I've always filed my personal taxes. I've had to file one extension in the past. Because I never owed taxes at end of year, I never experienced interest/penalties with my extension. I always viewed extensions as a zero risk grace period.
I open a business mid 2022. I hire a CPA to handle our personal taxes as well as scorp election/taxes for the business. I calculate and file the monthly EFTPS payments on line and the CPA handles everything else. For 2022, I have no issues.
The business does well in 2023. I turn in all necessary paperwork for 2023 on March 4, 2024. On April 1, 2024, the CPA emails saying they will have to file extensions for us due to health issues within the firm. Having no experience with owed taxes and interest/penalties, I don't ask the relevant questions. Nothing is said to me about paying a chunk or lump sum to avoid future issues.
The October 15 extension deadline nears and I haven't heard from CPA. I email and prod about my tax burden for 2023. The CPA says a second extension was filed and the IRS allowed for Louisiana residents to extend due to Hurricane Francine. Bear in mind, we nor the business were affected by Hurricane Francine. We also weren't told about the filing until I inquired.
I get the call this week that 2023 taxes are done. Great. I go to the office and pay the tax prep fee: $500 for personal and $1700 for scorp election/taxes. I'm also asked to sign an irs form 8879 for amount of 2023 federal tax owed. It totals $11,900.
I get a voucher in the mail yesterday to make the 2023 irs payment and the voucher is for $13, 300. That's $1400 more than expected per form 8879. Back to cpa office. I'm told the difference is interest owed. I walk out with the light bulb moment that extensions are indeed not zero risk grace periods at all.
I haven't look at state taxes yet but I'm assuming it has similar penalties/interest owed.
How would you proceed? Do I just eat this due to my ignorance of tax law? Did my cpa have a duty to inform me of repercussions or at least advise me to make a lump sum before extending twice. Again, we did turn in all needed documents early March 2024. Need an unbiased frame of reference. Greatly appreciate any input.
I open a business mid 2022. I hire a CPA to handle our personal taxes as well as scorp election/taxes for the business. I calculate and file the monthly EFTPS payments on line and the CPA handles everything else. For 2022, I have no issues.
The business does well in 2023. I turn in all necessary paperwork for 2023 on March 4, 2024. On April 1, 2024, the CPA emails saying they will have to file extensions for us due to health issues within the firm. Having no experience with owed taxes and interest/penalties, I don't ask the relevant questions. Nothing is said to me about paying a chunk or lump sum to avoid future issues.
The October 15 extension deadline nears and I haven't heard from CPA. I email and prod about my tax burden for 2023. The CPA says a second extension was filed and the IRS allowed for Louisiana residents to extend due to Hurricane Francine. Bear in mind, we nor the business were affected by Hurricane Francine. We also weren't told about the filing until I inquired.
I get the call this week that 2023 taxes are done. Great. I go to the office and pay the tax prep fee: $500 for personal and $1700 for scorp election/taxes. I'm also asked to sign an irs form 8879 for amount of 2023 federal tax owed. It totals $11,900.
I get a voucher in the mail yesterday to make the 2023 irs payment and the voucher is for $13, 300. That's $1400 more than expected per form 8879. Back to cpa office. I'm told the difference is interest owed. I walk out with the light bulb moment that extensions are indeed not zero risk grace periods at all.
I haven't look at state taxes yet but I'm assuming it has similar penalties/interest owed.
How would you proceed? Do I just eat this due to my ignorance of tax law? Did my cpa have a duty to inform me of repercussions or at least advise me to make a lump sum before extending twice. Again, we did turn in all needed documents early March 2024. Need an unbiased frame of reference. Greatly appreciate any input.
Statistics: Posted by Bayoufrogg — Wed Jan 15, 2025 2:02 pm — Replies 2 — Views 280