what your tax responsibilities are, as the income tax is an important source of revenue.

By: Jeff Parrack1

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1040-Tax Extension will file your online tax extension with the IRS and guarantee that the IRS will accept your application. Visit us online for automatic extension on your individual tax return.

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Most of the time CPA’s and tax companies are completely slammed and don’t have time to take detailed looks at their clients statements. When you file for an extension you will be able to meet with a tax professional in a much more relaxed setting. If you don’t need a tax professional, it can allow you more time to get your tax documents in order under your own time.

To file for an extension with the IRS you will need to file IRS form 4868, which is the automatic extension form. If you owe taxes, you will also need to get a good estimate of what you owe. The IRS will still tack on interest for unpaid taxes if they are not paid by the 15th. Even if you owe taxes and cannot pay, one good thing to know is that the failure to pay penalty is only .5% per month, while the failure to file penalty is up to 5% of the amount owed per month. Filing for an extension will also allow you to get around that unfiled penalty until October 15th.

If you decide to extend your tax filing deadline, you must have your tax filing documents post marked and sent by April 15th. To ensure minimal interest charges tacked onto your tax amount, ensure you enclose a check for your best estimate of your taxes owed. You can also pay online through a credit card by using pay1040.com and officialpayments.com, for a fee of course.

For this year’s tax filing, it has become easier than ever to file for an extension. There are even companies out there that streamline this process for individuals and businesses for a small fee. Take advantage of what is offered by the IRS to save you stress and buy you more time.

To find more information on using a Filing a Tax Extension please  visit our site for more information. Find discounts for services that do express extensions in 5 minutes of your time.

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Actually i was not able to directly find a reference about extension of child tax credit on IRS website. However the following URL mentions that the child credit or dependent credit has been extended to 2009.

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Introduction

As the tax filing deadline is quickly approaching, many procrastinators and those who legitimately are just not ready to file their returns become stressed out and frantic, trying to meet what may virtually be an impossible deadline. Many would rather rush to get their returns prepared than file an extension. Common concerns include, but are not limited to, being flagged as a late filer, being assessed penalties, or being more likely to be audited. If you are one of these individuals, I hope that I can put your mind at ease and inform you of what it really means to extend your tax return and the benefits of doing so.

A few notes before getting started: This article is written assuming a tax year that is the same as the calendar year, which is the case for most individual taxpayers. If a tax deadline noted falls on a holiday or weekend, the deadline is actually the next business day. The focus of this article is on the filing of federal individual extensions except where noted otherwise. ‘Tax professional’ as opposed to ‘tax preparer’ is referred to in this article. My definition of ‘tax professional’ is someone who has extensive knowledge, education, and experience in taxation and can provide tax consultation and planning services in addition to preparing returns. Two commonly recognized credentials held by tax professionals include CPA (Certified Public Accountant) and EA (Enrolled Agent). CPAs and EAs are by no means the only tax professionals out there and not all CPAs do tax-related work.

With those preliminary notes out of the way, I will now discuss what you should know about extensions.

What is an extension?

First and foremost, it is important to know that an extension is an extension of time to file an income tax return, not an extension of time to pay the tax due. Unfortunately, many taxpayers miss the part about it not being an extension of time to pay, perhaps due to wishful thinking.

There are two federal  individual income tax extensions  that can be filed. The first extension, which is ‘automatic,’ is due by the April 15th tax deadline and is a four month extension of time to file. Thus, if you file this first ‘automatic’ extension, you will have until August 15th to file your income tax return. Your best estimate of the tax that will be due with the actual return is still due by April 15th.

As for the first extension being ‘automatic,’ that does not mean it just happens – you need to actually file the extension. There are various ways to do so which are convenient and are discussed later. The reason it is referred to as ‘automatic’ is that you do not need to provide an explanation for why you need additional time to file.

The second extension is not ‘automatic’ like the first one. If you cannot complete your returns by the August 15th first extension deadline, you can ‘apply’ for an additional two months. The second extension is considered an ‘application’ because you need to provide a good reason why you need the additional two months to file. You need to demonstrate that you made a reasonable effort to get your returns completed within the first four month extension period or that you had extenuating circumstances. If the reason is merely for your convenience, your request can be denied. If your application is denied, your return will be due immediately or within a 10-day grace period. If you did not timely file a first extension, a second extension will only be approved in cases of undue hardship.

Between the two extensions, that gives you up to  six months additional time to file  beyond the April 15th tax filing deadline. Six months is generally the maximum total time a return can be extended by law.

Why should I extend?

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 unlikely to be complete and accurate. Thus, 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.

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, do not be surprised if he or she indicates 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 15th deadline.

A few more comments for those of you who use tax professionals. If it is approaching the tax deadline and you have not yet contacted your tax professional, do not be surprised if he or she is unable to speak with you when you call his or her office. Also, do not assume that just because you used his or her services last year they will file an extension for you without you specifically requesting it. Tax professionals are very busy dealing with many clients and working long hours all of tax season and they get even busier as April 15th approaches. Moving forward, you should consider getting in contact with your tax professional’s office well in advance of the tax deadline to determine what he or she needs to file an extension, if necessary, and prepare your taxes.

In addition to having a complete and accurate return, there are certain planning opportunities that can be taken advantage of if you or your tax professional is not forced to rush through your return. One example is funding certain retirement plans such as SEPs and Keogh Plans – these can be funded for the prior year through the extended deadline of the return that falls in the current year. Some plans, such as a SEP, can actually be established for the prior year up through the extended due date of the tax return. It is important to note that traditional and Roth IRAs need to be funded by April 15th to qualify as contributions for the prior year. For more information on such planning opportunities for the year just past as well as the current and future years, you should consult with your tax professional.

