No time to file? Here’s what to know about getting an extension – Daily News

on Apr11
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When it comes to taxes, most will gather up receipts and financial statements ahead of time in order to meet the April 15 filing deadline, removing that stress quickly from their lives.

But it’s not always that easy. Some taxpayers — owing to displaced documents, time constraints, procrastination or the sheer complexity of their financial situation — can’t pull it together in time. So they file for an extension.

Here are some things to keep in mind before you seek an extension:

The Internal Revenue Service allows taxpayers to file for a six-month extension for any reason as long as they submit the proper form in time. Form 4868 can be filed either electronically or on paper by the April deadline. But getting it in on time doesn’t mean late filers have more time to pay. The money owed — or at least the best estimate of what’s owed — still must be paid by April 15.

And anything owed after the deadline is subject to interest and a late-payment penalty — even with an extension. Filers can catch a break on the late-payment penalty this year if they’ve paid at least 80 percent of their actual tax liability by the April deadline, then pay the rest with the tax return, according to NerdWallet.

Once the extension is approved, filers have until Oct. 15 to complete the tax return. If a refund is expected, it won’t be processed until the tax filing is complete.

So, what’s the big advantage to an extension? There’s a lot less stress involved. It also gives filers time to thoroughly review returns and ensure they’re taking advantage of all the tax benefits available.

Regardless of which option you choose, one thing is certain — tax laws and regulations have become increasingly complex.

“It’s very difficult, and I’ve been doing this for 27 years,” said Todd Schaus, a certified public accountant who has his own practice in Tustin. “This last round of new laws that went into effect in 2018 under the Trump administration are very complicated, even for someone with as much experience as I have.”

Schaus deals primarily with wealthy clients and many of them have financial information that “straggles forward,” meaning it’s not readily available by the April 15 deadline.

Information needed for the K1 tax form is a prime example.

“That’s pass-through information on a partnership or S Corp,” Schaus said. “If you own 50 percent of a pizza business, the information on the K1 form will tell you what percentage of the profit or loss you earned. Some of that information doesn’t come until the summer.”

State and federal tax laws are constantly changing, and keeping up with the revisions isn’t easy, according to Schaus.

“There were a lot of changes this year and the interpretation of these laws is still being debated,” he said. “What the law says doesn’t answer all of the detailed circumstances that can come up with any one business.”

Schaus said about 80 percent of most taxpayers tend to file on time while 20 percent seek extensions. Among his wealthier clients, the split is closer to 50/50.

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