File an extension

[aE]

I know this has been covered but I don't see a recent how-to: I have completed my taxes and ready to file but one new investment I made last year won't have their K-1 until September and they are recommending I file an extension. I expect to owe federal and get a refund on one state.

Do I still pay the liability and get the refund if I file the extension?

Also, I don't see "File an extension" on the online version. How do I actually extend?

[DoninGA]

Any taxes owed on the 2023 tax return have to be paid on or before April 15, 2024 to avoid a failure to pay penalty.  The extension request is only for filing the federal tax return, not an extension for paying the taxes owed.

Go to this TurboTax website to e-file an extension request - https://turbotax.intuit.com/irs-tax-extensions/

[aE]

Thanks, but what about my state refund? I have to file an extension as one K-1 won't be ready and I owe Federal but will be getting a state refund. I know I owe the federal when I extend or by 4-15 but will I get my refund also on 4-15? Or when I file in October?

[DianeW777]

It depends.  You can file your state return now by mailing it to receive your refund possibly earlier.  You can choose to wait to file your state return until you file your federal return using e-file.

As a reminder an extension of time to file is not an extension of time to pay. That simply means that each day you wait to pay, interest and penalty will continue to accumulate on any underpayment when you file. This does eliminate the late filing fee. 

• IRS Extension Information
• Free federal tax extension is available.

[aE]

I was planning on using the refund to pay the federal as both offset. Let's assume I owe $30 to federal, am getting a $55 refund from NY and owe $15 to CT. So net, I am getting $10 back. I plan to e-file ideally all (first time filing an extension so apols if my question is basic). 

Paying $45 to both federal and CT would require some action on my part - I don't have the full $45 (and it's not 45 but obviously thousands we're talking about). 

All this for 1 new investment that provides K-1s in September...but that's a topic for a different day :(

[DianeW777]

The extension will eliminate the late filing fee and full payment is optimal, however, pay what you can now and wait for your state refund to add another payment if you want before you actually file.  Or, you can choose to pay the balance due when you file your return.  The unpaid tax balance will continue to accumulate interest and late payment fees until paid in full.

There is also a possible option to request an installment agreement for a fee. 

• What is IRS Form 9465 Installment Agreement Request?
• Form 9465 and Instruction
• Can I set up a payment plan for my taxes?

[aE]

Can I choose just to file now? In that scenario, I would pay my federal and CT and get my NY refund. When I get the K-1 in September, can't I just file an amended return? And if I make an estimated payment between now and September, then there would be no interest or penalties, correct? 

I hate the idea of extending when my taxes are done for one small investment. 

[PaulaM]

You can file now and amend in September, but you still must pay what is due by 4/15/24. 

Interest would still accrue of whatever amount is owed and late payment fees if not paid by the due date.

[aE]

Sorry, now I'm confused and don't understand your comment on late / penalty fees.

I will be pay what is due by 4/15/24. My question is why not file now, pay what is owed to both federal and CT (by 4/15), get my NY refund, and amend when I get the K-1 in September (call that Option A).  The alternative, call it Option B, is to not file by 4/15 but to extend, still pay what is owed to federal and CT (by 4/15) but DON'T get NY refund, and then file in September when I get the K-1. 

Option A sounds better to me? Not sure why there would be any penalties since I don't have the K-1, nor do I even have an estimate of it. 

[PaulaM]

I missed the part where you said you pay what is due by 4/15/24 @aE .  That's all that anyone is cautioning about.  If the K-1 increases your income, then the taxes due on that income would be 4/15/24. If you choose option A, amend when you get the form, and you owe taxes on that K-1, you still will owe interest/penalties if you did not pay them on 4/15/24. Better to overestimate, than underestimate.

I like option B for the less hassle with amending and the long amending processing, but do whatever works best for you. Just pay what you expect to owe (including the K-1 income) by 4/15/24.

[aE]

Thanks @PaulaM . One small follow-up - I don't have the K-1 nor do I have any estimate of its performance (investment in private companies). All I have is a notice from the broker saying "the K-1 will be ready in September and to file an extension; an estimate will be ready possibly by May." So not sure how i'm supposed to estimate by tomorrow? 

[DawnC]

Make your best guess; it is just an estimate.  If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. 

Generally, most taxpayers will avoid this penalty if they either they owe less than $1,000 in tax after subtracting their withholding and refundable credits, or 

if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.  

[aE]

So I thought I was done but...

I filed a federal extension which was accepted and I am paying the full amount due by 4/15/24 (today). But Turbo did not automatically extend for Connecticut where I also owe money. A quick search says Turbo will will do this when you complete your state return. But I am at the State part now it is giving me the "are you ready to file. This cannot be undone" option.

Do I click through? Does Turbo know not to file state if they've already granted me a federal extension? If it's helpful, because my extension was accepted, I now have a 0 balance on the screen within Turbo. 

[DMarkM1]

No, do not continue to file.  Exit the filing interview and return to the CT state interview.  At the end of the CT state interview you will find the "Extension" request option. Follow the prompts from that point to file the CT extension.   

[aE]

Does TurboTax pay the IRS the amount due when you extend? I put in the full amount due, I put in my bank account information, authorized the payment, set the date for 4/15/24, and followed all the prompts on the screen and hit submit. And I did it on Sunday 4/14. But the amount has not been debited from my bank account yet.

I don't have to go to the IRS website to make the payment, do I?