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     How To Get An Extension To File Your Business Tax Returns

If you can’t imagine getting your tax returns together by the appropriate filing DEADLINE, you need not worry. The Internal Revenue Service automatically gives you an EXTENSION if you file the appropriate form. As you might expect, there are different forms for different businesses.

It is vitally important that you understand that an extension to file taxes is not an extension to PAY taxes. The Internal Revenue Service 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.

If you conduct business as a CORPORATION with a fiscal year-end of December 31st, you are required to file your tax returns on or before March 15. 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.

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 Internal Revenue Service only grants automatic extensions for filing PERSONAL tax returns to August 15.

The Internal Revenue Service 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 company is required to file tax returns by April 15. 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 Internal Revenue Service classifies you as a partnership for tax purposes. If you are the sole owner of a limited liability company, you may be in for a surprise. The Internal Revenue Service doesn’t recognize limited liability companies owned by one person. Instead, it simply considers you a SOLE proprietor and the rules for sole proprietorships apply. These are discussed below.

If your business is a PARTNERSHIP, you are required to file tax returns by April 15. You can use form 8736 to obtain a 3-MONTH extension.

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. You can obtain a 4-MONTH extension by filing form 4868.

Regardless of how your business is organized, the Internal Revenue Service 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 with BusinessTaxRecovery.com -- providing information on taxes.

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