When I wrote the other about how to file an income tax extension, it was more than an academic exercise. I was actually thinking about the possibility of filing an extension ourselves. I actually figured everything out quite awhile ago, but our return ended up being a bit more complex than expected in that we ended up getting snagged by the AMT.
The additional tax hit wasn’t too bad, but I’m still thinking about seeking a second opinion to look things over. In order to buy some extra time, I decided that to submit what was due along with IRS Form 4868. The only real downside to doing this is that filing an extension has the potential to delay your tax rebate payment. This is a non-issue for us, so I went ahead with the extension.
On the state side, we’re actually due a refund, so there’s no real need to file an extension (but check your own local laws). While this would otherwise delay our tax refund, we’re apply our overpayment to our estimated taxes. Thus, there’s no harm in delaying, and it will allow us to make sure we have our federal taxes right before filing our state return.
What next? Well, we now have until October 15th to file the actual returns. In the worst case scenario, we’ll simply file our returns with no additional payment since we’ve already submitted the amount that we think we owe. But it’s possible that we’ll get a bit of a surprise if we can figure out how to further reduce our tax burden. If nothing else, filing a paper return and requesting an extension are both supposed to reduce your risk of an income tax audit.