Refunds Due -Need for Extensions?

[zeros]

For clients that normally have refunds due but can't the return filed by 4/15, is it necessary to get an extension?

[AJsTax]

always better

to if you can, but penalties and interest are figured on balances due, so if nothing is owed, nothing to penalize.

[BHoffman]

For clients that normally have refunds due but can't the return filed by 4/15, is it necessary to get an extension?

The word "normally" appears in your post. Will you be paying the late filing penalty if they pop up with income

I would absolutely file the extension no matter what.

[David1980]

Oops I forgot about this stock I sold,...

[BHoffman]

Oh, and they will....they will....

[JohnH]

Am I supposed to do something with this 1099 I didn't give you back when you said we don't need to file an extension, or did you know about it by osmosis? It's only for $5,000, so how much tax could that be?

[taxea]

Yes we remember the days when you could just tell the client...you get a refund every year...nothing to worry about. And it was because there is no penalty for late filing when nothing is owed.
Be we must change with the times.
I have yet to find a client with a more than average return that doesn't forget something or the preparers of business, trust, etc returns that don't seem to realize the the deadline for issuing K-1's is 3/15.
Sometime's it isn't the clients fault that all the docs are not available. Do what you can to insure that the client won't owe, file the extension and if there is any chance that the client will owe have them send money by the l5th then relax and do the return after the necessary ones have been filed.
When it gets this close to the end and I have a return with a balance due, I call the client explain the bottom line, tell him to send the money....then I file an extension and go on to the next return.
The catchup can come after the 15th as long as the client doesn't fail to pay on time.

[JohnH]

I tell them something slightly different, because there's no requirement to pay on time in order for the extension to be valid.

I tell them the extension will get them off the hook for the 5% per month FTF penalty and that they should pay the estimated balance due if they can. But if they don't pay the estimated balance due, or if they underpay it, then they will owe aproximately 1-1/4% per month on the unpaid balance in combined FTP penalty and interest. Also, if there's an estimated tax penalty due they will owe that as well, but it would have been due even if they filed and paid by the 15th.

In any case, filing an extension with a proper estimate will get them off the hook for the FTF penalty regardless of how much or how little they pay with the extension. It isn't mandatory that they pay anything at all with the extension as long as the estimate of tax due is accurate based on the information at hand.

[WhiteOleander]

Who said the deadline for issuing K-1s is March 15th?

[Super Mom]

Without checking, I think the K-1's for S-Corps are due March 15 but is April 15 on Partnerships.

[WhiteOleander]

Without checking, I think the K-1's for S-Corps are due March 15 but is April 15 on Partnerships.

If those entities file extensions, then the K-1 will not be sent until later when the entity files the return. There is no requirement to get them out by March 15.

[Davc]

Another reason to extend is to maintain availability of some elections.

[taxea]

" It isn't mandatory that they pay anything at all with the extension as long as the estimate of tax due is accurate based on the information at hand."

Really? I mean realllllllyyyyyy.....the extension only covers delaying the paperwork. It doesn't cover not paying what is estimated to be due in taxes.

[JohnH]

Yes, really. REALLLLLYYYYYY.....

But don't take my word for it. Try reading the instructions on page 2 under "Qualifying for the Extension". Then come back here and post what you think they mean by "Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes."

Focusing in a little more clearly, once you give us your interpretation of "Although you are not required to make a payment of the tax you estimate as due", maybe you'll want to modify your last post. Or better yet, maybe improve the quality of your service by giving your clients correct information when you explain how the extension works. It doesn't really matter to me whether you give them right information or wrong information because I know what's correct, but it should matter to you.

[newbie]

Yes we remember the days when you could just tell the client...you get a refund every year...nothing to worry about. And it was because there is no penalty for late filing when nothing is owed.
Be we must change with the times.

How far back do you need to go the find the days when everyone one got a refund and had nothing to worry about. Many good reasons listed here for filing an extension but if an extension is not filed and nothing is owed there is still no penalty. Only change I see is the 4868 doesn't require a signature.