If the last three–and-a-half months has not provided you enough time to complete your calendar 2003 personal tax returns, fear not, securing an extension of time to file your returns is fairly simple.
Following is a summary of the steps to take to obtain additional time to file your federal and California tax returns. Note: Except where indicated, these extensions may still result in the imposition of interest and certain penalties on any unpaid taxes. Failure to file an extension will virtually always be more costly if you still owe money.
Federal Extension Procedures:
Form 4868 (20th Century Style) – This one page form must be mailed on or before Thursday, April 15th in order to obtain a four-month extension until August 15th. The extension is automatic, so you don’t even need to come up with a creative excuse for your procrastination. The IRS mailing addresses for Southern California taxpayers are: (with payment) P.O. Box 7122, San Francisco, CA 94120-7122, and (without payment) Internal Revenue Service, Fresno, CA 93888.
To document your timely filing, you can use the U.S. Postal Service’s certified mail or a private delivery service such as FedEx, UPS, etc.
Form 4868 (21st Century Style) – If you don’t like paperwork, or want to save the cost of a stamp, you can request an extension via phone or computer. By calling 1-888-796-1074 between April 1st and April 15th, you can obtain an immediate extension. Software tax preparation packages also contain an option to obtain an electronic (“paperless”) extension. You will need your completed Form 4868 and the primary taxpayer’s birth date in front of you when requesting the extensions over the phone or your prior-year return, if by computer. If you have a balance due, for either option, make sure to have your banking information available.
What if I owe and don’t pay?
Interest will accrue at a current rate of 5% on the unpaid balance. In addition, a 1/2 of 1% per month (6% per year), late payment penalty will generally apply, unless you have entered into a formal Installment Agreement (Form 9465) with the IRS (in which case the penalty rate drops to 1/4 of 1% –3% per year).
While an additional extension of time can be requested, failure to pay your federal tax by the extended due dates can result in the imposition of other very significant penalties, retroactive to the original due date. Penalties can also be assessed on taxpayers who purposely understate their estimated tax liability on Form 4868.
Out-of-Country Taxpayers
For people residing out of the country, an automatic two-month extension for filing your return and paying your tax is given to U.S. citizens and residents whose tax homes are outside the U.S. and Puerto Rico, and to military personnel assigned to duty outside the U.S. and Puerto Rico. You simply file your tax return by the extended due date (June 15) and attach a statement to the return explaining how and why you qualify for the two-month extension. If you need an additional 2-months extension of time to file, file Form 4868 with “Taxpayer Abroad” written across the top of the form.
California Extension Procedures
An automatic six-month extension until October 15th is allowed with absolutely no effort on your part.
Similar to the federal rules, California is willing to wait for their returns, but is less patient when it comes to receiving their cash. Therefore, if you owe money, you still need to send off a payment by April 15th. The payment is made with Form 3519 and should be mailed to: Franchise Tax Board, P.O. Box 942867, Sacramento, CA 94267-0051
What if I owe and don’t pay?
Interest will accrue at a current rate of 5%, and a 1/2 of 1% per month (6% per year) late payment penalty will generally apply. Harsher penalties apply unless at least 90% of your liability is paid by April 15th. Installment payment agreements can be requested by filing FTB Form 3567BK.
Other Information:
Obtaining Tax Forms
Tax Forms can be obtained through the IRS and FTB websites, or tele-fax numbers listed below, or by contacting one of our offices listed on our website (www.hcvt.com).
IRS: www.irs.gov 1-800-Tax-Form
FTB: www.ftb.ca.gov 1-800-338-0505
Payment by Credit Card (But Watch Out – this is expensive!)
You can pay your tax liabilities via various credit cards. Be aware that the approximate 2.5% “service fee” may be a steep price for the convenience of not cutting a check and increasing your frequent flyer miles. However, following are two service providers:
Official Payments Corporation: 1-800-2Pay-Tax www.officialpayments.com
Link2Gov Corporation: 1-888-PAY-1040 www.PAY1040.com
Other Cautions:
Mailing – Taxpayers have the burden of proof regarding timely mailing/payment; therefore, use certified mail, Fed Ex, UPS to prove timely mailing.
Checks – Make sure you make federal checks payable to “United States Treasury”, rather than “IRS”, which can easily be changed to “MRS. …..” by mail thieves. State checks should be made payable to “Franchise Tax Board”. Also make sure you have sufficient funds to cover the checks, since cashing taxpayers’ checks is the one of the steps the tax authorities do very efficiently.
Post Offices – Despite what you see on the news every April 15th, very few post offices are open until midnight, and the few that are should be avoided for personal safety reasons. Therefore, DON’T WAIT UNTIL THE LAST MINUTE!!
Prior-Year Refunds – Every year millions of dollars of taxpayer refunds end up in the black hole of the federal and California tax system. For potential errant federal refunds, check out NBC’s Dateline website:
http://msnbc.com/modules/tvnews/dateline_irs/form.asp
For additional information, contact one of our Tax Managers or Partners, or email us from the “Contact Us” page on this website.
More information can be obtained on our website www.hcvt.com.