re: Tax Filing Extension

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Does it make a difference if a client is paid via K-1 then? Since those are not typically released till March 15.

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If our firm is preparing the K-1s, then we can quickly drop that in when it's ready to go, as the systems are linked together.

If we don't prepare the K-1s, then the same date rules apply. We try to be flexible... if you send us all of your info on time and send us your K-1 on March 16, we can probably get it all finished. So we encourage, if you are just waiting on a K-1, send everything else first, and then forward the K-1 when you get it.

And then we have the clients who won't get a K-1 until August, so we get the rest of the info in, prep the return, drop in an estimate number for the K-1, then give them a tax estimate for 4/15 extension and see them in August to wrap up.

It's the ones that show up on April 5th with a mess and then want the return filed on time that get a quick nope.

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that. I delivered all my stuff to my CPA in February with the remaining K-1 coming in on March 15. First year getting this and having to file state tax returns for all states. Rather complicated. Still waiting to hear something from my guy.
Not worried if we need to file an extension but really have no idea whether I owe anything extra or not, just like OP.

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If it was me, given all that I would tell you when the K-1 came in, let's extend at least this first year, as all the state returns can get a little tricky the first time, but go ahead and pay in X now.

My CPA emailed today asking if I want him to make the (sizable) tax payment or if I would make the payment myself. Is this a normal request?

This is my first year working with him. In the past my CPAs have filed and I’ve just paid with an echeck. Can’t remember an accountant offering to do that before.

Well then what’s your question? Drafting from your account is very common.

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Those are estimated taxes that you pay quarterly. You have to pay 100% by April 15th.

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With estimated taxes you avoid a penalty if you pay 90% of the current year's final number or 100% of the previous year's tax due whichever is lower by the 15th. It is shorthand for quarterly payers so as long as you pay 100% of the last year's total by the 15th you avoid any penalties but you could have a big check to cut about a month after your 3rd quarterly for the year. Been there done that but I knew it was coming.

IIRC withholdings payers don't have the 100% of last year to rely on I think they have to pay the 90% of the current year. Don't quote me or rely on that.


Somebody mentioned up above:

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You pay an estimated number, if you overpay it goes towards next year.

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If he over pays he will be due a refund just like if he had overplayed by withholdings. If he pays quarterly estimated taxes he can choose a refund, to apply the balance to next year's estimated taxes, or any combination of the two.



DO NOT TAKE TAX ADVICE OFF THE INTERNET!

To answer the OPs question his CPA can and should provide him with a number that he needs to pay to be penalty free.

There is a third way but I won't bother with it but the standard 2 ways to get an extension are to file a Form 4868 either by e-file or paper. The form's Part II will have a line for estimated 2023 tax liability, total 2023 payments, balance due and the amount you are paying.

The instructions for 4868 will contain this information:

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Late Payment Penalty
The late payment penalty is usually ½ of 1% of any tax (other than
estimated tax) not paid by the regular due date of your return, which
is April 15, 2024, for most people. It’s charged for each month or
part of a month the tax is unpaid. The maximum penalty is 25%.
The late payment penalty won’t be charged if you can show
reasonable cause for not paying on time. Attach a statement to your
return fully explaining the reason. Don’t attach the statement to
Form 4868.
You’re considered to have reasonable cause for the period
covered by this automatic extension if both of the following
requirements have been met.
1. At least 90% of the total tax on your 2023 return is paid on or
before the regular due date of your return through withholding,
estimated tax payments, or payments made with Form 4868.
2. The remaining balance is paid with your return.

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With estimated taxes you avoid a penalty if you pay 90% of the current year's final number or 100% of the previous year's tax due whichever is lower by the 15th. It is shorthand for quarterly payers so as long as you pay 100% of the last year's total by the 15th you avoid any penalties but you could have a big check to cut about a month after your 3rd quarterly for the year. Been there done that but I knew it was coming. IIRC withholdings payers don't have the 100% of last year to rely on I think they have to pay the 90% of the current year. Don't quote me or rely on that.

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Not sure if I’m missing the point of your post, but the 90% thing refers to estimated tax underpayment penalties, not late payment/interest penalties, which is the consideration at extension time.