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Helping Clients Get an Extension on Filing Taxes

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This year's income tax filing season is upon us, but some of your clients might need more time. Not to worry, says tax guru Julian Block. The IRS wants to help those who need or want an extension, so your clients can rest easy knowing you'll guide them should they need an extension on this year's tax season.

Apr 7th 2022
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Accountants need to remind clients that their day of reckoning with the IRS is happening in just a few weeks. This is the first article in a series on what to tell clients who need or want to postpone the inevitable.

Remember that the IRS wants to help. The agency says there’s no need to panic if you need additional time to complete your return. All the feds ask you to do is submit Form 4868, known officially as Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. It’s easy to complete, though there is a deadline. This year, the deadline is April 18, 2022, for most calendar-year taxpayers. Satisfy that requirement, and you’ll receive an automatic, no-questions-asked six-month extension to October 17, 2022.

Note that this year’s due dates are April 18 and October 17, rather than April 15 and October 15, because Internal Revenue Code Section 6081 authorizes an exception when either due date falls on a Saturday (as October 15 does this year), a Sunday or a legal state holiday, such as Patriots’ Day in Maine and Massachusetts. Taxpayers in those states will receive an extension until the next succeeding weekday.

The IRS will target filers who fail to file for an extension and submit Form 1040 by April 18. The law authorizes the agency to assess stiff, nondeductible penalties and interest charges. However, the rules are less restrictive than they were in 2004 and years prior, when the extension time was significantly shorter.

Remember, however, what Form 4868 does and doesn’t do. It extends the time to file, but it doesn’t extend the time to pay. While the accompanying payment doesn’t have to equal the exact amount of tax due, it must be there, or its absence must be justified.

The IRS will also help if your client feels more comfortable with a paper, rather than digital, copy of Form 4868. Just download it from the agency’s website, and then, in accordance with Code Section 6091, mail it to the address provided on page four of the form’s instructions. Don’t attach a copy of it to your client's return.

File later, pay now. Again, Form 4868 extends the time to file, but not to pay. The IRS mandates that the payment your client submits cover what you estimate your client will owe, after subtracting taxes previously paid through withholding from salaries and estimated payments.

Remember, too, to subtract any overpayment of the previous year’s taxes that you elect to apply to the current year’s bill––say, 2020 to 2021. That estimate of the balance due must be in good faith, a topic that will be discussed in a later column.

Here’s what to do if your client is paying by check. Make it payable to “United States Treasury” or “IRS.” Include on it all the information necessary to credit the money properly: Social Security number, daytime phone number and “2021 Form 4868.” Don’t attach your client's payment to Form 4868.

Form 4868 doesn’t require your client to explain why they seek additional time. The IRS couldn’t care less whether they've misplaced their records, become hopelessly ensnarled in a briar patch of tax regulations or lost track of time while sipping wine in their hot tub rather than laboring over their return.

A reminder for when your client eventually does file their return. Pay any balance due or claim a refund for all or part of the amount submitted with the automatic extension or earlier. Enter any extension-related payment on the 1040’s Schedule 3, Part II, line 10, “Amount paid with request for extension to file.”

What’s next. Subsequent columns will explain other aspects of filing extensions, such as late-filing penalties and interest charges.

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