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Thread: Extension Issues

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  1. #4
    Join Date
    Apr 2007
    Charlotte, NC


    I agree with ATSMAN. The only thing that can potentially cause a problem is under-estimating the tax liability on the 4868. An estimate which can be demonstrated not to have been made in good faith is the only potential way to invalidate a timely extension.

    The amount paid does not affect the validity of the extension in any manner with respect to the FTF penalty. For example, if the estimate shows $2,000 due, the extension is valid regardless of whether the taxpayer pays $2,000 or nothing. So I always estimate the balance due on the high side, and let the client decide how much they want to pay. If they underpay, they will owe a little less than 1% per month on the underpayment (interest plus a 1/2 of 1% FTP penalty), but that was their decision, not mine. I will give them the high side and low side of my range, and the reasons why, but at the end of the process the decision on how much to pay with the 4868 is entirely their call.

    State rules may differ, but that's the way the Federal extension works - it has been that way for decades.
    Last edited by JohnH; 04-13-2018 at 10:38 AM.
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