2013-03-13 22:31:50 -

Thomson Reuters analyst explains reasons for individuals to file an extension,
deadlines for filing and making payments, and implications for living and
working abroad

NEW YORK, March 13, 2013-More than ten million U.S. taxpayers (out of 140
million) got an extension to file their income tax returns last year.  To help
taxpayers decide if they should get an extension this year, Michael Sonnenblick,
a tax analyst at Thomson Reuters, offers the below considerations.

Why file for an extension.  "Basically, filing for an extension provides you
with more time to prepare a complete and accurate income tax return,"
Sonnenblick says. "While you should have received your Forms W-2 and 1099 by the
end of January, seemingly in enough time to file by April 15, 2013, you might be
waiting for other forms   that are not yet available. For example, partnership
information forms (K-1s) are not due to the taxpayer until the 15th day of the
fourth month following the end of the partnership's tax year.  This means that
partners in calendar-year partnerships may not receive their K-1s before April
15." Additionally, a taxpayer might be waiting for financial information from
outside the U.S., which may not be as readily available as information from
within the U.S.

Filing for an extension will also give a professional tax preparer more time to
prepare a return, review it with the taxpayer, and suggest future tax saving
ideas. One concern a taxpayer might have about filing for an extension is that
it might increase the risk of an IRS audit. While the IRS is understandably
quiet as to what triggers an audit, many practitioners, Sonnenblick notes, feel
that filing for an extension is not a problem. In fact, many attorneys and CPAs
feel that filing an amended return is an audit trigger, so it is better to file
latter than it is to file early and more than once.

There are a number of reasons to file for an extension, and the good news is
that it is easy to do so, explains Sonnenblick. Generally, a taxpayer applies
for an automatic extension using Form 4868. A paper or electronic form may be
filed. A taxpayer also gets an automatic extension if paying estimated income
tax on time using a credit or debit card by April 15. Filing for this extension
gives a taxpayer six more months to file a return.

But Sonnenblick warns that the extension is only for filing a return, not for
paying the taxes. "Your tax bill is due on April 15, 2013, and if you haven't
paid in full by then, you will owe interest, which is currently three percent,
and perhaps a penalty, on the unpaid amount Sonnenblick says. Make a reasonable
estimate of the taxes you owe, and return that amount with Form 4868. Even if
you are short on cash, file for an extension and pay what you can." The penalty
for not filing is five percent per month (up to 25 percent) of the amount due on
the return, whereas the penalty for paying late is only 0.5 percent of the
unpaid amount per month (also up to 25 percent).

Filing for an extension does not require waiting until October 15, 2013, to file
a return -- it can be filed any time during the six-month period.

There are two other extensions available for individuals-for taxpayers living
abroad and for members of the military serving in a combat zone or a qualified
hazardous duty area. If living abroad and working abroad, a taxpayer gets an
automatic two-month extension to file income taxes, and no interest or penalty
is charged if paid within that two-month extension period. There is no need to
file Form 4868.  But, if needing more than two additional months, a taxpayer can
file Form 4868 to get an extra four months. The rules for the military also
extend the time allowed for paying taxes, depending on when a taxpayer leaves
the combat/hazardous area zone. A tax professional can help determine the
deadlines in those cases.

Taxpayers should consult with a tax adviser before applying these or other tax
strategies.

Up-to-date analyses of legislation and regulations affecting taxpayers are
available for tax and accounting professionals on the industry-leading, award-
winning Thomson Reuters Checkpoint research platform.


Thomson Reuters

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                                     -End-


CONTACT

  Ruth Ann Baker
  Public Relations
  972-250-7438
  ruth.ann.baker@thomsonreuters.com








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