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| Jerry Moss |
Many taxpayers who would like to file an extension are concerned that doing so might “raise a red flag” and increase the likelihood of an IRS audit. Not so, according to Jerry Moss, tax member with KraftCPAs. Jerry explains, “Requesting an extension is definitely not a red flag as far as the IRS is concerned.” In fact, he says approximately 10 percent of KraftCPAs’ clients request extensions.
Individuals
An individual taxpayer is granted an automatic extension of six months to file a return (but not for the payment of tax) provided that Form 4868 is properly filed before the normal due date of the return.
If the amount of tax included with the extension request is less than sufficient to cover the taxpayer’s liability, the taxpayer will be charged interest on the overdue amount. No late-payment penalty will be imposed if the tax paid through withholdings, estimated tax payments, or any payment accompanying the extension request form is at least 90 percent of the total tax actually calculated on Form 1040, and the remaining unpaid balance is paid with the return within the extension period.
Corporations
A regular C corporation or an S corporation can receive an automatic six-month extension for filing its return, provided it files Form 7004 and deposits the full amount of the tax due.
Trusts, estates, partnerships, certain nonprofit organizations, and other taxpayers may also receive an extension of time to file by submitting the appropriate form for their particular type of entity.
According to Jerry, “Filing an extension is particularly beneficial for taxpayers who receive K-1s or other tax information close to the filing deadline. In fact, if clients know their information will not be available until close to the deadline, we recommend moving forward with the extension process as soon as possible. Once all the necessary information comes in to us, we can prepare the return in an orderly fashion.
If you’re interested in filing an extension of your personal or business tax return, contact your KraftCPAs advisor.
KraftCPAs is a public accounting (CPA) firm headquartered in Nashville, TN that provides tax, accounting, audit and consulting services to businesses in middle Tennessee.
