In order to pass the tax preparer exam there are some basic facts to understand about extension of the due date for an income tax return. The IRS allows anyone an extra six months to file a tax return if properly requested by the initial due date, which is normally April 15.
The most important fact about filing an extension form is that it does not grant extra time to pay any tax owed. This is commonly misunderstood by the general public and requires frequent repeating by someone who has become a tax preparer.
When Form 4868 is filed to obtain an extension to file a tax return, it requires simultaneous payment of any amount due. This means that taxpayers should gather their tax information before April 15. Providing details about income and deductions permits completion of tax preparer jobs to estimate any tax liability payable with the extension form.
A payment made with Form 4868 is subsequently listed on a final tax return as one of the amounts credited toward the annual tax liability. The IRS charges interest for any tax balance that is not paid by the original due date.
Interest is assessed until full payment is received.
In addition, a penalty is usually assessed for failure to pay at least 90 percent of the total tax by the original due date. A Registered Tax Return Preparer can help a taxpayer avoid this penalty by calculating the safe harbor minimum payments based upon the prior year tax.
Another type of penalty is determined based upon the requirement to pay tax via withholding or equal estimated tax payments. Individuals waiting until April 15 to pay most of their annual income tax will incur penalties for not paying evenly throughout the year.
People who fail to file Form 4868 and instead send their tax returns after the original due date will face a penalty for late filing. This penalty is higher than the penalty for late payment of tax.
There are some special rules about extensions for taxpayers living abroad. These are all addressed in the income tax course to become a preparer of tax returns. Overseas taxpayers have an extra two months to file tax returns and pay any tax balance due. This is accomplished without having to request an extension. The extra two month period applies for any US citizen (or resident alien) who is out of the country on the original due date of April 15 for employment reasons or military service.
Military personnel serving in combat zones receive even more time to file their tax returns. No extension request is required. However, tax preparers working on returns for these individuals know to include statements explaining qualification for this later deadline. body> nder. They must continue deducting the remaining points over the life of the new loan.
There’s one other matter where a professional tax preparer helps taxpayers avoid mistakes. That is, points paid by a seller count for the benefit of the buyer. That means the buyer gets a tax deduction for the points, but must subtract the points from the basis in the home.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
