Help! Defer or pay it ?

File the "deferment" AND pay.

Send in form 4868 to the IRS and the equivalent to your state. Send the checks with the forms (if you can). You then will have time to send in the actual tax forms as they are, or after an accountant improves things to get a refund.

I don't know, for sure, but since you both have businesses, I suspect that the accountant will be very helpful.

You should request an extension, Form 4868 (Federal) and the equivalent state form and pay the estimated tax due. Then go see an TAX accountant. I have to say that accountants are thought of as "numbers" people but that this is really a misconception. True, accountants work with numbers but they are not mathematicians. What makes Tax Accountants qualified to help in situations like this is their knowledge of tax law, rules, and regulations. A truly qualified tax professional will have spent years studying tax matters and had years of experience dealing with a wide variety of situations. You would have to spend a lot of time reading tax materials to acquire an equivalent knowledge. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Pay it straight out, as you have calculated it (check your figures). If you pay up now, you stop the clock as far as pentalies that might occur. You never know, and the IRS does "the best it can" (in thses Bush II years). Usually, they produce a credible bill.. Anyway, you can quibble with them on it next summer. The only thing in additional work you could do right now is to compute the penalites that are possible to occur. That's also the only benefit of a tax accountant at this point. Figuring their fees these days (approaching those of lawers), I personally take my chances with the IRS (whose ssalry I have already contributred to). Angelo Campanella

The "deferment" (actually, an extension) is only for the filing of your tax return, not the payment of tax.

Last year would have been a much better time to seek out a tax professional. He/she could have recommended setting up a retirement plan for the $40,000. You may have to prepare Form 2210 to see if you owe underpayment penalties (again, another thing that proper planning would help you avoid).

Preparing a tax return is the easy part. Good tax PLANNING is what sets the pros apart from the amateurs.

Tax planning and preparation of tax returns isn't rocket science, but then neither is dentistry. Do you drill and fill your own cavities?

Gary

-- E-mail to the above address is rarely read. If you want to contact me directly, please send an e-mail to: gary at gdgoodman dot com.

I disagree with that statement. The OP stated that the "other" income was from books that he/she wrote and other sources. Without detailed knowledge about all of that income, one cannot say whether they would be eligible for deductions for expenses incurred to generate that income or subject to an additional SE tax. The OP is clearly not knowledgeable enough about tax laws to do it herself.

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-Ernie-

"There are only two kinds of computer users -- those who have suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?