The only common circumstance I could think of where an extension is helpful is if the documents were presented to the tax preparer at the last minute and the tax return can not be prepared on time. Really, there is no official benefit to filing an extension if you are actually ready to file. Instead, the income of the corporation flows through to the shareholders and they pay taxes on that income on an individual basis. To make things more interesting, most s corporations do not pay any taxes. To avoid penalty, taxes must be paid in by the due date. An extension grants time to “file” your taxes, not to “pay” your taxes. Many taxpayers believe that an extension gives them time to pay their taxes at a later date.
If you have your business paperwork together for your s-corp return it often makes sense to simply file on time and forgo the extension. Around tax time, the if you or the bookkeeper is backed up with this work and the P&L, etc, is not ready, filing for an extension might be appropriate. Many small business hire an accountant to do this bookkeeping for them. This can be a lot of work to do by yourself. Among other things, a balance sheet with a list of new assets might be needed too.
To file your corporate income taxes, you generally need to categorize your income and expenses for the period into an organized profit and loss (P&L statement). Why File an 1120s Extension? If you need more time to get your books together, and you do not owe any tax, it may make sense for you to file an extension. This is regardless to your federal filing obligations. Some states require that you pay a franchise tax that is due on the due date of the state return – or even in advance as estimated tax payments. There are also other issues to consider, however, such as state return requirements. Note that with most S-corps, the filer does not generally pay taxes specifically on the deadline, but instead most often pay their remaining taxes a month later when the personal tax return is filed. You still have to pay any tax due by the deadline (or at least estimate it within 90% of your tax liability to avoid penalty). The extension gives you more time to get your paperwork together to file the tax return.
Many small business owners believe that an extension gives you more time to pay your taxes. There is some information on the IRS site on penalty abatement here (opens in a new tab).įiling an Extension for an S Corporation Tax Return If you are seeking penalty abatement, you can hire us to negotiate on your behalf or to prepare and send letters and responses, or you can do it yourself. There are a few different ways to do this, but there is guarantee that efforts to reduce penalties will work. If you are late, and especially if you have reasonable cause for being late, it might make sense to seek penalty abatement if you are subject to these high-dollar penalty amounts. Don’t blow this one off – the consequences are unpleasant to say the least. Failure to file your corporate tax returns seems to be a much bigger deal than failing to file a personal tax return, in many cases. Late-filed 1120s corporation tax returns will likely result in VERY stiff penalties that increase with every month. If you do not use the “calendar tax year”, your 1120s deadline is the 15th day of the third month following the end of the corporation’s tax year, in most cases. If the deadline falls on the weekend or a holiday, the deadline is often moved to the next business day. 1120s S Corporation Tax Return Due Date and Late Penaltiesįor most S Corporation Tax Returns filing under the calendar year, the deadline to file your 1120s tax return falls on March 15th. We strongly recommend that you check with a CPA or EA to make sure that your are in compliance according to your specific tax situation. Warning: This tax advice is general in nature.
#EXTENSION FOR BUSINESS TAX RETURN HOW TO#
Do you need to file an extension for your 1120s S Corporation tax return? Should you file one? Here are the basics about how to file them.
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