I made a bunch of money last year. So I'd owe a bunch of taxes. (Got an extension to file my return.)
The hitch: I invested 95% of that money back into the business. Which got promptly wiped out this year by a lava eruption. (Still shown on the daily news.)
So in real life, no money. On tax paper, I'd owe a ton of taxes for past year, then get some sort of tax credit next year when I file, I guess. Fat lot of good will that credit do for me.
Is there a way how to carry over last year's tax payment liability till next year, so I don't have to spend money I don't have? Just wipe that gain out on next year's tax return? (As it got wiped out in real life?) Thank you for all helpful ideas in advance
For the 2017 tax year, taxes were due and payable by Apr 18th, 2017. No extension changes that. All an extension does is extend your time to file. It does not extend your time to pay. So if you owe taxes for 2017 and haven't paid them yet, you're late. Any outstanding balance is accumulating interest with each passing day. Unless congress changes the law (and I doubt they will for 2017, this late into 2018) that will not change regardless of your situation.
I would suggest you start paying that 2017 tax liability ASAP, even if you can't pay it all at once. That way, it shows the IRS you're making the effort, thus reducing the chances of the IRS taking other legal action against you, like placing a lein on your property or seizing bank accounts. You can make a payment online at any time at http://www.irs.gov/directpay. Just make sure you select the correct tax year you're paying, and just what type of payment it is. Then print your receipt. Without a receipt, if the IRS says you never paid, then bottom line is you never paid.
Now if you are self-employed then at this time there is no provision I'm aware of that will excuse you from paying your 2018 quarterly taxes. So you'll still need to pay those too, to the best of your ability so as to hopefully avoid any underpayment penalties next year, when you file your 2018 tax return.
With the massive changes to tax law for 2018, you really want to get the 2017 tax liabilities out of the way ASAP if you can. If things are really bad then I would suggest you seek the services of a CPA or tax professional and see if you can set up a payment plan with the IRS for your 2017 tax liability. So long as the IRS sees you're making an effort, they will generally work with you. But if you're not making the effort and they come after you, there will be no mercy.
For 2017 income, the taxes were due in April 2018. After the extension (which I filed) I have till October 15, 2018 to put in the final tax return. I'm not late with filing taxes for the good, income producing year.
So, as a best solution, you recommend making a token payment. The gist of my original post was, is there a better alternative to carry over liabilities on paper till I can claim the loss 2 months later (January 2019) on the next year's tax return.
And bingo, IRS Publication 2194, Disaster Resource Guide has the answer. On Page 2 it says: "if you paid taxes in the year immediately preceding the disaster, you can elect to deduct your loss on a Form 1040x (Amended IS Individual Tax Return) for the prior year, instead of waiting to file your current year return. This will allow you to receive a refund of some or all the taxes paid on your prior year return."
I knew there has to be a way...