Extensions Explained - Fagan & Fagan, LLP

The IRS allows taxpayers to file an “Application for Automatic Extension of Time To File U.S. Income Tax Returns” or for short, an “Extension” to extend their income tax filing due date. Fagan & Fagan, LLP can assist you with this complex and delicate tax filing process.

The IRS allows taxpayers to file an “Application for Automatic Extension of Time To File U.S. Income Tax Returns” or for short, an “Extension” to extend their income tax filing due date. Once filed, the extension changes a tax return’s original filing deadline in March, April, or May to an extended deadline in September, October, or November depending on your entity type.

If you file an extension no late-filing penalties will be assessed assuming the tax return is filed by the extended deadline. But, FILING AN EXTENSION DOES NOT EXTEND THE DEADLINE TO PAY YOUR INCOME TAXES!!! If you fail to pay your income tax bill by the original deadline, you may be subject to PENALTIES & INTEREST!!!

So, how do I file an extension?

Most extensions are fairly simple. Complete the correct forms and submit them to the tax agency by the original filing deadline. No confirmation is required. Assuming you completed the form correctly, you will be granted an extension. The extension form identifies the entity’s, or individual’s, legal name, address, EIN or SSN, the type of entity, and allows the taxpayer to estimate their tax liability for the year and make a payment.

Form 7004 for S-Corporations, C-Corporations, Partnerships, & Others: http://www.irs.gov/pub/irs-pdf/f7004.pdf
Form 4868 for Individuals (Sole Proprietors): http://www.irs.gov/pub/irs-pdf/f4868.pdf

**If you are an LLC you will file with the IRS as one of the above entity types. Contact our office for more information.

Every individual state has their own unique extension filing rules. Many states, such as California, accept the Federal extension in lieu of their own form if you are extending with “No tax due.” If you think you owe state income taxes, or are filing outside of CA, be sure to check the rules for your specific state(s), or call our office for additional assistance.

Can Fagan & Fagan, LLP file an extension for me?

ABSOLUTELY!! We are happy to prepare the extension as part of the preparation of your tax return. Please organize and send as much of your tax information as you have available ASAP. You will need to let us know if, when, and how much you paid in estimated taxes (this includes income tax withholding on your forms W-2 and 1099). From this information, we can begin the process to prepare your extensions and work with you to estimate any tax liability that may be due. We can also file the extensions electronically.

How much does it cost?

To prepare extensions we need to start the preparation of your tax returns. We will gather, review, input, and begin working with your source documents. In many cases, we will discuss the file with you and compute tax projections based on the currently available information. Upon preparation and filing of the extension, we will progress bill the time and fees incurred to date on the project but no less than our minimum fee for tax preparation; $1,000 for Individuals and $2,250 for business entities. To obtain an estimate of the total fee for the preparation of your income tax returns, please contact our office.

I’m on extension; now what?

Send us your tax information! Did you know that we could prepare your tax returns as early as JANUARY and not submit them to the IRS until as late as OCTOBER? We often hear, “I don’t want to pay the government any sooner than I have to!” Nor do we, but bringing your information to our office close to the deadline provides very little time to complete your work and may subject you to penalties and interest from the IRS and other taxing agencies if money remains due beyond the initial deadline. Our goal is to advise you of your pending tax liabilities and provide optimal preparation of your tax forms. The more time you give us to do this, the more time you will have to plan and save for any tax liabilities that might be due. You also ensure that your file is not rushed and is given the attention and care that it deserves.