For many small business owners, you not only have to file your own tax return, but you also have to file the tax return for your business as well. Working with your tax professional or accountant, such as Child Tax Credit, you may find that it will be necessary for you to file an extension. The question is how do you qualify for the extension and how do you file it? Here are a few of the items that you need to know to file your business’ tax extension.
What Qualifies Your Business for an Extension?
In order to qualify for an extension, you will need to file a Form 7004, which will give you a six-month extension to file your tax return. Most businesses will qualify for this extension option. However, you will also need to make an estimate of how much tax you may owe and send in that amount by the due date for your specific tax return. Since each type of business has a different due date, then you may want to work with your tax professional to find out when your specific extension and estimated tax payment may be due.
If you do not send in your estimate tax payment, then you may find that the IRS will invalidate your tax return extension. Therefore, you need to work with your tax professional or accountant to be sure that you are meeting your obligations in a timely fashion.
Due Dates for Corporations and Partnerships
If your business has been incorporated, then you will need to file your income tax return for the business by the 15th date of the 3rd month after your corporation’s tax year ends. If your corporation is following the calendar year for your fiscal year, then you will need to have your tax return filed by March 15th. If you have determined that you will need to file an extension, then the extension request and your estimated tax payment must be made by the due date.
If you have a fiscal year that ends earlier than the calendar year, you will need to work with your tax professional to determine what your due date will be for your tax return.
For partnerships, you will need to have your tax return filed by the 15th day of the 4th month after the end of your tax year. So if you follow the calendar year for your fiscal year, then you will need to file your tax return or extension and estimated tax payment by April 15th.
Cautions for Businesses
Keep in mind, you will need to make sure that you do not underestimate your taxes for your extension filling. If you do, you may find that when you do file your return, you may be paying penalties and interest. Other areas that might cause you to end up with penalties and interest are filing your return late or not providing the IRS information in a timely fashion by your due date or your extension due date.
Additionally, if you are paying based on a fiscal year, your due date will be adjusted and may not occur in the spring. Therefore, your tax professional or accountant should be able to work with you to determine your due date both for your tax return and the new due date that will result from filing your extension.
Another point is that you might not always owe a tax payment, but may be eligible for a tax refund. Therefore, working with your accountant, you will be able to determine if you need to make an estimated tax payment when filing for your extension.
However, if you have been making estimated tax payments throughout your fiscal year, then you should be able to easily determine if your business still owes any more taxes or if you have broken even for the year. Just remember, the IRS will attach any penalties and interest when you file your tax return by the extension due date. So if you and your tax professional are unsure, it is best to make a payment and err on the side of caution. Interest can be collected if you have overpaid, which is always the better scenario.
Click on the link below to connect with a tax professional or accountant at Child Tax Credit, who can assist you in filing your business tax return or your business tax return extension and making your estimated tax payment!
