The Internal revenue Service allows business and individuals to file their tax extensions by filling out Form 7004. This gives businesses and individuals extra time for filing their income tax returns. Nevertheless, the due dates and the rules for these tax extensions generally tend to be different in comparison to the ones for personal tax extensions.
Considering the business type, the IRS gives the flexibility of a five or six month tax extension which starts from the original due date of the tax return. This can be understood by an example. Suppose that a particular business gets an extension of 6 months with the original tax filing deadline being 16th March, the new filing deadline of the business would be 15th September.
1. Importance of IRS Due Dates and Rules on Tax Extensions
If you, as an individual, are trying to file tax extension for a business that you own, it is necessary for you to have a clear understanding of the IRS due dates and the rules as well. Business extensions tend to be automatic meaning that you are not required to sign Form 7004. You are also not required to provide the reason behind the extra time that you need for paying your taxes. There are a lot of companies that make use of Form 7004 for applying for business tax extensions. Nevertheless, there are certain businesses like the sole proprietorships where business activities are generally reported on the personal tax return of the business owner. In this case, personal extensions are requested by filling out IRS Form 4868.
Some important rules that need to be followed when requesting tax extensions are as follows:
2. Be Accurate
The business tax extensions are automatic as long as Form 7004 is completed and filed in the correct manner. Always keep in mind that your tax extension request might be denied if your form has errors in it.
3. Pay All taxes Due
Always keep in mind that through tax extension you do not get extra time for paying your taxes. The only thing that you get is more time for filing your tax returns. Thus, if by any chances, you happen to owe taxes for a year, you will still be expected to pay those taxes within the due dates. In case, you are not able to pay your tax liabilities within the deadline, you might have to pay interest charges and penalties. Therefore, it is highly recommended to pay the taxes along with extension as this helps in avoiding late fees.
4. Try Filing On Time
It is necessary for you to submit the tax extension form on or before the filing due date of tax returns. The deadline might vary depending on business entity type. Original filing due date for most estates, trusts and business entities is 15th April. On the other hand, 15th march happens to be the original filing due date for all corporations including S-corporations and C-corporations.