If you are rushing to complete your income tax return, consider filing for a business tax extension. Filing taxes for small business can be difficult, and an extension allows you more time to file your business’s tax return. Learning how to file an extension for business taxes is simple. And, you can avoid mistakes that might occur from hurrying.
The extension only prolongs the time you have to file tax forms. You still have to make your tax payment by the regular deadline. If you do not pay your tax liabilities on time, you could face IRS penalties, fines, and interest charges.
Business tax extension deadlines and forms
Your federal business tax extension is due by the date you would normally send your return. The due date is either March 15 or April 15, depending on your business structure. If the due date falls on a holiday or weekend, the due date moves to the next business day. Instead of filing your return, you will submit your request for an extension.
The deadlines are important to remember if you want an IRS business tax extension. You cannot file for a tax extension after the deadline passes.
Below are your deadline and form requirements according to your business structure.
Partnerships and multiple member LLCs
If you own a portion of a partnership or multiple member LLC, file the federal tax extension for business by April 15. This business tax return extension will allow six extra months to complete your income tax return, which is now due on September 15.
File the extension on Form 7004. The form is relatively short and includes information about your business and the taxes you owe. Your business structure and location determine where you send Form 7004. The IRS has a chart that can help you determine where to send the form.
Corporations and S Corps
Both corporations and S Corps should file their IRS tax extension by March 15. The extension gives you an extra six months to file.
Like partnerships and multiple member LLCs, corporations and S Corps should use Form 7004.
Sole proprietorships and single member LLCs
If you are a sole proprietor or the only member of an LLC, file your tax extension by April 15. This federal extension for business taxes gives you six months after the filing deadline to send your income tax return.
Use Form 4868 to file a tax extension. You will need your personal income statement and Schedule C to fill out the form. On Form 4868, report information about your business and the amount of taxes you owe.
| Business structure | Form to file for extension | Due date |
|---|---|---|
| Partnership Multiple member LLC | Form 7004 | April 15 |
| Corporation S Corp | Form 7004 | March 15 |
| Sole proprietor Single member LLC | Form 4868 | April 15 |
Estimating taxes
Your taxes are due on the regular deadline, even if you file for an extension. You need to estimate your taxes to figure out how much you owe.
Information from last year’s income statement can help you estimate your taxes. If business was similar to last year, the taxes you pay should be about the same. If you overpaid estimated taxes last year, you could apply that amount to this year’s taxes.
If you own a corporation, use Form 1120-W for estimated taxes. If you do not own a corporation, use Form 1040-ES for estimated taxes. The instructions for Form 1040-ES include a worksheet that can help you calculate estimated taxes.
What if you can’t pay your taxes?
A business tax extension does not change the amount of taxes you owe. But, sometimes, you can’t pay your business taxes. Do not ignore the IRS. The IRS offers several solutions to help you pay your taxes.
If paying your total taxes owed is not an option right now, you could apply for an installment agreement. With an installment agreement, you pay a fixed payment each month.
You can ask for a reduced tax liability. This is called an offer in compromise. This agreement allows you to pay less than the full amount due. You must submit an application and pay fees for part of the debt.
If you can’t pay at all, you could make your account status Currently Not Collectible. The IRS won’t try to collect money from you. But, your debt doesn’t disappear. And, it accumulates interest and penalties.
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This article is updated from its original publication date of January 25, 2018.
This is not intended as legal advice; for more information, please click here.