Tax return filed now, but contribution not ready to go in until extension date.

[katieinny]

Has anybody had a situation where a CPA filed a client's tax return in March, but the cleint won't have the money to fund the retirement plan until the extension date? Apparently, the CPA didn't realize that the client didn't have the funds available now, so the return was filed. How would you fix that?

[Lame Duck]

I'm not a CPA so this is a suggestion only. Can the CPA file a tax extension even though the return has been filed since he or she will have to file an amended return if the contribution is not made? Can the client borrow the money to fund by the due date of the tax return? Contributions are required to be made by the due date for the tax return, including extensions, regardless of when the return is actually filed, so the client may still have a little time left before the contribution must be made. See 404(a)(6). The loan would be for a short period until the anticipated income is received.

It's my understanding that the return must be signed and usually mailed by the client, rather than the CPA. Why did the client sign the return if the contribution hadn't been made yet?

[katieinny]

I'm guessing that the client signed the return, but somehow the inability to immediately fund the plan didn't come up. I don't know if the client can get a loan. I think he would rather see if he can get the extension first.

[Guest LeslieMM]

What type of Retirement Plan is involved?

[mbozek]

I dont know if an an extension to file a return can be requested after the return has been filed with the IRS. The instructions for form 4868 state that it is to be used to request an extension to file a return which implies that no return has been filed. What is permitted is to file for the extension and then file the tax return by the due date in order to gain a 4 or 6 mo extension to make the contribution.

[JanetM]

To keep taxpayer legal seems the only rememdy is to file amended tax return without deduction for contribution and pay tax immediately. After contribution is made file amended one to take deduction and receive refund.

Long time ago in CPA land, clients usually didn't want to do anything when this sort of thing happened, they just prayed they didn't get caught.

[MGB]

I would be willing to bet that wherever the extension request goes to, they have no record that the return was actually filed. The two just don't seem to be linked and is why a copy of the grant of the extension must be filed when the return is filed later (not applicable in this case).

I don't know why this wouldn't work.