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How "reasonable" does the estimate have to be on Form 4868?
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Ed Roberts Jr
Apr 17, 2017, 3:53:21 PM4/17/17
to
Taxpayer had subsidized health insurance last year based on low
projected income (i.e. advance payment of the premium tax credit);
however, the taxpayer's new business brought in income exceeding all
expectations, and significantly above the income declared for the
subsidy.
Obviously, the taxpayer will have to enter this credit on Form 8962 and
it will flow through to the 1040 and be added to his tax. However, the
taxpayer lost his Form 1095-A and does not expect to be able to replace
it before April 18. The taxpayer declines to even guess at how much the
credit was (after all it went straight to the insurance company instead
of into the taxpayer's pocket).
The instructions on Form 4868 say "If we later find that the estimate
wasn't reasonable, the extension will be null and void." Would it be
reasonable to put what the tax liability is without the repayment of the
health insurance tax credit, or should I put in some huge number that's
well over what the credit could possibly be? Is the test for
"reasonabless" biased toward unreasonably low estimates over
unreasonably high ones? Can anyone tell me the facts of any cases where
the IRS nullified an extension on this basis?
Thanks, Ed
--
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projected income (i.e. advance payment of the premium tax credit);
however, the taxpayer's new business brought in income exceeding all
expectations, and significantly above the income declared for the
subsidy.
Obviously, the taxpayer will have to enter this credit on Form 8962 and
it will flow through to the 1040 and be added to his tax. However, the
taxpayer lost his Form 1095-A and does not expect to be able to replace
it before April 18. The taxpayer declines to even guess at how much the
credit was (after all it went straight to the insurance company instead
of into the taxpayer's pocket).
The instructions on Form 4868 say "If we later find that the estimate
wasn't reasonable, the extension will be null and void." Would it be
reasonable to put what the tax liability is without the repayment of the
health insurance tax credit, or should I put in some huge number that's
well over what the credit could possibly be? Is the test for
"reasonabless" biased toward unreasonably low estimates over
unreasonably high ones? Can anyone tell me the facts of any cases where
the IRS nullified an extension on this basis?
Thanks, Ed
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Arthur Rubin
Apr 17, 2017, 5:49:29 PM4/17/17
to
On Monday, April 17, 2017 at 12:53:21 PM UTC-7, Ed Roberts Jr wrote:
> Obviously, the taxpayer will have to enter this credit on Form 8962 and
> it will flow through to the 1040 and be added to his tax. However, the
> taxpayer lost his Form 1095-A and does not expect to be able to replace
> it before April 18.
Does the exchange have a working website? That's how I got my 1095-A.
> Obviously, the taxpayer will have to enter this credit on Form 8962 and
> it will flow through to the 1040 and be added to his tax. However, the
> taxpayer lost his Form 1095-A and does not expect to be able to replace
> it before April 18.
--
Arthur Rubin, AFSP, CRTP, Brea, CA
MTW
Apr 17, 2017, 7:05:03 PM4/17/17
to
On Monday, April 17, 2017 at 12:53:21 PM UTC-7, Ed Roberts Jr wrote:
> The instructions on Form 4868 say "If we later find that the estimate
> wasn't reasonable, the extension will be null and void." Would it be
> reasonable to put what the tax liability is without the repayment of the
> health insurance tax credit, or should I put in some huge number that's
> well over what the credit could possibly be? Is the test for
> "reasonabless" biased toward unreasonably low estimates over
> unreasonably high ones? Can anyone tell me the facts of any cases where
> the IRS nullified an extension on this basis?
One case I've seen in this area (and I'm not sure there are many) is Boatman, TC Memo 1995-356. It doesn't offer a whole lot of guidance, but it seems to say that if your estimate is going to deviate significantly from prior years, you better have ascertainable facts to support your conclusion (not merely hunches, etc.).
> wasn't reasonable, the extension will be null and void." Would it be
> reasonable to put what the tax liability is without the repayment of the
> health insurance tax credit, or should I put in some huge number that's
> well over what the credit could possibly be? Is the test for
> "reasonabless" biased toward unreasonably low estimates over
> unreasonably high ones? Can anyone tell me the facts of any cases where
> the IRS nullified an extension on this basis?
In light of this, I have generally concluded that estimating equal to last year's tax would generally be "reasonable" for this purpose in the absence of facts clearly indicating otherwise (like, if you had won the lottery IN ADDITION to your historically normal income).
But I'm not sure this helps with your specific situation...
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