TurboTax 2019 - 2020 Tax Extension Tips
TurboTax 2020 online tax extension support explains that the good news is that you don't have to rush the completion of your tax return. Tax payers can take advantage of a simple one-page automatic extension along with payment of taxes owed to the IRS and state.
Filing a tax extensions can be helpful in many ways. By requesting an automatic extension of time to file individual federal and state income tax returns by Oct. 15, 2020 you gain an extra six-month. Form 4868 instructions are simple and to the point on how easy it is to get a 6 month automatic extension. Best of all, no reason is required for this extension of time to file a completed tax return.
Tax Extension Tip # 2: Let's be clear, it's not an extension of time to pay taxes owed. Get your taxes paid!
Estimate and report what you believe you owe for 2019 based on the income tax information you have received. Late Payment Penalties begin with what is usually ½ of 1% of any tax owed that has not been paid by April 15, 2020. It is charged each and every month or part of a month for any portion that remains unpaid.
The maximum penalty is 25% so keep in mind that this can add up quickly! A late payment penalty can be avoided if you can show reasonable cause for not paying your taxes on time. You can attach a statement to your completed tax return fully explaining the reason for not making full payment in an effort to avoid penalties.
TurboTax Tutorial Video: How to File a Tax Extension
Tax Extension Tip # 3: File when it’s more convenient, and more affordable for you.
Smart and wily taxpayers know the “real” tax filing deadline is Oct. 15, for individuals and Sept. 17, for pass-through entities, including partnership and S-Corp tax returns. Several advantages greet these snickering tax filers including tax software discounts, less stressful rushing to complete your tax return, and more time to get all your documentation in order, including tax deduction advantages.
Tax Extension Tip # 4: Be conservative with your tax payments during the year.
My personal advice to clients has always been to be aggressive but legal with their tax returns, and carefully conservative with cash (tax payments). Be reserved with the IRS on your patience for overpayment credits and prove that you're not anxious to generate a tax refund. It can be a wise strategy to apply overpayment credits toward estimated taxes owed and linger back toward the end of the year. Other activity during the year may open opportunities for new ideas on tax savings and deductions.
Tax Extension Tip # 5: Buy more time to fund a qualified retirement plan
A tax extension may also push back the deadline for investing money in various qualified retirement plans such as a SEP IRA, Solo 401(k) and defined benefit plans. The deadline for IRA contributions is April 15.
Tax Extension Tip # 6: Don’t forget state tax extensions and payments
TurboTax Tutorial Video: State Tax Extension Filing
If you owe state taxes, be sure to file a state tax extension with payment of any taxes owed. Some states don’t require an automatic extension for overpaid returns, they incorporate your federal tax extension instead. Be wary that States tend to be less accommodating than the IRS in most cases for abating penalties, so it’s wise to pay your state taxes first if you’re going to be short on cash. Check the tax extension rules in your state.
5 Additional Tax Extension Tips
TurboTax offers up 5 additional tax extension tips you should pay attention to when buying more time to file your tax return.