Business Tax Extension and Loan Information

Tax season has a tendency to catch everyone off-guard, especially businesses operating on the calendar year. Businesses that enter tax season unprepared may need to request an extension from the IRS. This requires the business or individual to file the applicable form before the 15th of the third month in a calendar year. In addition, businesses must provide an estimate of their total earnings for the year in order to qualify for an estimate. The IRS can invalidate business tax extension requests based on a failure to provide an accurate estimate. Most businesses submit a Form 7004 to extend their tax returns for six months.

Read these frequently asked questions (FAQs) to find out more about business and personal tax return extensions and see TurboTax for Preparing and Filing Small Business Taxes:

When should I file my business income tax extension?

Corporations and S corporations are obligated to submit their business tax extension by 11:59 PM on the 15th of the third month, usually March 15th of a regular calendar year. Sole proprietors, partnerships, and LLCs must file their business tax extension by the deadline assigned for individual income tax extensions, which was April 17th for the 2012 tax season.

Will I face penalties if I submit a tax extension early, but the IRS does not contact before midnight of the due date?

No, absolutely not. The Internal Revenue Service (IRS) provides a grace period for businesses to receive their approved business tax extension. This grace period means businesses can fix any problems with their submission that may cause rejection.

How long will it take for the IRS to contact me on the approval of an IRS Form 7004?

The IRS generally contacts you within 24 hours on the status of business tax extensions. Be mindful of submission times to ensure that the application arrives on time. As long as you submit the application before midnight, the IRS will not consider it late.

How do I determine the extended due date after I receive approval from the IRS?

The IRS grants business tax extensions of 6 months for corporations and S corporations following the calendar year. Partnerships receive a business tax extension of 5 months.

Should I file both a personal and business tax extension if I am a partner in an LLC or partnership?

Partnerships and LLCs consisting of more than one member must submit a separate tax return for the business and themselves. You must file a personal income tax extension and a business tax extension to avoid troubles with the IRS.

What type of tax extension should I file for if I’m self-employed?

Sole proprietors who file a Schedule C and independent contractors filing Form 1099 must file for a personal tax income tax extension to extend both personal and business tax deadlines. If you operate another business type, then you will need to file for a business tax extension using Form 7004.

Do single-member LLC businesses file personal or business tax extensions?

Single-member LLCs must file Form 4868, to extend both personal and business deadlines. Single-member LLCs are characterized as “pass-through entities,” which means the business tax return qualifies as part of the 1040 personal income tax return located on Schedule C.

Am I eligible to file tax extensions for trusts or estates?

Yes. You must file Form 7004 for tax extensions on trusts, estates, and other eligible entities. You must indicate the extension as an estate, trust, or other entity during the step-by-step online process.

How can I assess whether I owe a tax payment when filing for a business tax extension?

Businesses who keep financial records for their company should be able to calculate an estimate based on their net income multiplied by the current year’s tax rate. Many businesses use the current tax rate from the previous year to assess this estimate. Subtract any tax payments made throughout the year from the total figure.

Am I required to file a business tax extension for the state I live in, too?

State requirements for business and individual income tax extensions vary from state to state.

Should a sole proprietor file for an individual or business tax extension?

Sole proprietors should have their business tax returns linked to their personal tax return as a Schedule C. Therefore, sole proprietors only need to submit their individual tax extension, which will extend both personal and business deadlines.