Filing a Business Tax Extension
Do you need more time to file your 2007 business tax return? Here's what to do.If you need more time to complete your 2008 business tax return, you can request an extension of time to file your return.
However, even with an extension, you must estimate how much you owe, if applicable, and send in that amount by the due date. Otherwise, the IRS can invalidate your extension.
Most business tax returns can be extended by filing Form 7004, Application for Automatic 6-Month Extension of Time to File by the due date of the return.
Extension due dates will vary depending on how your business is organized for tax purposes.
If your business is organized as a corporation, the income tax return or extension is due by the 15th day of the 3rd month after the end of your tax year.
For example, if your corporation is a calendar year taxpayer with a December 31 year end, you must file a 2008 tax return or extension by March 16, 2009. You get the extra day because March 15 falls on a Sunday in 2009.
If your business is organized as a partnership, your income tax return or extension is due by the 15th day of the 4th month after the end of your tax year. For example, if your partnership is a calendar year taxpayer, with a December 31 year end, you must file a tax return or extension by April 15, 2009.
The IRS may hit your business with costly penalty and interest charges if you underestimate your taxes, file your return late, or do not furnish certain information by the due date. We assume your business entity is a calendar year taxpayer.
In the event you are a fiscal year taxpayer, please adjust your due dates based on the information provided above. For example, the due date for the tax return of a corporation for the fiscal year ending March 31, 2009 is June 15, 2009.
If your corporation elects S corporation status right away after it is formed, the corporation is treated as an extension of the shareholders and will never owe tax. However, if your S corporation was once a C corporation, it may owe tax in certain limited situations. An S corporation must provide a Schedule K-1 to all shareholders, detailing their share of the corporation's income and deductions for the tax year.
- In the event your S corporation owes tax, you'll have to pay interest on the amount you fail to pay by March 16.
- If the S corporation does not pay all of the tax by March 16, it may owe a penalty of 0.5% of the unpaid tax for each month the tax is not paid, up to a maximum of 25% of the unpaid tax.
- If you do not file the S corporation's return by March 16, it may owe a penalty of 5% of the unpaid tax for each month the return is late, up to a maximum of 25% of the unpaid tax.
- If the S corporation fails to furnish a complete Schedule K-1 to each shareholder by March 16, it may owe a penalty of $85 per shareholder per month for each month the return is late, up to a maximum of 12 months.
- If you think you may need more time to prepare the S corporation's return, you should file for an extension using Form 7004, Application for Automatic 6-Month Extension of Time to File. Your return will be extended until September 15, 2009.
Like an S corporation, a partnership does not owe tax, but is treated as an extension of the partners. Partnerships must provide a Schedule K-1 to all partners, detailing their share of the partnership's income and deductions for the year.
- If you do not file your partnership return by April 15, 2009, you may owe a penalty equal to $85 per partner in the partnership for each month the return is late, up to a maximum of 12 months.
- If you fail to furnish a complete Schedule K-1 to each partner by the due date, you may owe a penalty of $85 for each partner who did not receive a Schedule K-1.
- If you think you may need more time to prepare your return, you should file for an extension using Form 7004, Application for Automatic 6-Month Extension of Time to File. Your return will be extended until October 15, 2009.
State guidelines for filing extensions vary. In many cases, unless you owe state taxes, your federal automatic extension can be used to extend your state return(s) as well. Refer to the tax form instructions or tax help for your state(s) before you request a state extension.
TurboTax can help you file an extension for your business tax return.
Updated for tax year 2008
