Q: How to File for a Business Tax Extension in 2020

When are business taxes due again? (For most businesses, that’s April 15.)

If you’re unsure you’ll meet the tax deadline, filing a business tax extension is pretty easy.

Six-month extensions are granted automatically. Although you’ll still be required to pay your business taxes by the usual deadline, having an extension will give you an extra five to six months to submit your return (or in other words, the paperwork).

Here are the steps for filing your business tax extension correctly in 2020 (for the 2019 tax year):  

Step 1: Download the application form

Here are the forms you’ll need to file, depending on your business type. Both grant an automatic extension.

  • Partnership, LLC filing as a partnership, corporation (“C Corp”), or S corporation (“S Corp”): IRS Form 7004
  • Sole proprietorship, or if you need to file an extension on your personal income tax: IRS Form 4868

Not sure what type of business you have? Then check here.

Step 2: Estimate your 2019 taxes owed

This part is important. No, an extension won’t get you out of paying your business taxes.

When you file for a business tax extension, you’re required to estimate the taxes you owe for the 2019 tax year and submit this payment, along with your extension application, to the IRS. You’ll also have to deduct any payments or credits.

It’s always best to slightly overestimate the amount of taxes you need to pay. That way you’ll avoid being charged interest and a late penalty for any additional taxes you haven’t paid. You’ll also be refunded any overpaid taxes when your tax return is filed.

As always, check in with your CPA to get advice tailored to your business.

Step 3: Find your tax extension due date

The due date for filing your tax extension can be different for different business entities.

Business entityExtension request due dateNew due date if granted extensionForm needed
Sole proprietorshipApril 15, 2020October 15, 2020IRS Form 4868
C CorpApril 15, 2020October 15, 2020IRS Form 7004
Single-member LLCsApril 15, 2020October 15, 2020IRS Form 7004
S CorpMarch 15, 2020September 16, 2020IRS Form 7004
PartnershipMarch 15, 2020September 16, 2020IRS Form 7004 and Form 4868
Multiple-member LLCsMarch 15, 2020September 16, 2020IRS Form 7004

Step 4: File your extension application and payment

Either you or your CPA can prepare and submit your application and payment to the IRS.

Although you can file for an extension by mail, consider filing electronically using the IRS’s e-File service. When you file electronically, you should receive instant confirmation that your extension has been granted.

Step 5: Take note of when your tax return is due

Forms 7004 and 4868 only get you a six-month extension. That means partnerships and S Corps need to file completed business tax returns by September 15, 2020.

For C Corps, the tax return will be due October 15, 2020. That’s also the date your personal tax return will be due.

Step 6: Review the instructions for filing

Instructions for filing Form 7004, along with related information, can be found on the IRS website. However, filing a tax extension requires little more than the following:

  • Name
  • Address
  • Tax ID number, and
  • Type of business tax return you plan to file: (Form 1065 is for partnerships, Form 1120-S is for S Corps, and Form 1120 is for C Corps).

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Special Note: Automatic 2-month extension

If you are a US citizen or resident alien who is living or running your business outside of the United States on the regular due date of your return, you may qualify for an automatic 2-month extension.

You can apply for the extension using Form 2350.

Still have questions about business tax extensions?

You can either call your CPA, contact the IRS by phone (call volumes during tax season tend to be very high, so expect long hold times) or make an appointment to talk to a tax professional at your local Taxpayer Assistance Center.

Most importantly, remember that being granted an extension to file your business taxes does not grant you an extension to pay them, so plan on paying an estimated amount of tax when you file Form 7004 or Form 4868.

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