Extension and installment agreement

[oceanlovin'ea]

I had a new client today. Moved here from New York and took her entire retirement and didn't roll any of it over. She is 44 so no exception to 10% penalty. She also sold her stock in Con Edison but that is not too big a problem as it is mostly employee contributions. But we have to get statements from broker so we can figure cost basis accurately. They will mail statements which means we probably won't get them till after April 17th.

We will need to do an extension. She needs to set up an installment agreement to pay IRS. Does the installment agreement need to go with the extension? She will send some money now and then make payments. So I don't want to do this wrong and have her penalized because I wasn't sure what to do.

HELP!

Linda F

[Brian EA]

I had a new client today. Moved here from New York and took her entire retirement and didn't roll any of it over. She is 44 so no exception to 10% penalty. She also sold her stock in Con Edison but that is not too big a problem as it is mostly employee contributions. But we have to get statements from broker so we can figure cost basis accurately. They will mail statements which means we probably won't get them till after April 17th.

We will need to do an extension. She needs to set up an installment agreement to pay IRS. Does the installment agreement need to go with the extension? She will send some money now and then make payments. So I don't want to do this wrong and have her penalized because I wasn't sure what to do.

HELP!

Linda F

Hey Linda, How are you doing.

If you are sending a payment with form 4868, you can also send the 9465 installment form. requesting a payment plan. The IRS will charge her $45 to set up the plan and she will have to stick with it. So make sure she understands the entire process There should be no problem.

[Bill Tubbs]

how much does she owe?

We will need to do an extension. She needs to set up an installment agreement to pay IRS. Does the installment agreement need to go with the extension? She will send some money now and then make payments. So I don't want to do this wrong and have her penalized because I wasn't sure what to do.

How can you set up an installment agreement for an amount you don't know?

I would:
1) encourage her to pay what she can by April 17
2) file the extension
3) apply for the installment agreement when the return is complete
4) if she wants to make more payments between now and when the return is complete, this would reduce the amount of interest that may be due

Bill

[Brian EA]

How can you set up an installment agreement for an amount you don't know?

I would:
1) encourage her to pay what she can by April 17
2) file the extension
3) apply for the installment agreement when the return is complete
4) if she wants to make more payments between now and when the return is complete, this would reduce the amount of interest that may be due

Bill

You are absolutely correct Bill.I must be suffering from DIMS. Cannot set up a payment plan without knowing how much you owe

[BOB W]

Brokers will...........

.........fax what you need. I have done it time and time again, why wait for mail?

How about filing a return with the intent of amending it later. Now you have a $ figure for the installment agreement.

I was alway under the opinion that not filing a return with a balance due can cause "failure to file timely penalties"????

[Matt Sova]

Incorrect

Failure to file on time is the big penalty. Filing the extension, even with no payment, avoids that penalty. You will incur fail to pay penalties of 1/2% per month but you avoid the 5% per month failure to file penalty.

[BOB W]

Thanks.......

... for that info, I wasn't up on that.

[oceanlovin'ea]

I like options

You have given me several options to look at. Client will call tomorrow and see if they will fax or overnight information to her.

Based on the statement for 2005 and she had 2003, I can estimate the cost basis and probably come fairly close. So my estimate of what she would owe would be very close.

I was going to file the extension electronically. But I can't do that and attach the installment agreement form. So we would have to mail it in. But that's not really a problem.

I will talk to her tomorrow and we will decide.

Thanks for all your imput.

Linda F