What are the common concerns over extending?

As referenced earlier, many individuals are adverse to even the idea of extending due to concerns such as being ‘flagged’ as a late filer, being assessed penalties, or being more likely to be audited. 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 April 15th. As for being audited, you are more likely to be audited if your return is incomplete, includes estimated figures, or is inaccurate.

Another concern individuals have is that it will cost them more to file an extension. The IRS does not charge for  filing an extension with the IRS . Your tax professional may charge you for doing so, but the fees charged most likely will be far outweighed by the benefits of the return being complete and accurate. Incomplete and/or inaccurate returns can result in you being contacted by the IRS and generally require that an amended return be filed. Your tax professional will likely charge you for preparing an amended return. If additional tax is due, penalties and interest may be assessed. A complete and accurate return is much less likely to result in any correspondence from the IRS. Additionally, it includes an accurate tax liability, which means lower taxes or reduced penalties and interest as related to an understated tax liability. Like with many things in life, it is better to do something right the first time as there is more time, effort, and expense associated with having !

to correct something later.

Yet another reason that some individuals do not want to extend is because they are in the process of buying a new home or refinancing and their lender is requesting a copy of their tax return. Many lenders will accept a copy of an extension along with copies of documents substantiating income (W-2s, 1099s, K-1s, etc.) and copies of the prior year tax returns.

What information is needed 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. To avoid potential delays in the processing of your extension, special attention is required if any of the following apply: your name has changed due to marriage, divorce, etc.; your address has changed since you last filed a tax return; or you want to have correspondence related to your extension sent to your tax professional or otherwise. You should refer to the instructions for the extension form to properly address any of these items.

There is not much other information needed. The items needed for the tax year that the extension is for are an estimate of your total tax liability and the total tax paid. The estimate of the total tax liability is the more difficult of the two. 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.

How do I file an extension and, if applicable, pay the (estimated) tax due?

Either you or your tax professional can prepare and file your extension. The methods for filing it include e-file by phone, e-file by computer, or filing a completed paper Form 4868. Regardless of who is going to prepare and file your extension, the information discussed in the previous section will be needed. Thus, if you use a tax professional, you need to get in touch with him or her in advance of the tax deadline to ensure that he or she has that information.

E-file by phone is a very convenient option if you are going to file your own extension. The Form 4868 and its instructions can be easily downloaded from www.irs.gov. After reviewing the instructions for the form, use Form 4868 as a worksheet and then call the toll free number in the instructions. You will be prompted for the information from the completed form and given a confirmation number at the conclusion of the call. In order to e-file by phone, you must have filed a federal return for the prior tax year.

As for paying the (estimated) amount due, you can do so via electronic funds withdrawal (EFT, from a checking or savings account), credit card, or check. The EFT option can be used if you e-file by phone or e-file by computer. You will need to enter additional information when filing the extension to include AGI (Adjusted Gross Income) from your prior year tax return and the routing and account numbers for your bank account. Payment by credit card can be done via one of several service providers, each of which charge a convenience fee based on the amount of the tax payment being made. Payment by check can be made if you e-file by phone, e-file by computer, or file a paper extension form. More detail about these payment options is included in the instructions for Form 4868.

It should be noted that if you are a taxpayer that makes or should be making estimated tax payments, you should compute and timely make those payments for the current year even if you filed an extension. The federal income tax system is a ‘pay as you go’ system and if you are self-employed or otherwise have income that results in a tax liability that is not paid via withholding, you may be required to make estimated tax payments throughout the year. If you are not sure if this applies to you, it is recommended that you research this topic or consult with a tax professional.

For further information about filing a second extension, please refer to the instructions for Form 2688, ‘Application for Additional Extension of Time to File U.S. Individual Income Tax Return’ which can be easily downloaded from the IRS website as www.irs.gov.

What about state, local, and other income tax returns?

Some states will accept the federal extension while others require that you file an extension document with them. Ohio accepts the federal extension and does not require that you send them a copy of it, though you do need to send in the tax due, if applicable, by the April 15th deadline. If you live in a state with municipal or other local income taxes, you may need to file an extension with the locality (or localities) that you have a filing responsibility with. Further discussion about state and municipal filing requirements are beyond the scope of this article as they vary from state to state. Check with the respective department(s) of taxation or your tax professional for more detail. Like with the federal extension, you generally need to pay any state or local tax due at the time the extension is filed.

In Conclusion

Whether you prepare your own taxes or work with a tax professional, I hope that you have a better understanding of what an extension is, when it should be considered, and what is involved in completing and filing one. If it is close to the April 15th filing deadline and you have not finished or even started preparing your returns, you should consider  filing an extension with the irs . This will allow additional time to ensure that the returns are complete and accurate and, in turn, should reduce the stress associated with filing your taxes.

About The Author

This article may be re-published only in its entirety and the author must be given acknowledgment including full email link.

By Tiffany J. Morisue, CPA, 04/03/05
e-mail: tiffany@rrohio.com

Morisue & Associates, LLC
dba ABC Solutions
3964 Brown Park Drive, Suite A
Hilliard, Ohio 43026-1163
Ph. (614) 850-9440
Fax (614) 850-8770
www.abcsolutionsohio.com

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