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SnakebyteXX
04-12-2005, 11:55 AM
By Mary Dalrymple, AP Tax Writer | April 12, 2005

WASHINGTON -- Like your grade school teacher, the Internal Revenue Service won't believe the dog ate your homework -- or your tax return. But harried taxpayers can get another four months beyond Friday's April 15 deadline for getting their returns in.

Almost 9 million people are expected to file for automatic extensions, a step that can be taken with a phone call, a few mouse clicks or a single piece of paper.

The reprieve does not give taxpayers more time to pay any money owed. Anyone who requests an extension must estimate the taxes due and enclose a check or authorize an electronic bank withdrawal. The extension will be voided if the IRS finds the estimate to be unreasonable.

Although the extension form is short, that can be a little deceptive, said Kathy Burlison, director of tax implementation at H&R Block. Calculating an estimate of taxes due forces many taxpayers to fill out most of their return.

"By the time you do the work to figure out the information on the extension, you might as well do your taxes," she said.

The IRS expects about 40 million taxpayers to reach the same conclusion and make a last dash this week to beat the deadline. Tax professionals warn procrastinators to be careful and avoid simple errors that can slow a refund or cause an electronically filed tax return to be rejected.

"Sit down and take another good look at it, from a checking point of view, and you'll avoid lots of delays," said Michael Lister, chief executive officer of Jackson Hewitt Tax Service. "You don't have to feel bad about it because you're in a lot of good company. The key is just not to panic."

The tax agency automatically grants one extension to any taxpayer who asks. Additional extensions must be supported by a good explanation.

An extension means filling out Form 4868 and mailing it to the IRS by the same April 15 deadline as tax returns.

Anyone who filed a return last year can use the form as a worksheet and request the extension by telephone using a special toll-free line -- 1-888-796-1074.

For the electronically inclined, most tax preparation software can handle and electronically file an extension form. Tax preparers can also submit the form.

To avoid interest and late payment penalties on taxes due April 15, anyone who files for the automatic extension can also make a tax payment by check, credit card or electronic bank withdrawal.

Tax professionals recommend that taxpayers who find they owe more than they can pay should file a tax return or an extension anyway.

"Go ahead and file. Send as much as you can," Burlison said. "At a bare minimum, do that."

Filing a tax return lets taxpayers avoid a steep non-filing penalty -- a monthly 5 percent fine that can add up to as much as 25 percent of taxes due. That would be added to interest charged on any unpaid taxes.

The penalties for unpaid taxes compile at a much slower rate, a monthly 0.5 percent fine that can eventually -- over a long period of time -- add up to at most 25 percent, plus interest.

Taxpayers who just need a little more time to get the money together might consider charging the tax bill to a credit card. The IRS says this payment option has jumped in popularity this year -- a 53 percent increase to more than half a million taxpayers paying by plastic.

Two companies work with the IRS to take payments by American Express, MasterCard, Visa or Discover. Both of them, Official Payments Corp. and Link2Go Corp., charge a 2.49 percent convenience fee for the service.

Taxpayers who need more time to pay off a hefty tax bill and don't want to use a credit card can seek an agreement with the IRS to pay the taxes in monthly installments. The IRS has made the process easier for those who owe $25,000 or less and can pay if off in five years. The installment agreement obligates taxpayers to pay their taxes on time in future years.

Taxpayers will still be charged interest and some penalties, but those charges could be less than the interest rate on many credit cards.


link (http://www.boston.com/news/nation/washington/articles/2005/04/12/9_million_expected_to_seek_tax_extensions/)

SnakebyteXX
04-12-2005, 12:00 PM
I've been doing this now for nearly ten years. My CPA recommends it - in fact he also files for an extension every year. You must pay your estimated tax burden by April 15th but a filed extension is automatic and gives your another four months in which to procrastinate...

There is also an option to file for an additional extension of two months if it looks like August 15th won't give you enough time. However that filing requires a written explanation of why you're taking so damned long and written approval from the IRS before it's granted. I've gotten several approvals without too much effort.

Snake <--- likes to file as late as he possibly can and still stay legal.

SpiderMan
04-12-2005, 12:08 PM
Also note that, if you overpay your taxes, the 4-month extension may become a de facto three-year extension.

This is because the late-filing penalties are all a percentage of tax owed. If you send enough in with your extension form such that you owe nothing at the time of filing, then penalties calculate to zero because there is no "tax owed". You're all paid up, you just are letting the IRS hold your refund.

At least it worked that way for me several times in the past. I made sure I overpayed by $100 or so, and they bugged me for a couple years until I finally filed for my refunds. I got the refunds with no questions asked.

If you let it go beyond three years, any refund due you will be forfeited. Yes, I learned that one the hard way, forgot what year I hadn't filed until it was too late /ccboard/images/graemlins/grin.gif

SpiderMan

eg8r
04-13-2005, 05:10 AM
[ QUOTE ]
Snake &lt;--- likes to file as late as he possibly can and still stay legal. <hr /></blockquote> LOL, for the past 4 years, I have taken the extensions and hated it every time. I have my own business so I was unable to file my taxes until the business paperwork was complete. The accountant, every year, would file an extension to give herself more time (so she could do everyone else's taxes). I really have not found one single time in which this helped me. I knew what had to be paid out, so instead of just paying it out, we left it in the bank and made sure not to spend it.

However, this year was great. I shut one company down and opened another. In shutting down the one company, we were able to get all the paperwork/taxes done by March and now I don't have to worry about anything (except quarterlies, which will never go away /ccboard/images/graemlins/frown.gif ) for a whole year. /ccboard/images/graemlins/smile.gif

eg8r &lt;~~~paid off 02 and 03 taxes this past January /ccboard/images/graemlins/frown.gif