How To Get An Extension To File Your Business Tax Returns

Comments (20)


How To Get An Extension To File Your Business Tax Returns

By: Richard A. Chapo

Yes, the tax season is upon with the first filing date for some businesses being March 15, 2005.) If you can't imagine getting your tax returns together by that date, you need not worry. The IRS automatically gives you an extension if your file the appropriate form. As you might expect, there are different forms for different businesses.

An Important Note

It is vitally important that you understand that an extension to file taxes is not an extension to PAY taxes. The IRS will give you a break on the filing date, but it wants the money now! If you anticipate that you will owe taxes, you need to send in the appropriate payment. Failure to do so could result in interest charges when you eventually get around to filing your returns.

Corporations

If you conduct business as a corporation with a fiscal year-end of December 31st, you are required to file your 2004 tax returns on or before March 15, 2005.) You can get an automatic extension, however, by filing form 7004 before the March 15 deadline. Form 7004 applies both to "C" and "S" corporations and grants you an automatic 6-month extension to September 15, 2005.)

While this automatic extension applies to "S" corporations, you should be aware of a quirk in the tax code. Since "S" corporations "pass through" taxes to your personal returns, the six-month extension is really only a five-month extension. To file your personal tax returns, you must report information from the K-1 issued from the "S" corporation. Unfortunately, the IRS only grants automatic extensions for filing personal tax returns to August 15, 2005.)

Limited Liability Company

The IRS has never really figured out to how to handle limited liability companies. It has settled on a policy of avoiding the issue and simply treating the entity as a corporation or partnership.

Limited liability companies with more than one owner typically elect to be treated as partnerships for tax purposes. If this describes your situation, the LLC is required to file tax returns by April 15, 2005.) You can obtain a 3-month extension by filing form 8736.) Although form 8736 contains language regarding partnerships, you will still use this form since the IRS classifies you as a partnership for tax purposes.

If you are the sole owner of an LLC, you may be in for a surprise. The IRS doesn't recognize LLCs owned by one person. Instead, it simply considers you a sole proprietor and the rules for sole proprietorships apply. These are discussed below.

Partnership

If your business is a partnership, you are required to file tax returns by April 15, 2005.) You can use form 8736 to obtain a 3-month extension.

Self-Employed/Sole-Proprietor

If you are not using a business entity, your business tax information should be reported on your personal tax return. The due date for filing your personal tax returns is April 15, 2005.) You can obtain a four-month extension by filing form 4868.)

Summary

Regardless of how your business is organized, the IRS will automatically grant you an extension to file your tax returns. By sending in the appropriate form, you can avoid a mad rush that will inevitably result in missing deductions and overpaying your taxes. Just make sure you pay any taxes you anticipate owing by the appropriate date.

About The Author

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

Comments

Blossom 08.06.2007. 14:53

How do I get my CPA to do my 2005 and 2006income tax return? My CPA filed an extension for doing my business income tax return for 2005 and now for 2006. She keeps saying she will get to it, but doesn't. I am getting an ulcer over it. How can I make her do my taxes? She is impossible to get hold of. Her office manager relays all messages. The CPA is in poor health. What will I do if she can no longer do her job? What can I do to force her to do my back taxes! She has all the paperwork.

Blossom

Admin 08.06.2007. 14:53

Send a certified letter with return receipt requested and ask that they return your documents to you immediately, and then go to another, healthier accountant.

Admin

newenglander45 30.03.2010. 14:19

can you file your business tax return and ask for an extention for your personal taxes? I collected unemployment for most of the year, but in October I started my own home business with my own Tax ID number. Can I file the business taxes now but ask for an extention for my personal taxes? I believe I will have to pay personal taxes, and I will do that when my business gets better. Thanks to anyone who knows about this and where I can find the info.
I do have a corporation, a separate Tax ID

newenglander45

Admin 30.03.2010. 14:19

Unless you formed a corporation your business return and personal return are one in the same.

While you can ask for an extension of time to file your return, you must pay any balance due in full by April 15th to avoid penalties and interest for late payment of tax.

Edit: Well, both returns are due on April 15th. But why did you waste money and complicate your life and business with a corporation, especially considering that you have not even turned a profit yet? The vast majority of small businesses get nothing from a corporation, aside from HIGHER taxes, HIGHER tax prep costs, and time lost from the business managing all of the tax and other corporate filing requirements.

