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Posted Wednesday, June 4, 2025
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If you want to extend your tax returns, there are a few things to keep in mind. First, we must get written approval from you to extend your tax returns either directly or as part of your Engagement Letter. We cannot legally file an extension without permission. So, if we don’t hear from you, an extension will not be filed. Failure to file is a huge penalty (5% per month based on tax due). Yuck.
Second, an extension to file is NOT an extension to pay. Taxes are due Tuesday, April 15, 2025 (or as adjusted depending on natural disasters or Congressional whims, which are actually the same). Failure to pay is a smaller penalty (0.5% per month based on tax due).
Extended tax returns will be completed in August or September provided we have everything we need from you. If you need them prepared sooner, please contact us. May, June and July are reserved for 2025 tax planning.
Our turnaround time increases to 12-15 days during the off-season to accommodate for mental breaks and vacations. Frankly, our motivation wanes slightly after April 15 but we bounce back fast.
Calculating 1040 Extension Payments Using a Tax Plan
If we prepared a 2024 Tax Plan for you using specific data, first congratulations since tax planning is a wonderful tool. Second, please review the Tax Plan PDF that was delivered to you via your Sharefile, and review the income, adjustments, deductions and tax computation for accuracy (see button below for Sharefile access). If you have made the quarterly estimated tax payments as illustrated in your tax plan, and there are no material changes between reality and tax plan, then you don’t need make an extension payment. Sorry to sound like Mom, but in a properly planned tax year, an extension payment is never needed.
Otherwise, if WCG prepared your 2023 individual tax return (Form 1040), we created an “auto Tax Projection Worksheet” or “TPW” which takes 2024 data as a proxy and projects your 2024 taxes. The projection factors in likely repeated income (wages, interest, dividends) and one-and-done income (such as selling a rental or stocks). This will be part of your tax return PDF and is buried near the end of the federal portion of the tax return. If you have bookmarks within your PDF viewer (such as Adobe), it will look like the image to the left.
The following table illustrates how to calculate your extension tax payment using the automatic tax projection worksheet-
| Total Tax (Line 76 on 2024’s Tax Plan) | 21,455 |
| Federal Income Tax Withheld | |
| Bob’s W-2 | -6,772 |
| Jenny’s W-2 | -3,231 |
| Federal Estimated Tax Payments | |
| Q1 | -2,500 |
| Q2 | -2,500 |
| Q3 | -2,500 |
| Q4 | -2,500 |
| Net Extension Payment Due | 9,452 |
The state is similar to above.
Investor Patrol and Tax Patrol
Tax planning takes the mystery out of estimated tax payments and extension tax payments. Our Business Advisory Service plans have tax planning and tax reduction strategy sessions built-in, but not everyone has a business or needs that level of service.
Investor Patrol is a wonderful tax service for those who don’t need all the business advisory bells and whistles, but desire pro-active tax planning and scenario-based decision making assistance from an experienced tax consultant. Have a quick tax question? Need to know the depreciation rules as you furnish that new short-term rental? Want to kick around Real Estate Professional designation? Wondering what your April tax bill is going to be in August?
Investor Patrol is like ski patrol… you might not use it, but you sleep better knowing you have it. We offer three typical versions aptly labeled Houses, Hotels and Monopoly.
We also have Tax Patrol which is similar, but without the rental property and real estate investment mindset.
Both our Patrol Services, Tax and Investor, are specifically designed to give you the freedom to call, text or email us without the worry of being nickeled and dimed like other outdated CPA firms. And! We also provide a tax planning event (usually around May, June and July) where we gather up your financial records like paystubs, rental activities, stock sales, etc. and we create a mock tax return projecting your annual income and eventual tax obligations. We are not big on surprises… bad news in August is palatable, yet bad news on April 15 is unacceptable.
Our Patrol Services include tax preparation, estimated tax payment calculations, unlimited complimentary quick chats and a tax planning event plus IRS audit defense for any tax return that we prepare.
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