What to Do If the Tax Preparer Cannot File a Tax Return by April 15
If you work with a CPA or an accounting firm to pay taxes, you may have received some nervous news recently: due to a combination of factors, including the recent government shutdown and new tax laws, many tax preparers are behind schedule, and not all. taxes will be filed on time. To quote the New York Times :
“This is the toughest tax season ever,” said Ross A. Riskin, a certified public accountant and assistant professor of taxation at the American College of Financial Services.
The IRS estimates it will receive more than 14.6 million renewal requests this year, or nearly one in ten submitters. This will be the highest number of requests ever received in a year, according to IRS spokesman Eric Smith.
If your accountant or tax preparer has told you that your taxes may be withheld, you need to know the following:
Requesting a tax extension is not such a big deal
The first time I had to request a tax extension – because I was a new freelancer who tried to pay taxes on his own and realized that I was on top – I felt like a failure. How could I have missed such an important deadline? Will the IRS be mad at me? Will I have to pay a bunch of fines?
For at least the last two questions, no and no . The IRS will not shame you for applying for an extension (for example, how they would have done it at all), and you will not receive a penalty for applying for an extension. All you have to do is fill out a simple form , pay any unpaid taxes that you think you owe, and you have another six months to complete your tax return.
You also need to pay taxes by April 15th.
When filling out the extension form, you need to indicate the approximate amount of tax that you think you owe, as well as the amount of taxes that you have already paid for the year. If you think you have more taxes than you currently paid, you will want to make this payment when you fill out the extension form.
If you are thinking, “But the reason I am applying for an extension is because I don’t know how much taxes I owe,” you can skip the payment, but later you may have interest and penalties.
This is how the IRS explains it :
Although you are not required to pay taxes that you estimate are payable, Form 4868 does not extend the time to pay taxes. If you do not pay the due amount by the due date, you will be required to pay interest. You may also face fines. For more information, see “Interest and Late Payment Penalties” on page 2. Any transfer you make with your renewal application will be considered tax.
Your tax filler should be able to offer you the amount you may have to pay to avoid penalties. Remember, if it turns out that you overpaid, you will get this money back after filing your tax return. This will be part of your tax refund.
You also need to pay most of your IRA and HSA contributions by April 15th.
If you plan to make contributions to the HSA or IRA in tax year 2018, you will need to make them by April 15th. Submitting a tax renewal request does not give you additional time to deposit funds into these accounts.
There is an exception if you are a freelancer or small business owner making SEP IRA contributions. In this case, the extension applies to your SEP contributions as well, and you have additional time to add money to these accounts.
You will receive your refund after filing your tax return.
If you are looking forward to your annual tax refund, I have good news and bad news. The bad news is that you will not receive your tax refund until you file your tax return. The good news is that after filing your tax returns, the IRS shouldn’t take longer than usual to process your refund, even in this particularly challenging tax year.
As reported by The New York Times :
The IRS said it expects a refund on time. This generally means nine out of 10 refunds are processed within 21 days if the refund was submitted electronically and the refund was sent using a direct deposit.
You can always check the status of your reimbursement with the IRS if you want to know where it is in the process and if you can expect to receive it any time soon.
Don’t forget about government taxes
Each state has its own tax filing requirements. If you work with a tax preparer to file a state tax return and they expect they will not be able to collect your taxes by the due date, they should provide you with information about the state tax rate renewal process.
If you use a CPA or tax filing professional to file your tax return, how did your 2018 tax process go? Did you submit everything on time, or do you suspect the refund may be delayed? Accounting firms still have a little over a week to get things done, so this may not be a problem, but if you do decide to extend your taxes this year, try not to spend too much time worrying about it.