October Extension Due Date Rapidly Approaching

Article Highlights:

• October 16 is the extended due date for filing federal individual tax returns for 2016.
• Late-filing penalty for individual federal returns is 5% of the tax due for each month, or part of a month, for which a return is not filed, up to a maximum of 25% of the tax due. A separate penalty applies for filing a state return late.
• Interest on tax due.
• Other October 16 deadlines.

Special extension in FEMA designated disaster areas. If you could not complete your 2016 tax return by the normal April filing due date and are now on extension, that extension expires on October 16, 2017. Failure to file before the extension period runs out can subject you to late-filing penalties.

There are no additional extensions (but see below for FEMA designated disaster areas), so if you still do not or will not have all of the information needed to complete your return by the extended due date, please call this office so that we can explore your options for meeting your October 16 filing deadline.

If you are waiting for a K-1 from a partnership, S-corporation, or fiduciary return, the extended deadline for those returns is September 15 (September 30 for fiduciary returns). So, you should probably make inquiries if you have not received that information yet.

Late-filed individual federal returns are subject to a penalty of 5% of the tax due for each month, or part of a month, for which a return is not filed, up to a maximum of 25% of the tax due. If you are required to file a state return and do not do so, the state will also charge a late-file penalty. The filing extension deadline for individual returns is also October 16 for most states.

In addition, interest continues to accrue on any balance due, currently at the rate of 4% per year.

If this office is waiting for some missing information to complete your return, we will need that information at least a week before the October 16 due date. Please call this office immediately if you anticipate complications related to providing the needed information, so that a course of action may be determined to avoid the potential penalties.

Additional October 16, 2017 Deadlines – In addition to being the final deadline to timely file 2016 returns on extension, October 16 is:

• The last date to recharacterize (undo) a 2016 traditional IRA conversion to a Roth IRA. If you made a conversion and now regret doing so because of the conversion tax or because the value of the Roth IRA's holdings has dropped sharply, you can undo the conversion if it is recharacterized by October 16. This involves transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a direct (trustee-to-trustee) transfer. You must file an amended return for 2016 reflecting the recharacterization if you have already filed your 2016 return. To see if you qualify and other details call this office.
• Taxpayers with foreign financial accounts, the aggregate value of which exceeded $10,000 at any time during 2016, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). The original due date for the 2016 report was April 18th, but individuals have been granted an automatic extension to file until October 16, 2017.
• Special Note – Disaster Victims – If you reside in a FEMA designated disaster area, the IRS provides additional time to file various returns and make payments. For example, for taxpayers in counties affected by hurricane Harvey, the extended due date for filing their 2016 Form 1040 returns is extended until January 31, 2018.

Please call this office for extended due dates of other types of filings and payments and for extended filing dates in other disaster areas.