Tax Filing Extension is Good News for Procrastinators
Texas CPAs Say Six-Month Extension Will Help
Those Who Need More Time to File Their Returns

DALLAS — The tax clock is ticking, and the countdown to April 17 has begun. If you’re one of the thousands of Texans who needs more time to file your 2005 tax return, the Texas Society of Certified Public Accountants says you may be in luck.

Revised Internal Revenue Service rules now allow most taxpayers to get an automatic six-month tax return filing extension. Texas CPAs caution, however, that filing an extension only gives you more time to submit your return, not more time to pay your taxes.

FILE FOR EXTENSION ON PAPER OR ELECTRONICALLY

Under the new rules, taxpayers can use a single IRS form, Form 4868, Automatic Extension of Time to File U.S. Income Tax Return, for an automatic six-month extension until October 16, 2006. The request for the extension must be made by the original due date for your return – April 17, 2006.
If you choose to file for the extension on paper, you must complete the recently revised Form 4868, and mail it to the address shown in the form’s instructions.

You may file for an extension electronically, with tax preparation software or by using the service of your CPA. In either case, you will need to have a copy of your 2004 return handy for taxpayer verification. When you e-file for an extension, you receive a confirmation number showing that the IRS has received your extension request. Keep this information with your tax records. There is no need to follow your electronic request with a paper Form 4868.

AN EXTENSION TO FILE IS NOT AN EXTENSION TO PAY

What hasn’t changed is that the extension you request is an extension for filing – not for paying your income tax bill. If you fail to pay on time, you’ll face fines and interest charges.

Paper extension filers should send a check, payable to the United States Treasury, along with Form 4868, to the address shown in the form instructions. Taxpayers who file for an extension electronically can make payment by authorizing an electronic funds withdrawal from a checking or savings account. You will need to have the appropriate bank routing numbers and your account number to process your request. When you file your income tax return, be sure to enter any payment you made when you requested the extension.

You can also use your American Express, Discover Card, MasterCard, or Visa to charge all or part of your estimated tax balance due. Form 4868, which should be used as a worksheet, includes instructions for making credit card payments. Be sure to keep the acknowledgement number you receive; it serves as proof that you filed for an extension. There is no IRS fee for credit card payments, but some processors may charge a fee.

DIFFERENT RULES APPLY TO THOSE LIVING OUTSIDE THE U.S.

If you are a U.S. citizen or resident and you qualify as being “out of the country,” you are allowed two extra months to file your return and pay any amount due without requesting an extension. However, interest will be assessed on unpaid tax from the original due date of the return.

For an additional four-month extension, you must file Form 4868 and check the box on line 8. You qualify as being out of the country if: (1) you live outside of the United States and Puerto Rico and your main place of work is outside the United States and Puerto Rico, or (2) if you are in military or naval service outside the United States.

CONSULT WITH A CPA

If you have questions regarding the process of filing for an extension, consult with a CPA. When you are ready to file, he or she can help you prepare your tax return as well.

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ABOUT TSCPA
TSCPA (http://www.tscpa.org) is a nonprofit, voluntary, professional organization representing Texas CPAs. The society has 20 local chapters statewide and has 27,000 members, one of the largest in-state memberships of any state CPA society in the United States. TSCPA is committed to serving the public interest with programs that advance the highest standards of ethics and practice within the CPA profession.