A corporation can be worth the extra expense once your net PROFIT hits $250k to $300k or so. But below that point you are virtually always better off with a Sole Proprietorship filing Schedule C on your personal return.

The promised liability protection won't materialize with a closely held corporation, leaving you with a false sense of security. It's been my experience that most corporation owners skimp on liability insurance thinking incorrectly that the corporation will protect their personal assets.

Admin

Chuck P 31.07.2007. 17:41

My accountant failed to file my business return on time and I now owe a penalty. Any good advice? My accountant was always really good up until this year when he kind of went off the deep end with some personal issues. He assured me that he'd file my business return on time and when he didn't he assured me that he filed an extension. Today I received notice from the IRS that there was not an extension filed and that I owe $450 due to my return being filed 3 months late.

What recourse do I have? Will the IRS take into consideration that my accountant failed to do his job and basically lied to me about filing the extension and possibly reduce/waive the penalty? Do I have legal recourse against my now former accountant? Any sound advice would be most appreciated.

thanks.

Chuck P

Admin 31.07.2007. 17:41

If your accountant is a person of honor he will pay the penalty amount, but the tax amount is yours to pay. If he refuses to pay it, your only real option is to sue him in small claims court. You could also try reporting him to the state cpa society if he is a cpa.

Admin

Kristen 17.02.2013. 19:08

Do my business taxes get filed separate from my personal taxes? I have a daycare center with a partner. We are an LLC but filled out the form to do taxes as an S-corp. Do we than file our personal taxes separately? If so, is there any need to wait for our business taxes to be done before filing our personal. Also, we cut ourselves paychecks and have w-2's from the business
How would that factor in?

Kristen

Admin 17.02.2013. 19:08

Judy is absolutely right, you have to file your S-corp return first. Then each partner will get their own K-1 statement and this K-1 must be included on the personal return. Without it you will need to amend your tax return later, and this is more hassle than you need. S-corp returns must be filed before Mar 15, 2013 or you need to file an extension until Sep 15, 2013. If your S-Corp return is not filed until Apr 15, 2013 you need to file extension on your personal return as well.

Admin

Michael K 13.01.2013. 22:09

I need to file an extension of the federal business tax return. Do I also need to file a state return extensio? Do I need to also file a separate extension for New York State and NY City Returns? If so where can I get the information to get the extension forms? Your advice will be very much appreciated.

Michael K

Admin 13.01.2013. 22:09

And you are supposed to estimate any taxes that might be owed and that amount is supposed to paid when you do fill out file the extension for the extra time ONLY to fill out and file the income tax returns for the 2012 income tax return NO extension for the taxes that MIGHT be due for the tax year.
Contact and check with the city and the stat about this matter and try to make sure that you do get ever thing done correctly by the April deadline for this purpose and time in your life.
Hope that you find the above enclosed information useful.01/13/2013

Admin

Weetie 14.03.2007. 15:48

Is a LLC with less than 10 million dollar in assets required to file an extension? If so, does it file Form 7004 (Application for Automatic 6-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns)

If this is not the right Form, which one?

Thanks in advance for your help!

Weetie

Admin 14.03.2007. 15:48

If your LLC has elected to be taxed as a corporation or has more than one member (a partnership) you will file Form 7004. Make certain to check Form 1120 if your LLC is taxed as a corporation or Form 1065 if you are treated as a partnership.

If your LLC is a single member LLC who has not elected to be treated as a corporation than you would file it on your personal tax return on schedule C and you would use Form 4868 to get an extension on your personal return.

Admin

Yvett 12.10.2007. 04:59

How much taxes & late fee would you pay if you report $18,000 in earned income? Example if I did NOT file taxes for 2006 and I just now decided to file taxes for earned income of $18,000 as a 1099 form.
For the state of California. About how much money will I have to pay back in taxes and how much will I have to pay in late fees?

Yvett

Admin 12.10.2007. 04:59

1 If you got 1099 (instead of W2), then it is not your salary income. It is Independent Contractor or self-employment income.

2. If you have work related expenses, then you can deduct those expenses to figure out your net profit. If you have expenses, then you will also file schedule C (form 1040) with your tax return.

3. If possible file before October 15, 2007, which is last date of filing for persons who applied for 6 months extension. But even if you did not apply for extension, use this date.

