tax question

[Mrs.Reese]

I'm having a hard time understanding this but I know that someone on the dis will have the answer to it. I filed an extension for tax returns back in April. Now I just finished doing our taxes. We owe around $2000 but I'm sure there is interest on that amount. When I send in the return should I send in the money then and then the IRS tells me the interest or not send anything in and the IRS then sends me a bill. I'm really confused on this one.

 

[jenm2878]

Definitely send in the payment with the return and let the IRS send you a bill for the interest. If you pay the tax with the return, the interest on the tax amount will stop accumulating and you will only owe interest from the original due date until the paid date. If you don't pay, they can start charging you penalties and interest for failing to pay. At this point, you are only paying interest on underpayment of tax. (From April - Oct)

Hope that makes sense.

Jen (CPA)

 

[bumbershoot]

Call the IRS. They are, in general, very nice. (even when telling you that your just-deceased FIL hadn't filed taxes in 6 years...had paid some, but hadn't filed, and now your widowed MIL owes 50K+)

Per the form you would have filed, "Please be aware that an extension of time to file is NOT an extension of time to pay. " You were supposed to have estimated the amount you owed and paid something at the time you filed (I did it once...found the process to be the most stupid thing EVER...it wasn't the paperwork I needed an extension with, it was the money!).

You need to call them and get your answers from them.

 

[allyphoe]

Pay now, in order to mitigate the late-payment penalty. The IRS will send you a bill for interest.

(I'm going to respectfully disagree with Jen's comment about there being no penalty for tax due in April and unpaid until October. As long as the return is filed by 10/15, there's no late-filing penalty, but you're stuck with both the late-payment penalty and the interest. Payment in full is expected 4/15, whether the return is filed then or not.)

Phoebe (also a CPA)

 

[deva]

Pay now, in order to mitigate the late-payment penalty. The IRS will send you a bill for interest.

(I'm going to respectfully disagree with Jen's comment about there being no penalty for tax due in April and unpaid until October. As long as the return is filed by 10/15, there's no late-filing penalty, but you're stuck with both the late-payment penalty and the interest. Payment in full is expected 4/15, whether the return is filed then or not.)