published April, 2007
The thing I’m supposed to say is “an extension to file is NOT an extension to pay.”
That means if you expect to owe tax for 2006, you should send a payment WITH the extension. There’s some possibility that if you don’t include payment, the government could invalidate your extension, which leads to a ‘failure to file’ penalty based on what you owe. It’s not clear how they decide if you willfully didn’t make a payment vs. you just didn’t know what you owed and you guessed wrong. To be honest, I’ve never seen them void an extension. But it could happen.
If you don’t pay what you owe, late payment penalty and interest will continue to accrue, even if you DID file an extension. Filing the extension only allows you to avoid the ‘failure to file’ penalty of 5% per month or part of month, up to 47.5% of the amount owed.
So, if you want me to file an extension, let me know, preferably BEFORE APRIL 13. I’ll be much more polite up to April 13–after that, I start to get stressed out (yes Virginia, even I get stressed out at some point!).
Let me know if you intend to make a payment with your extension; I can put you on extension electronically. Since my software charges me per social security number I “activate,” I’ll be sending a small bill to people I put on extension, to cover my fee. That way we’re ‘clean’ — if you go to someone else to get your return done, I’ve covered my costs. If you subsequently have Tax Buddha prepare your return, we credit what you’ve paid against the future return cost.
You can also do your own extension, look for Form 4868 at www.irs.gov If you successfully file a Federal Extension and DON’T OWE STATE tax, you don’t need to do a state extension (at least in CA). The federal extension covers you. If you DO owe state tax, you’ll need to look for Form 3519 at www.ftb.ca.gov. I’m told you can pay CA with a credit card (for a fee).