You are viewing a single comment's thread from:
RE: Need Additional Time to Nail Down Crypto Taxes? File an Extension!
It is my understanding that one can file extension without a payment in order to avoid a late filing penalty once actual return completed...as mentioned you will be charged additional interest and penalty on the final balance owed...which I believe runs about .75 percent each month...however...you avoid the much higher 5 percent per month late file penalty...
Please be advised this is my opinion only and is in regards to USA taxation...your state may be different...my state requires a payment of 90 percent of tax to be valid...years ago the Federal required something similar...this is not tax advice...you are responsible for your own research.
Perhaps, in the federal jurisdiction, the act of filing the extension form generally prevents one penalty and the extension payment prevents a different penalty. I sprinkled some clarifying language through the article.
Due to the associated late payment penalties, I was initially a little put off to go out and advertise that it was possible to not make a payment (instead I linked to the penalties section). As you noted, at the state level a person could be assessed a late filing if he/she fails to make a payment by the original due date (the payment is as important the form itself).
I fully appreciate your concerns...I have been in practice a number of years and find the "reality" of what is allowed is not always easily gleaned from the form instructions or IRS publications...the instructions clearly suggest a payment "should" be made...however...it is my understanding that the rules changed years back where an extension will be accepted to avoid a bigger late file penalty even if a payment isn't made....again...this is not tax advice...merely my understanding only and each taxpayer is responsible for doing their own research on their own or with a competent tax preparer....
The myriad of penalties is a mine field. Plus the international compliance penalties get nasty very quick some at $10,000 plus. Thanks for sharing, it keeps the discussion well rounded with diverse input!
I thought it was .5% a month for paying taxes late. As in half of 1 percent.
Great post btw @cryptotax
Correct for the penalty...but there is an interest computation as well I believe.