Does filing extension with zero's avoid failure to file penalties?

[thomtax]

Thomtax, yes. It's called an amended extension return. All you have to do is download Form 4868-X and file it.

Sorry, Thom, I couldn't let that one pass by.

Seriously, I don't know the answer to your question, but I think it would be O.K as long as done prior to April 15th.

I can't seem to find the 4868-X on the website. Could you mail me a copy?

LT

[Zee]

Zee: Thanks for responding to the "debate" comment, just to clarify things. This subject is too important for anyone to get distracted by misinterpreted 'tone of voice" or a poorly worded reply.

First of all, let's get the penalties clear. As I understand it, he FTF penalty is 5% per month and it maxes out at 25%. The FTP penalty is only .5% per month (1/2 of one percent). It also maxes out at 25% if it runs on its own long enough ( 50 months). There's some coordination between the two when they both apply to a late-filed return, but a valid extension takes the 5% per month FTF penalty completely off the table, provided the extended due date is adhered to. The extension has no effect on the interest or FTP penalty, but I'd much rather be dealing with .5% than 5%.

The first & second paragraphs of page 3 of the 4868 apply only to the FTP penalty. They don't have anything to do with the FTF penalty as I understand them.

Finally, the reference to using last year's tax liability is mentioned only as a last resort, when it's clear that not enough information is available to even hazard a guess. Using last year's liability is better than pulling a figure out of thin air. I've done that a few times when the taxpayer was ill or otherwise indisposed and I just had no information on which to base an estimate. That's why I continue to say I'd never be comfortable with an extension showing all zeros, unless I was near 100% certain that all zeros was a factually accurate estimate.

OK. 5% vs .5% is a whole lot different. My client is working overseas, and should be able to complete & file his return within the special 2-month extension allowed. No form is needed. Simply a note with the return indicating he qualified for the automatic extension. So, it's probably better to just wait and not take a chance on a FTF penalty.