The year of many difficulties isn’t quite over yet. In terms of the tax filing process, 2020 is just getting started. We all still need to file business (and personal) taxes. You may find you would benefit from a filing due date extension. There are some simple yet mandatory ground rules to keep in mind if you plan to file for an extension.
The 3 Big Rules
The three most important extension rules are:
- Rule #1:An extension of time to file your return does not grant you any extension of time to pay your taxes.
- Rule #2: You should estimate and pay any owed taxes by your regular deadline to avoid possible penalties.
- Rule #3: You must file your extension request no later than the regular due date of your return.
Let’s reiterate what the above means: Asking for more time to file does NOT give you more time to pay. If you file an extension application, you must pay what you owe before the deadline to avoid late payment penalties and fines.
More of the ground rules: Q & A
Q: How many extensions are you allowed?
A: There is only one extension allowed per tax year. There are no multiple extensions.
Q: What if I need an extension for both business and personal taxes?
A: File the appropriate form to request a business tax extension and a personal tax extension. Approval is generally automatic, but check the instructions when you file.
Q: Do I need to request an extension if I don’t owe?
A: If you can’t file your return by the due date, even if you don’t owe, you should request an extension.
Q: If I have to pay on time even if I can’t file on time, how do I figure out what I owe?
A: If you aren’t sure how much to pay with the extension application, you can calculate the estimated tax due.
Q: What about my state taxes?
A: State extensions are separate from the federal extension. The process for requesting an extension for a state tax filing differs from state to state. Check with your state’s taxing authority (state department of revenue or another similar title) to learn about the filing process.
Q: What form does my business use?
A: Partnerships, multi-member LLCs, S corporations, and corporations use Form 7004 to file an federal business tax extension application. Individuals use Form 4868.
How to File
If the situation is straightforward enough, you can file for the due date extension on your own and online. Very simple. An accurate calculation and payment of the estimated tax owed to the IRS is critical. If you have any doubts about the estimate, as always, I recommend hiring a tax professional to look everything over just to be safe.
If you have tax filing questions, reach out to us. You can also follow Brigade on Facebook and LinkedIn for tips throughout the year. We look forward to assisting you!
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