Times to file an extension

We are finally beginning to have glimpses of spring-like weather here in Northeast Ohio. This can only mean that the tax deadline is near.

With that, you need to make sure you get something filed with the IRS.

Whether you are missing certain documents, had some medical challenges or other issues that prevented you from completing the return, you must take certain steps by the slightly extended deadline this year of Tuesday, April 17 to avoid additional interest and penalties.

The first step is to make sure that IRS form 4868 Application for Automatic Extension of Time to File U.S. Individual Income Tax Return is filed either through mailing or electronic filing. This needs to be completed by April 17 to prevent you from being charged a late filing penalty.

However, filing an extension is simply an extension to file the return, but does not act as an extension to pay any balance due.

To avoid any additional late payment penalties 100 percent of the prior year tax balance must be paid in by April 17. This can be a bit problematic when the tax return is not completed. It is advisable that you make a payment with the form 4868 that is more than sufficient to cover any anticipated taxes that have not already been withheld or paid through estimates. In the event that you over pay the taxes the overpayment can be refunded or credited to the following tax year.

I often run across a misperception in parts of the general public that if they are unable to pay their tax balance all that needs to be done to delay this is to file an extension. This is not correct. You should use all means available to you to pay your tax balance in full by April 17 to avoid those penalty and interest charges, which can be quite expensive.

There is no separate extension form for the State of Ohio.

A copy of the IRS form 4868 acts as any type of extension verification for the State of Ohio.

However, just like the IRS, the State of Ohio requires all taxes to be paid in full by April 17 to avoid any additional late payment penalties. So, it is advisable that you make an estimated payment using the Ohio IT 40P Income Tax Payment Voucher by April 17 so that your tax liability is fully covered. Similar to the IRS, any overpayment at the eventual time of filing the return can be refunded or credited to the following tax year.

The extension requirements for the local income taxes vary by taxing authority.

The extension requirements for the local income taxes vary by taxing authority.

RITA and CCA are the largest local tax collecting authorities in the area. Both of those organizations honor the federal extension but require a copy of the federal extension be attached to the local return when ultimately filed with them.

Other local taxing authorities such as Euclid and Ashtabula which are independent and service their own communities are a bit more problematic. These communities require you to mail or fax a copy of the IRS form 4868 to them prior to April 17. If you do not they will charge a late filing penalty of $50 or more. In addition, all tax payments must be made by April 17 to avoid additional penalties and interest as well.

One of the challenges that faces tax payers is that each local municipality has its own requirements for local extensions so it is advisable to check with your local taxing authorities to be sure that you are in compliance with their particular extension requirements.

So, whether you are able to get your returns completed and filed by April 17, or you ultimately end up needing to file an extension make sure that you get something filed. Don’t forget that with all taxing authorities an extension to file is not an extension to pay.

Paul Pahoresky is a partner in the accounting firm of JLP CPAs. He can be reached at 440970-1040 extension 14 or at paul@jlpcpas.com. Consult your tax advisor for your specific situation for additional information and guidance on these topics.

Paul Pahoresky