There are a number of reasons for not filing your tax return by
April 15. Some people have financial transactions or joint ventures
which may be difficult to summarize by April 15.
There are a number of reasons for not filing your tax return by April 15. Some people have financial transactions or joint ventures which may be difficult to summarize by April 15.
Others simply don’t get organized in time to file by the deadline. If you can’t file your 2002 tax return by April 15, you need to file an extension by that date.
Many people are still unclear about what an extension really means.
A valid extension simply means that your tax return will not be subject to a penalty for late filing. But even with an extension, you may be subject to a penalty for late payment of tax plus interest on any balance due.
To avoid a late-payment penalty, you generally must pay at least 90 percent of your ultimate tax liability by the time you file your extension.
For example, say your 2002 tax bill will ultimately come to $10,000, and you have already paid $8,500 via withholding or estimated payments.
You can avoid a late-payment penalty by paying at least $500 with your extension. (That’s the difference between $8,500 and $9,000, which will bring you up to the 90 percent level.)
Note that you’ll be charged interest on any balance due when you file your return, whether or not you’re also subject to a late-payment penalty.
If you are a U.S. citizen living abroad, you have until June 16 to file your 2002 return. This does not require the filing of an extension form.
When you file your tax return, you must attach a statement showing that you qualified for the extension. Also, interest will be calculated on any balance due from the April 15 due date.
This two-month extension does not apply to taxpayers who are just traveling outside the U.S. on April 15. Military personnel serving in combat qualify for an extension for filing returns and paying tax for the period of combat service plus 180 days.
Barbara Andres is a CPA and a partner with the accounting and business consulting firm of Bianchi, Lorincz & Company located in Morgan Hill.
