Filing an extension gives you more time to file your return, but it doesn’t change your quarterly tax payment timing, and the deadline will be here before you know it. The difference between a stressful filing season and a smooth one usually comes down to a few key habits: starting early, communicating clearly, and knowing what to expect. The Richey May mortgage banking tax experts compiled the questions we hear most often to help you feel prepared and confident as we work together to complete your tax return.
Question: When should I start preparing, even if I’m on extension?
The short answer: now. Extensions give you more time to file, not more time to gather. The earlier you start pulling together documents and communicating with our tax team, the smoother the process will be for everyone. Waiting until the weeks before your extended deadline compresses timelines, increases the chance of missing items, and leaves little room to catch errors before filing.
PRO TIP: Designate a single point of contact on your team, someone who can gather outstanding items, answer questions, and coordinate with our tax team. This eliminates significant back-and-forth.
Question: What does my tax team need from me, and when should I send it?
Our tax team will send you a Prepared by Client (PBC) list outlining everything we need to complete your return, along with the due dates. This typically includes items like your trial balance, permanent tax adjustments, mortgage servicing rights, equity items, fixed assets, and state information. Commit to those delivery dates early and let us know as soon as possible if your timing needs to shift. Last-minute or incomplete document delivery is one of the most common causes of delays and missed deadlines.
BEST PRACTICE: Rather than sending documents in multiple batches, submit your PBC items in one organized delivery. It’s also helpful to flag any significant changes from the prior year upfront so our team can plan accordingly.
Question: Our business has expanded into new states. How does that affect our state tax obligations?
If your operations have expanded into new states, or you’ve obtained a new license in a state where you weren’t previously active, you may have new filing requirements and tax accounts to establish.
State tax filing requirements can take several forms: entity-level income tax, composite returns filed on behalf of nonresident shareholders, partners or members, withholding obligations, and pass-through entity (PTE) taxes, which many states have enacted in recent years. It’s important to review your activity by state annually and discuss any changes with our team early on.
PRO TIP: New state license or activity? Create tax accounts with state jurisdictions early on to receive state tax ID numbers, so there are no delays when it’s time to file. These are often required to file tax returns and make tax payments online.
Question: What are quarterly estimated tax payments, and how do I know if we’re on track?
Estimated tax payments are required to be paid in installments throughout the year, typically in April, June, September, and December or January, to cover your anticipated tax liability. They exist because income taxes are a pay-as-you-go system: the IRS and most states require that you pay taxes on income as it’s earned, not just when you file your tax return. For pass-through entities, this applies at the individual partner or shareholder level as well.
A common misconception is that by filing an extension to submit your taxes, you gain more time to make quarterly payments. However, a filing extension does not change the timing of your quarterly payments, and you do not gain additional time to pay. Underpaying can result in interest and penalties, even if you pay the full balance when you file.
BEST PRACTICE: Revisit your estimated payments with our tax team each quarter to get a clear picture of where things stand. Don’t wait for year-end to find out you’re short.
Question: What should I do when my tax return is delivered for review before filing?
This important step is often underrated or overlooked. Before your tax return is filed, you’ll receive a draft for review. Take the time to go through it carefully. Review the return for accuracy, confirm that all income and deductions are reflected correctly, and flag anything that looks unfamiliar or inconsistent with what you expected. Catching an error before filing is simple. Correcting it after filing is more complex and involves greater time, cost, and exposure to scrutiny from tax authorities.
REMINDER: Our tax team is a resource to help make sure your return is right during this review period. If something doesn’t look right or you have questions before signing off, let us know as soon as possible.
The extended tax deadline is an opportunity to get things right, and we’re here to help you do that. If you have any additional questions about any of the topics above, or are ready to get a head start, reach out to your Richey May Tax professional today or contact info@richeymay.com.
