AmyC:
Thank you very very much for the detailed reply. That clarity certainly helps. Have a follow up for Q4 where you wrote "This year should be filed regardless. Prior year return has only AGI to use this year. Use the AGI of zero if the returns are not finished processing when you file. "
For the last two years, both of them have needed an extension (until October) to file their federal (Form 4868) and Virginia state tax (Form 760-IP) returns. Thus, by April deadline, they applied for the extension and paid a dollar amount which was always refunded because their income is low and so they did not end up owing any taxes. For 2021, they don't want to pay any taxes ahead of time (in April) because they know they will only get all of the amount refunded. So the question is: If no taxes are owed for 2021 and they can't file their 2021 federal and Virginia state tax returns in April, do they still need to seek an extension from IRS and Virginia by sending in Form 4868 and Form 760-IP respectively by entering $0 as estimated tax liability?
Regards!
