Accountants have to remind purchasers that their day of reckoning with the IRS is going on in just some weeks. This is the primary article in a sequence on what to inform purchasers who want or need to postpone the inevitable.
Keep in mind that the IRS needs to assist. The company says there’s no have to panic in the event you want further time to finish your return. All of the feds ask you to do is submit Type 4868, identified formally as Software for Automated Extension of Time to File U.S. Particular person Earnings Tax Return. It’s straightforward to finish, although there’s a deadline. This yr, the deadline is April 18, 2022, for many calendar-year taxpayers. Fulfill that requirement, and also you’ll obtain an automated, no-questions-asked six-month extension to October 17, 2022.
Observe that this yr’s due dates are April 18 and October 17, fairly than April 15 and October 15, as a result of Inner Income Code Part 6081 authorizes an exception when both due date falls on a Saturday (as October 15 does this yr), a Sunday or a authorized state vacation, reminiscent of Patriots’ Day in Maine and Massachusetts. Taxpayers in these states will obtain an extension till the subsequent succeeding weekday.
The IRS will goal filers who fail to file for an extension and submit Type 1040 by April 18. The legislation authorizes the company to evaluate stiff, nondeductible penalties and curiosity prices. Nevertheless, the principles are much less restrictive than they have been in 2004 and years prior, when the extension time was considerably shorter.
Bear in mind, nevertheless, what Type 4868 does and doesn’t do. It extends the time to file, nevertheless it doesn’t lengthen the time to pay. Whereas the accompanying fee doesn’t should equal the precise quantity of tax due, it should be there, or its absence should be justified.
The IRS will even assist in case your consumer feels extra comfy with a paper, fairly than digital, copy of Type 4868. Simply obtain it from the company’s web site, after which, in accordance with Code Part 6091, mail it to the deal with supplied on web page 4 of the shape’s directions. Don’t connect a replica of it to your consumer’s return.
File later, pay now. Once more, Type 4868 extends the time to file, however to not pay. The IRS mandates that the fee your consumer submits cowl what you estimate your consumer will owe, after subtracting taxes beforehand paid by way of withholding from salaries and estimated funds.
Bear in mind, too, to subtract any overpayment of the earlier yr’s taxes that you just elect to use to the present yr’s invoice––say, 2020 to 2021. That estimate of the steadiness due should be in good religion, a subject that might be mentioned in a later column.
Right here’s what to do in case your consumer is paying by test. Make it payable to “United States Treasury” or “IRS.” Embody on all of it the knowledge essential to credit score the cash correctly: Social Safety quantity, daytime cellphone quantity and “2021 Type 4868.” Don’t connect your consumer’s fee to Type 4868.
Type 4868 doesn’t require your consumer to elucidate why they search further time. The IRS couldn’t care much less whether or not they’ve misplaced their information, turn out to be hopelessly ensnarled in a briar patch of tax laws or misplaced observe of time whereas sipping wine of their scorching tub fairly than laboring over their return.
A reminder for when your consumer finally does file their return. Pay any steadiness due or declare a refund for all or a part of the quantity submitted with the automated extension or earlier. Enter any extension-related fee on the 1040’s Schedule 3, Half II, line 10, “Quantity paid with request for extension to file.”
What’s subsequent. Subsequent columns will clarify different elements of submitting extensions, reminiscent of late-filing penalties and curiosity prices.
