This article explains the process of filing a tax extension for different kinds of businesses and business owners, including an easy way to file by going online.
How To File a Business Tax Extension Application
You may request an extension on filing your business tax return by using Form 4868 or Form 7004, depending on the type of business you own. Even if you apply for an extension for filing your business income tax forms, you can’t extend the payment deadline. Below are the steps you’ll need to take to request an extension for your business tax return.
Pay the Tax That Is Due
You have to still pay your taxes that are due by the deadline. You must calculate and pay any income taxes and self-employment taxes by the due date of the form you fill out. To avoid IRS penalties for underpayment and late payment, you should pay at least 90% of the tax due. To estimate the tax you must pay, use an estimated tax calculation. If you can pay but you’re still not prepared to file your actual business tax return on time, file for the extension. The late filing penalty can be more expensive than the penalties and interest associated with paying late. So get your extension request in by the due date, then address the nuts and bolts of preparing your return and figuring out what you owe.
Know the Extension Due Dates
The due date for applying for an extension on a business tax return is the original due date of the return for that year, as follows:
April 15: For businesses filing business taxes along with their personal tax return on Form 1040/1040-SR15th Day of the Fourth Month: Corporate tax returns are due on the 15th day of the fourth month after the end of the tax year that it follows (April 15, for a Dec. 31 year-end).15th Day of the Third Month: S corporation returns are due the 15th day of the third month after the end of the tax year (March 15 for a Dec. 31 year-end). Partnership (including multiple-member limited liability companies (LLC)) returns are due the 15th day of the 3rd month after the end of the tax year (March 15 for a December 31 year-end).
File Form 4868 or 7004
To get an extension, you’ll need to file the application by the date that the tax is due. Oftentimes, this is by March 15 or April 15. Business owners who pay business taxes as part of their personal tax returns are called pass-through businesses. These businesses use Form 4868 to apply for an extension. The businesses that will use Form 4868 are typically:
Sole proprietors and single-member limited liability companies (SMLLCs) filing their business tax on Schedule C as part of their tax return Partners in partnerships and S corporation owners filing a Schedule K-1 for their share of business tax liability as part of their tax return.
Corporations and partnerships should use Form 7004 to file an extension application for the business, not the individual owners. This includes corporations, S corporations, and multiple-member LLC businesses filing as partnerships, corporations, or S corporations.
You Can File a Business Tax Extension Application Online
If you are one of the pass-through business types listed above and you pay your business taxes through your personal return, there’s an easy way to get an extension on your tax return. You don’t need to file Form 4868 if you make a payment using one of the electronic payment options. The IRS will automatically process an extension of time to file when you pay part or all of your estimated income tax (1040-ES) electronically. Form 7004 for corporations, S corporations, and partnerships can’t be filed through the personal tax filing system. You must use the IRS Modernized e-File (MeF) platform.
You Can Mail a Business Tax Extension Application
You can always file an extension application the old-fashioned mail-in way. You can print out either form from the IRS website (Form 4868 or Form 7004) and get the mailing address for your location from the form. Mail it in as many days as possible before the tax deadline. The IRS also provides a list of addresses for each state so you can ensure you mail the form to the right place.
E-File Using a Software Program or Tax Professional
All the major tax software applications allow you to file an extension using either Form 4868 or Form 7004. When you log on to prepare your return, there should be a tab or option for filing an extension. There may not even be a charge, although you’ll eventually have to pay to prepare the return itself. You can use either the personal or home business version of the product to file Form 4868 or use the business version to file Form 7004. You can do this immediately, then go back days or weeks later to complete your tax return.
Don’t Forget Extensions on State Income Taxes
States that have state income tax have different rules for extending the state return. Some states may go along with the IRS extension, while others (New York, for example) require you to file a separate extension. Check with your state’s taxing authority to make sure you are complying with your state’s requirements for filing an extension.
