What does filing an “extension” do?

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• An extension is a form filed with the IRS to request additional time
to file your federal tax return. The extension period is six months,
which extends the due date for submitting your final returns from April
15 to Oct. 15*. In some states, filing an extension with the IRS will
automatically extend the time to complete a state income tax return.
• Filing an extension grants you additional time to submit your complete
and accurate return, but you still need to estimate whether you will
owe any taxes and pay that estimated balance by April 18.
• Extending your return allows you and your CPA more time to prepare
your tax return to ensure filing of an accurate tax return. In many
cases, you may still be waiting for additional information (e.g.,
Schedule K-1, corrected 1099s, etc.) to complete your return.

Should I do anything differently if I am filing an extension or “going on extension”?

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No, you still should give our office whatever information you have as early as possible or as soon as it becomes available. Expect to pay any anticipated taxes owed by April 15. You still need to submit all available tax information to us promptly so we can determine if you will have a balance due or if you can expect a refund. If you are required to make quarterly estimated tax payments, your first quarter estimated tax payment is still due April 15. We will ask that you pay the balance due for last year and your first quarter estimated tax payment for this year with your extension. If we anticipate a large refund, we will likely try to get your extended return done as soon as possible once all tax information is available. We may also want to discuss tax planning opportunities with you so that in future years, you don’t give the IRS an interest-free loan all year!

Dig out first, then file for an extension

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The IRS has granted businesses affected by Winter Storm Stella, the storm that hit parts of the Northeast and Mid-Atlantic this week, additional time to request a 6-month extension to file their 2016 federal tax returns. The extension for the extension affects calendar year partnerships and S corporations that must file their 2016 returns by March 15, or else file for an automatic 6-month extension on Form 7004. The deadline to file an extension is March 20. Eligible taxpayers must write “Winter Storm Stella” on their Form 7004 extension request.

Can I get a refund even it I didn’t pay anything in?

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This article is part of our 2017 Tax Season FAQ Series – If you have a question submit it to FAQ@rmfcpallc.com, and it may become part of a future post.

The answer is, surprising to some, but yes. There are some situations where a taxpayer has not made any payments and still gets a payment from the Department of Treasury after filing an income tax return.

Individual credits within the tax code are refundable regardless of whether or not there is a tax liability. The Earned Income Credit, Additional Child Tax Credit, American Hope & Opportunity Credit are some of the refundable credits that lead to refunds even without estimated taxes being paid or withholding on earnings submitted during the fiscal years.

The instances that this occur are certainly rare in compared to the total number of tax returns filed, but it, in fact, does exist.

Check back here for many more answers to your tax questions. Or call our office (717) 337-1414 to schedule an appointment with one of our CPA’s to help you prepare your tax return and maximize your benefits.