(Metro Creative Connection)
Spring is in the air. For me, it just means that the tax season is nearing its end, and I’m switching my focus from filing returns to filing extensions for my clients.
Many of you may have to put it off until the last minute and file something before the tax return deadline of Tuesday, April 18, 2023. Even if you are unable to complete your tax return because you are missing certain documents, have health problems, or have other problems, you are still required to take certain actions by this year’s slightly extended deadline of April 18. steps should be taken to avoid additional interest or penalties.
The first step is to ensure that the IRS Form 4868 Application for Automatic Extension of Filing Time for U.S. Individual Income Tax Returns is filed by mail or electronically. This must be completed by April 18th to avoid late submission penalties. This form can be submitted electronically or mailed as a payment slip for extended payments.
However, filing an extension is merely an extension to file your return and does not serve as an extension to pay any outstanding balance. To avoid additional late penalties, he must pay 100% of the 2022 tax balance by April 18. This can be a bit of a problem if your tax return isn’t complete. It is usually the most complex returns that need to be extended. We recommend that you make your payment on Form 4868. This is enough to cover the expected taxes that have not yet been withheld or paid by the estimate. If you overpay taxes, you can either refund the overpayment to the next year or carry it over to the next year.
I often come across the misconception by some members of the public that if they are unable to pay their tax balance, all that is required to delay this is to file an extension. You should use all means available to you to pay your tax balance in full by April 18th to avoid potentially prohibitive fines and interest.
This rule that file extension is not payment extension can present a challenge.
If taxpayers are still awaiting documentation to complete their taxes, such as a K-1 form from an investment, get a firm estimate of reported income from that investment to properly account for the resulting tax consequences. must be processed. As a result, it is important to develop a robust estimate that is on the high side of the expected tax balance. Again, if you overpaid tax, the overpayment will be refunded or credited to the next tax year.
There is no separate extension form for Ohio. A copy of IRS Form 4868 serves as any kind of extension confirmation for Ohio. However, like the IRS, Ohio requires all taxes to be paid in full by April 18th to avoid additional late penalties. Therefore, we encourage you to make estimated payments using the Ohio IT 40P Income Tax Payment Voucher by April 18th to ensure your tax liability is fully covered.
As with the IRS, overpayments made when you finally file your return can be refunded or credited in the following tax year.
Local income tax extension requirements vary by tax authority. RITA and CCA are the largest local tax collection agencies in the region. Both of these organizations honor federal extensions, but you must attach a copy of the federal extension to your local return when you finally file it. Make sure the proper extension is filed to avoid fines and interest charges.
So, whether you’re able to complete and file your return by April 18th, or need to finally file an extension, make sure you have something to file.
Remember that extension of file is not extension of payment for all tax authorities.
Paul Pahoresky is the owner of PRP & Associates. 440-974-1040 ext. 214 or paul@prpassoc.comFor additional information and guidance on these topics, please consult your tax advisor for your specific situation.