Posted by Fred Lake

Five ways to avoid E-file Extension Rejection

Five ways to avoid E-file Extension Rejection

The Internal Revenue Service (IRS) does not reject many tax extension applications. However, there are many reasons why the IRS doesn't accept some tax extension applications. The reasons for rejection of a tax extension are enormous, but how to make sure your application passes all of these tests, and broadly, how to avoid the e-file extension rejection are explained below in Five (5) ways to avoid E-file extension rejection. They are;

  • Make Use of the Appropriate Form: Before the taxpayer files using Form 4868, he or she must check to ensure it is for the appropriate year. The revision year is usually on the upper right-hand corner of the first page. The revision year must match the year of the tax return. For instance, if you are filing an application for your 2018 tax return, the revision date on Form 4868 must be for 2018.
  • File promptly: Taxpayers must know when to file his or her extension application before it becomes tricky. Generally, taxpayer’s extension application is often due when tax return is due. But knowing exactly when a tax return – and equally essential a business tax return - is due can be rather difficult. Each year, the exact due date for returns changes; due to where the due date falls on the calendar. Should the tax return due date fall on a weekend or holiday? The due date is the next working day. The expertise of tax preparers and accountants can be sought to help with all relevant bookkeeping. Therefore, to avoid e-file extension rejected, taxpayers must ensure to include the payment for your taxes along with his or her extension application.
  • Use a Tax Professional: The best way to make sure the taxpayer’s extension application is accepted is to solicit the help of tax professionals; tax preparers and accountants. These would use tax preparation software to help ensure what is required is done. Taxpayers can either file his or her extension application online using the software, or allow the tax professionals; tax preparers and accountants your handle the filing. 
  • Check and correct errors and Report any change in information: Are you reporting your business taxes or you are reporting income from a partnership or PLC? Then, you will be filing your business taxes as part of your personal tax return. You need to use Form 4868. Though the process of filing the extension application is fairly easy, there are some potential pitfalls to watch out for and avoid. 
  • Taxpayer’s detail; name and address and your tax identification information. Taxpayers must ensure he or she use the correct Tax ID number (TIN). The tax ID number (TIN) on the taxpayer’s extension is also his or her personal social security number. The number for taxpayer’s business must not be mistaken for this because the application is for taxpayer’s personal tax return. 
  • How much taxes the taxpayer have already paid (in withholding taxes, VAT ,estimated taxes, or other payments), 
  • Current tax payment. The taxpayer should send in his or her payment along with the extension application. Taxpayer must note that any payment made after the due date is subject to fines and penalties
  • An estimate of taxpayer’s tax liability. The taxpayer’s estimate must include (a) his or her personal income, (b) the business income, and (c) taxpayer’s self-employment tax liability (if it applies). Failure to estimate taxes due correctly can result in penalties for underpayment. The help of tax preparers and accountants might be sought for their expertise.
  • The tax balance due

The taxpayer do not need to file Form 4868 if he or she is paying the due balance electronically. The IRS will automatically process taxpayer’s extension application when he or she pays part or all of your tax electronically.

  • Review Application thoroughly before Filing: The taxpayer must use the correct extension application form for the business type he or she is filing tax for. Also, the taxpayer must check his or her application to ensure it is devoid of errors.  Is there any change(s) in either the business or personal information? For instance, was there any change in your address since your last communication with the IRS? If there is and you didn’t communicate such prior to filing, the IRS would not be able to match your tax information to the extension application information. If your business or personal information changed, you must notify the IRS using Form 8822.

Finally, the taxpayers must not forget the due date for completing and submitting the extended tax return. The time available for the completion of tax return depends on the type of business the taxpayer operates. 

Fred Lake
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