Running out of time to file your business taxes? Learn how to easily file for an extension for Forms 1065 and 1120S and avoid costly penalties.
Forms 1065 and 1120S
Filing taxes can be a daunting task for business owners, especially for partnerships and S corporations that have specific filing requirements and deadlines. If you’re finding it difficult to meet the March 15 deadline for filing Forms 1065 or 1120S, don’t panic. You can request an extension to give yourself extra time to gather the necessary documentation and ensure accuracy. This blog will guide you through the steps to file for an extension, helping you stay compliant and avoid penalties.
1. Understanding the Importance of Filing Deadlines
Meeting tax filing deadlines is crucial to avoid penalties and interest charges:
– March 15 Deadline: Partnerships and S corporations must file their tax returns by March 15. Missing this deadline can result in significant penalties and interest on any unpaid taxes.
– Penalties: The IRS imposes a penalty for each month or part of a month that your return is late. For partnerships, the penalty is $210 per month for each partner. For S corporations, the penalty is $210 per month for each shareholder.
2. What is Form 7004?
Form 7004, the “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns,” allows businesses to request an automatic six-month extension for filing their tax returns:
– Automatic Extension: Filing Form 7004 grants an automatic six-month extension, pushing the deadline to September 16 for partnerships and S corporations.
– Not an Extension to Pay: It’s important to note that this extension only applies to filing the return, not to paying any taxes owed. Estimated taxes must still be paid by the original deadline to avoid interest and penalties.
3. Steps to File Form 7004
Filing Form 7004 is a straightforward process, but it’s essential to follow the steps carefully to ensure your extension is granted:
Step 1: Gather Information
– Business Information: Collect your business’s legal name, address, and EIN (Employer Identification Number).
– Tax Year: Determine the tax year for which you are requesting an extension.
Step 2: Complete Form 7004
– Part I: Indicate the type of return you are filing (Form 1065 for partnerships or Form 1120S for S corporations).
– Part II: Provide details about your business and tax year.
– Estimated Tax Payment: Calculate and enter any estimated tax payment due with the extension request.
Step 3: Submit Form 7004
– Electronic Filing: File Form 7004 electronically using the IRS e-file system or authorized e-file providers.
– Mailing Option: Alternatively, you can mail the completed form to the appropriate IRS address listed in the form’s instructions. Ensure it is postmarked by March 15.
4. Calculating Estimated Taxes
Even with an extension, you must pay any estimated taxes owed by the original deadline to avoid penalties and interest:
– Estimate Your Tax Liability: Use your financial records to estimate your total tax liability for the year.
– Subtract Payments and Credits: Subtract any estimated tax payments and credits you’ve already made to determine the amount due.
– Pay by March 15: Submit the estimated tax payment with Form 7004 by the March 15 deadline.
5. Benefits of Filing for an Extension
Filing for an extension offers several benefits, including:
– Avoiding Penalties: Extending the filing deadline helps avoid late filing penalties.
– Ensuring Accuracy: Extra time allows you to gather all necessary documents and ensure the accuracy of your tax return.
– Reduced Stress: Knowing you have more time can reduce the stress associated with tax season.
6. Common Mistakes to Avoid
To ensure your extension request is processed smoothly, avoid these common mistakes:
– Incorrect Information: Double-check all information on Form 7004 for accuracy.
– Missing the Deadline: Ensure Form 7004 is submitted or postmarked by March 15.
– Ignoring Estimated Payments: Make sure to pay any estimated taxes due by the original deadline to avoid penalties and interest.
7. What to Do After Filing for an Extension
Once you’ve filed Form 7004, take the following steps to prepare for the extended filing deadline:
– Organize Financial Documents: Use the extra time to organize and review all financial documents.
– Consult with a Tax Professional: Consider working with a CPA or tax advisor to ensure your return is accurate and complete.
– Plan Ahead: Set reminders and create a timeline for completing your tax return well before the extended deadline.
Conclusion
Filing for an extension for Forms 1065 and 1120S can provide the additional time you need to ensure accuracy and compliance with IRS regulations. By understanding the importance of filing deadlines, using Form 7004 correctly, and calculating estimated taxes, you can avoid costly penalties and interest. Additionally, the extra time allows you to gather all necessary documents and consult with a tax professional, reducing the stress associated with tax season. Make sure to follow the steps outlined in this guide, avoid common mistakes, and plan ahead to meet the extended deadline with confidence.
Need Assistance?
Don’t let tax deadlines stress you out! Ensure your partnership or S corporation stays complaint by filing for an extension if needed. Contact our COO, Anshul Goyal, at anshul@kkca.io to schedule a consultation today and secure your financial success.
Disclaimer
The information provided in this blog is for general informational purposes only and should not be considered as professional legal or financial advice. Every tax situation is unique, and tax laws are subject to change. You should consult with a licensed CPA, tax advisor, or attorney who is familiar with the laws in your state and country and who can provide personalized advice based on your individual circumstances.
FAQs
1. What is the deadline for filing Forms 1065 and 1120S?
The deadline for filing Forms 1065 and 1120S is March 15, 2024. This date applies to partnerships and S corporations respectively.
2. What is Form 7004?
Form 7004 is the “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.” It allows businesses to request an automatic six-month extension for filing their tax returns.
3. How do I file Form 7004?
Form 7004 can be filed electronically using the IRS e-file system or authorized e-file providers. Alternatively, you can mail the completed form to the appropriate IRS address listed in the form’s instructions.
4. Does filing Form 7004 extend the time to pay any taxes owed?
No, filing Form 7004 only extends the time to file your tax return, not the time to pay any taxes owed. You must estimate and pay any taxes due by the original March 15 deadline to avoid penalties and interest.
5. What information do I need to complete Form 7004?
To complete Form 7004, you need your business’s legal name, address, EIN (Employer Identification Number), and details about your tax year. You also need to estimate and report any tax payment due with the extension request.
6. What happens if I miss the March 15 deadline and don’t file for an extension?
If you miss the March 15 deadline and do not file for an extension, you may incur significant penalties and interest charges. The IRS imposes a penalty for each month or part of a month the return is late.
7. How do I calculate estimated taxes when filing Form 7004?
Estimate your total tax liability for the year using your financial records, subtract any estimated tax payments and credits you’ve already made, and then report the remaining amount as your estimated tax payment due.
8. What are the penalties for late filing of Form 1065 or Form 1120S without an extension?
The IRS imposes a penalty of $210 per month for each partner or shareholder for late filing of Form 1065 or Form 1120S. These penalties can accumulate quickly if the return is not filed on time.
9. Can I amend my tax return after filing for an extension?
Yes, if you discover errors after filing, you can amend your tax return. Partnerships can file Form 1065X to amend their return, and S corporations can file an amended Form 1120S.
10. Why should I consult a tax professional when filing for an extension?
Consulting a tax professional ensures that your extension request is properly filed and that your estimated taxes are accurately calculated. A professional can also provide guidance on tax planning and compliance, helping to minimize liabilities and avoid potential penalties.