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    #1

    Extension

    This subject has always been a problem for me.
    If I file an extension, and do not send any taxes due, do I still have to pay a penalty for late filing?

    Since I will not send any money what is the purpose of filing an extension?

    I have been reading this board for sometime now.

    YOU FOLKS ARE AWESOME
    Brian
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    #2
    Failure to file penalty

    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.

    Matt
    I would put a favorite quote in here, but it would get me banned from the board.

    Comment

      #3
      Originally posted by Matt Sova
      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.

      Matt

      Matt, I was always told that if you do not send any money , filing an extension is a waste of time. They drop it in the waste basket.

      You file an extension because you think you are going to owe the IRS $500 and you send them $500. Of course, if you are getting a refund, there is no need to file an extension.
      Brian

      Comment

        #4
        IRS dropped it

        That used to be the rule, but they changed it. The old requirement was that an extension request was not valid unless you timely paid at least 90% of your tax liability. Since most people only file extensions because they can't determine their tax liability, it was not enforceable so the IRS dropped it.

        California used to say late payment penalty applies even if you get refund, because you can't claim credit for withholding until you file the return. I don't know if they still take that ridiculous position.

        Comment

          #5
          Extensions

          Actually, you are supposed to make a reasonable estimate of the tax liability. You do not have to send any money with the extension.

          However, you do have the failure to pay penalty mentioned above, starting with April 18, 2006 until the date the return is file.

          You don't even have to sign the extension any more.

          Bill the client $30 for doing one, with money or not!
          Jiggers, EA

          Comment

            #6
            Again check your state requirements. Oregon recognizes the extension but still has big penalty if you don't pay in tax..

            Comment

              #7
              Extension

              Thank you all
              Brian

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