6 Month Extension For 1040, Question ?

The failure-to-file and failure-to-pay penalties are generally based on the amount due; so (1) If they are due a refund at this point, there would generally be no penalty. If they are more than 60 days late (past the extended deadline), there would be a minimum penalty. (2) The penalty can be waived for "good cause". If taxpayer(s) were "financially incompetent for the ENTIRE extension period due to an unexpected event in April, that might work. Otherwise, probably not good cause. (3) If taxpayer(s) have no significant prior penalties, they may apply for a "First Time Penalty Abatement Waiver." You might need a tax professional to push it through. TIGTA still reports frequent incorrect denials, even though they first reported the problem to the IRS in 2013.

Even with a penalty waiver, interest is rarely, if ever, waived.

-- Arthur Rubin, CTRP, AFSP, Brea, CA

Re: "If they are due a refund at this point, there would generally be no penalty." This is true for fed, but may or may not be true for the state. California, for example, will penalize you for failure to file even if you are owed a refund.

Maria Ku, CPA Oakland, CA

Also, if a late-filed federal refund return later incurs a balance due because of audit or other adjustment, the late filing penalty will apply.

Back to the question of what to do. I'm not a tax professional, and we don't know how complicated your relative's taxes might be, but it seems that one reasonable course of action would be to come up with the best estimate of the taxes and file a return. Amend later.

Coming up with a good estimate depends on the details of their tax situation. Perhaps one of the pros could comment on the idea of assuming the previous year's taxes as the basis of an estimate, but that would assume their taxes haven't changed much.