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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.
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.
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