Understand the April 2024 filing and payment distinction, estimate the balance due and check IRA timing separately before requesting an extension.
April 8, 2024 · Financial Forte Staff
Historical article: prepared retrospectively using information available as of April 8, 2024.
The tax deadline is close, and one document is still missing. You may be able to obtain more time to finish the return, but that doesn't automatically give you more time to pay. Treating those as separate decisions can prevent an extension from creating a new problem while it solves the paperwork problem.
For most individual taxpayers filing a 2023 federal return, the general deadline is April 15, 2024. A timely extension can generally move the filing deadline to October 15, 2024. Payment obligations, IRA contribution timing and any special relief need their own review.[1][2]
Separate the return from the amount you expect to owe
A filing extension gives you additional time to submit the return. It does not generally postpone the original payment deadline. Estimate the tax using the information available, account for withholding and estimated payments already made, and determine what remains to be paid.[2]
The estimate should be reasonable, not a guess chosen merely to complete the form. If a missing investment statement or business record could materially change the result, discuss how to account for that uncertainty with the preparer.
Consider a hypothetical taxpayer, Terry, whose preliminary federal tax liability is $18,000. Withholding and estimated payments total $14,000. That leaves an estimated $4,000 balance due, assuming the preliminary liability and payment records are correct.
Requesting an extension doesn't turn that $4,000 into an October obligation. Terry should address the payment by the applicable original deadline while using the additional time to complete the return accurately. The final return may establish a different amount, which will need reconciliation. If the final liability becomes $19,000 and Terry already paid the estimated $4,000, another $1,000 remains before any interest or penalties.
The example also shows why “I already paid taxes during the year” doesn't answer whether another payment is due. The relevant comparison is total liability against total payments and credits, not simply whether some withholding occurred.
Keep proof of the extension and payment
The IRS provides electronic and paper methods for requesting an extension, including circumstances in which an appropriately designated electronic payment serves as the request. Use the correct tax year and follow the method's instructions. Retain confirmation that the request and any payment were accepted.[2] An accepted payment and an accepted extension are related records; confirm that the chosen method actually establishes both when that is your intention.
If you use a preparer, agree on who is responsible for each step. Don't assume that sending documents constitutes an extension request or that signing an authorization means the payment has already left the bank account.
Check the payment amount, routing information, scheduled date and account balance. A well-prepared extension doesn't prevent a failed payment caused by an incorrect account number or insufficient funds.
Place confirmations with the return's records so the final filing can accurately reflect what was paid. That also makes follow-up easier if a notice or question arrives later.
Address an inability to pay directly
If Terry cannot pay the full estimated $4,000, avoiding the return or extension process won't make the balance disappear. Terry should consider paying what is possible and investigating an applicable IRS payment arrangement. Interest and potential penalties require separate attention; an arrangement is not automatically a waiver.[3] Compare a proposed payment plan with the household's essential monthly expenses so its promised installments are realistic.
Compare the actual terms of available options before using expensive borrowing simply to make the tax balance look resolved. A credit card or loan has its own costs and obligations. The appropriate choice depends on the amount, expected cash flow and available repayment terms.
Tell the preparer about the payment constraint early enough to discuss practical steps. The objective is to handle both the filing requirement and the balance, even if they cannot be completed in exactly the same way or at the same time.
Check IRA contributions on their own timetable
An extension to file the return generally does not extend the deadline for making a regular IRA contribution for the prior tax year. An eligible person intending to fund an IRA for 2023 should confirm the applicable contribution deadline and make the tax-year designation clear to the custodian.[4]
Eligibility, compensation and contributions already made still matter. An extension doesn't create a larger allowance or make an otherwise ineligible contribution permissible. A contribution confirmation also doesn't automatically establish that a traditional IRA contribution will be deductible.
Don't confuse regular IRA contributions with every other retirement-plan deadline. Business plans, employer contributions and other arrangements may follow different rules. Identify the exact account and action before relying on a deadline someone quoted for another situation.
Verify exceptions rather than assuming the national date fits
The IRS announced different general filing dates for certain taxpayers in Maine and Massachusetts for this season. Disaster relief, qualifying overseas circumstances and other exceptions can also affect deadlines. State filing and payment obligations may differ from the federal process.[1]
Use the official relief that actually applies to the taxpayer, location, period and obligation. News that a deadline was extended somewhere does not establish that every tax action or every taxpayer received the same extension.
Begin with four questions: what must be filed, what must be paid, what contribution is intended and which deadline applies to each? Assign responsibility and retain confirmations. Separating those tasks lets an extension do its proper job: provide time for an accurate return while the other obligations receive attention of their own.
Related reading
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Educational information, not personalized investment, tax, legal or benefits advice. Examples use hypothetical assumptions. Verify current rules and your circumstances before acting.
Sources
- [1] IRS announces 2024 filing season — IR-2024-04 — 2024-01-08
- [2] Your Federal Income Tax — Publication 17 (2023) — 2024-03-18; 2023 edition
- [3] Your Federal Income Tax — Publication 17 (2023) — 2024-03-18; 2023 edition
- [4] Contributions to IRAs — Publication 590-A (2023) — 2024-03-04; 2023 edition