3. Even if you miss Oct 15, 2007 you must file return to avoid serious problems.

5. From your net income (on 1099) deduct expenses to figure out your net profit. Your net profit ($18,000 less expenses) is subject to self-employment tax at 15.3%. Assuming you don?t have any business (work related) expenses, then on $18,000 the self-employment tax is $2,754.

6. If you are Single, then for federal tax your deduction is $8,750. Your taxable income is $9,750. Federal tax is about $1,030. But you will get Earned Income Credit (if you don?t have any other income) and the federal tax liability will decrease.

7. Then there is CA state tax. Also you owe interest and penalty on both the federal and state taxes.

8. In short, file and pay taxes. Do not delay.

Admin

BigTexas 15.08.2008. 20:56

I have a small business in Texas with no income and what forms I need to use to file the Federal Taxes ? I applied for an extension and would like to file my tax returns. Please help.

BigTexas

Admin 15.08.2008. 20:56

If you're a sole proprietor (you are the business) or an LLC with only you as the owner, you'll file Schedule C attached to your Form 1040.

If you're a corporation, you'll file Form 1120. Unless you've filed for Subchapter S (small business status-- Form 2553) in which case you'll file Form 1120S.

If you're a partnership or LLC with mutliple owners, you'll file Form 1065.

It sounds like you may want to find a professional tax preparer to help.

Admin

Leigha 06.04.2008. 23:10

Who do you hire for filing complicated taxes? I will be filing some complicated tax forms for 2007. I probably can't just take them down to H&R Block. I owned and sold a sizable amount of stocks & options (and lost a large amount of money), received an inheritance, and made a very modest amount of income. For 2006, I used Turbo Tax, but I'm not able to do that this year, because I need all the work & thinking done by a professional.

Leigha

Admin 06.04.2008. 23:10

First, any professional who could help you for your 2007 returns is already booked up therough the 15th, so you'd need to file an extension.

The professional you're looking for is an Enrolled Agent, preferably one specializing in your particular tax situation. CPAs may not have as much tax specialization, although one specializing in your specific situation would probably be adequate.

If you upgrade Turbo Tax software (probably not TT online) to the appropriate level, (Business?), you can almost certainly use it to file your forms IF you can find the appropriate numbers to put on them. Turbo Tax also has an option for professional review (for about an additional $50).

I'd offer to help you, but I cannot legally do so, being in California. California and Oregon regulate tax preparers, and I haven't kept up my registration.

Admin

unicorn 02.04.2008. 02:28

For those of you in the tax business, after tax season what do you do? I was just wondering because tax season ends on April 15th. So, what do some of you do after this time. Are you self employed and continue doing taxes during the year, or work for a tax office and do something else after the season?

unicorn

Admin 02.04.2008. 02:28

Many of our Enrolled Agents work due to several corporations, partnerships and "S" corporations being on a fiscal year. Secondly, many taxpayers come to us because they are in trouble with the IRS. Thirdly, when a taxpayer files an extension, the IRS grants 6 months. It didn't used to be that way. Some corporations as well as individuals have to file amended tax returns. If the state they reside in, work in or do business in has income tax, that means an amended for the State 96% of the time. We are busy year around. Many have to contact an Enrolled Agent year around. You can do your taxes yourself unless you are in a complicated situation - a proprietorship, partnership, lot of real estate deals with depreciation, foreign taxes and regulations, own a mutual fund - along that line. If you are not comfortable, get on the National Association of Enrolled Agents- naea.org - web site. Click on "Find an EA". Type in your town, state or zip code. Enrolled agents do not work cheap, but your taxes will be done right and they will go with you if you are audited by the IRS. Not always are they lawyers but have the power of attorney with the IRS. Enrolled agents are professional tax practitioners who have technical expertise in the field of taxation, and are licensed to represent taxpayers before the Internal Revenue Service at all administrative levels. Moreover, enrolled agents are the only tax practitioners required by Federal law to maintain their expertise through continuing professional education. Tax attorneys and CPA's used to, but lobbied and no longer are required. It was too hard for them to pass the EA examination and to maintain their EA certification through continuing professional education. A CPA is worthless to the taxpayer unless that CPA knows the income tax laws and has passed the enrolled agent examination. Note all the scandals among CPA firms.

Admin

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