I filed an extension till August 15th and need to now file a return. Been doing a lotta work 1099 and not setting anything aside.

First the extension should be valid until 10-15.  However the IRS could say that extension is invalid and charge you failure to file penalties which are 5% per month of the tax due from 4-15.   The reason is that the extension is for filing the tax return.  There is no extension for paying the tax.  If you do not have 90% of the tax paid the IRS reserves the right to invalidate the extension.  Once they do that they can charge you the failure to file penalty.  Good news is that in many cases I can write a letter for the client and get this penalty abated. 

Not meaning to pile on bad news but in addition to the above penalty the IRS will charge you .5% a month penalty for failure to pay.  Both this penalty and the failure to file penalty have a maximum penalty of 25%. 

 Nothing good about your situation so far sorry.  My best advice is first we should start working on the return asap.  First thing you need to know is how bad is it?  Depending on what you were doing the tax might not be that bad.  Additionally if you are going to keep doing more of this work if we know the consequences we can often plan to make the tax less in the future.  Yesterday I was consulting with a client that is in a situation where we can cut his taxes by about 40%, a savings of about $6,000 per year by simply changing his business entity structure slightly


About taxdude8422

Basically I am just a tax nerd, have been all my life. However I have found the more open you are to opportunities the better off you will be in this world. That makes my what is know as an open networker on Linkedin, I will connect with anyone. I am not an expert on Linkedin by any means but one day when I was asking someone to connect I mentioned that I had just been refilled on invites. My new connect asked how I did that. I used that same line for the next month and got asked the same question four times. I started thinking there was a lot of little things it took my sometime to learn. Through this blog I plan to share some of those "Linked Secrets"
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