Whether you work for an employer or own a business, the IRS allows you to file a tax extension. This extension gives you more time to file your taxes, it does not extend your time to pay. However, there are different rules and deadlines for personal and business tax extensions.
The IRS gives 5 or 6 months of extension starting from the initial tax return due date, depending on the type of business you own. If the initial filing deadline was March 15, upon approval of a 6-month extension, the new filing deadline will be September 15.
Understanding the IRS’ rules and due dates is necessary for filing a tax extension for your business.
Rules for Filing a Business Tax Extension
If you own a business and need additional time to prepare your tax return, you can use Form 7004(Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns) to request a tax extension from the IRS. The IRS automatically approves requests for extensions for businesses without asking or the reason behind the extension.
Form 7004 should be used by most companies while applying for a business tax extension. Businesses like sole proprietorships whose activities are declared on the owner’s personal tax return should apply for a personal rather than a business extension by using Form 4868.
If your business has to file any of these forms and you need an extension, you should file Form 7004 to extend your business returns:
Form 706-GS(D), Form 706-GS(T), Form 1041, Form 1041-N, Form 1041-QFT, Form 1042, Form 1065, Form 1065-B, Form 1066, Form 1120, Form 1120-C, Form 1120-F, Form 1120-FSC, Form 1120-H, Form 1120-L, Form 1120-ND, Form 1120-ND (section 4951 taxes), Form 1120-PC, Form 1120-POL, Form 1120-REIT, Form 1120-RIC, Form 1120S, Form 1120-SF, Form 3520-A, Form 8612, Form 8613, Form 8725, Form 8804, Form 8831, Form 8876, Form 8924, and Form 8928.
You should be critically aware of the following business tax extension rules:
- Form 7004 must be filled out and filed accurately to ensure your business extension is automatically granted. If there are any mistakes on your application such as a wrong Tax ID Number, then your extension will be denied.
- Taxes should be paid on time as a tax return allows you more time to file your tax, not to pay off your debt. Depending on the type of business, owed taxes should be paid by their due date of March 15 or April 15. Penalties and interest charges will be issued by the IRS if tax liability is not accounted for by the deadline. Hence, paying tax bills while applying for an extension is the easiest way to avoid late fees.
- Form 7004, or your application for extension, must be submitted on time before the deadline which will vary depending on the type of business entity. April 15 is the filing deadline for most partnerships, estates, and trusts while March 15 is the default deadline for a majority of corporations, including C-corporations and S-corporations.
For your confidential information to be kept safe, you can use an Authorized IRS e-file Provider. Choosing a 3rd party software provider formally approved to e-file tax forms to the IRS like TaxExtension.com is highly recommended.
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