The Minnesota Society of Certified Public Accountants (MNCPA) says taxpayers who need to request an extension need to be aware of late payment penalty relief, and also to understand what they need to do when filing for an extension.
As the state and federal income tax return filling deadline looms, the number of individuals filing for extensions could be higher than average this year due to year-end legislation and filing software issues.
Individuals and businesses can avoid a late payment penalty (.5 percent per month) if they attach to their returns and of the 31 forms that couldn't be filed until after Jan. 2013 due to legislative changes that affected the federal tax code.
List of eligible forms and further details on this relief: Notice 2013-24 at IRS.gov
On the extension request, taxpayers must designate their expected tax liability, file, and pay the estimated amount by the original due date of the return.
Request an individual extension using Form 4868 on the IRS website: http://www.irs.gov/formspubs/index.html
Request an extension to file certain federal business income tax returns with Form 7004:
The Minnesota Department of Revenue does not require a special request to extend the time to pay state income taxes, but tax payments after the due date are subject to penalties and interest. The automatic extension expires six months after the return's original due date.
Steve Warren, CPA with Lehrman, Flom & Co. says other reasons, such as new business, divorce, work overseas or death can also cause an individual to request an extension, and such an extension can best benefit the individual in the long run.
"As long as you pay at least the remaining tax amount due with your extension request, any potential underpayment penalties and interest can be minimized if not avoided," Warren said.
List of offices that offer direct IRS assistance: http://www.irs.gov/localcontacts/article/0,,id=98289,00.html
AccountAbility Minnesota tax preparation assistance for low-income Minnesotans. http://www.accountabilitymn.org
Are you deployed in the military or have a deployed spouse? The MNCPA offers information about free tax return preparation: http://www.mncpa.org/public/free-military-tax-prep.aspx