1. What is an extension?
An extension tells the IRS and any relevant State Tax Authorities that you need additional time to file your taxes. An electronic submission is filed with the IRS and States that automatically extends the deadline for filing by 6 months. It’s important to note an extension is just an extension to FILE the tax return, but not an extension to pay any balances due you may have. Any balances due to the IRS or States should still be paid to the IRS / States by the original April 15, 2019, filing deadline to avoid interest charges and / or late payment fees.
2. Why do I have to file an extension?
At Visor, our filing slots and capacity to meet the initial April 17th filing deadline fill up by early March. Therefore, for clients that upload their documents after early March, we file an extension on behalf of our clients so that the taxes can be filed after April 15th. We will continue to process tax returns as quickly as possible in the order in which we receive your documents, so it’s important for you to upload your documents and confirm your uploads in order to be scheduled for your tax return analysis.
3. How much does an extension cost?
$0. There are no filing fees from Visor nor from the IRS or states to file an extension.
4. Are there any negative implications of filing an extension?
No. Many taxpayers file extensions every year because they take longer to gather their documentation and / or their situation is more complicated requiring additional time to properly prepare their tax returns. Clients filing for an enhanced MBA deduction are at no greater risk of audit or questioning because they file an extension.
5. Does filing an extension affect my refund?
No, there is no impact on your refunds if you file an extension.
6. I’m not sure if I am getting a refund or might owe additional taxes. What do I do?
Most taxpayers expect refunds from their tax filings. However, in certain cases, some taxpayers may in fact owe some tax to the IRS and/or states. Generally, there is no 100% certain way to know for sure unless the actual complete tax return is prepared using all available information (W2s, 1099s, etc).
7. If I end up having a balance due to the IRS and/or states, how much interest/late payment fees would I have to pay on top of my original balance due?
As long as an extension is filed on time (no later than April 15th), the interest and late fees charged by the IRS and/or states are generally relatively small. Generally, interest is charged at a rate of 0.25% per month of the outstanding balance due. If 90% of your final tax liability has not been paid by April 15th, the IRS may charge an additional late payment penalty of 0.5% per month of the outstanding balance due. Some states may also impose late payment fees equal to or more than the IRS fees (between 2-10% of the final outstanding balance due).
Example: Your final IRS tax liability showed a balance due of $3,000 and a state balance due of $750. You successfully file an extension, but do not pay the final balances due until June 15th (2 months after the April 15th payment deadline). If the IRS balance due was >10% of your final total liability, the IRS will charge 2 months of interest and 2 months of late payment fee = 0.75% x $3,000 x 2 months = $45. State late payment fees vary by state, but could be reasonably estimated at $30 – $150 (between 2-10%).
8. If I am OK filing an extension, but want to avoid any interest/late payment fees, what do I do?
To completely avoid any and all interest / late payment fees, you’ll need to send the IRS and/or any states an estimate of your final tax liability prior to April 15th. Any “overages” would be refunded to you once the return is actually filed (e.g. if you paid more than what you actually end up owing).
9. Will Visor reimburse me or cover any IRS or state interest fees or late payment penalties?
No. All tax liabilities, interest fees and/or late payment fees charged by the IRS or State Tax Authorities are solely the responsibility of the taxpayer, and Visor will not assume any of these payment liabilities. Feel free to message us by logging in to your dashboard if you have any questions!
Frequently Asked Questions