This can be done in one of two ways. Most major tax software applications allow you to file extensions using Form for businesses or Form for individuals. Tax professionals will also be able to file S corp extensions by utilizing tax applications. Lastly, you can also choose to file an S corp tax extension by printing out Form , filling it in, and posting it to the IRS.
Be aware, however, that this method can be very slow. If your letter is held up in the post, this can cause delays in the IRS granting your S corp extension. If they receive your application after the filing deadline, they may reject it, and penalties will come into play.
Filing extensions for S corps are, like for individuals, considered automatic. However, the IRS might still turn down an automatic extension for a couple of specific reasons. If the extension application is filed after the tax return deadline, the IRS is likely to refuse the extension.
Another reason for the IRS to turn down a paper filed extension application is if it is not signed. However, in most cases, if the extension application is filed on time, and is correctly signed, the IRS is not likely to turn down extensions. Besides filing after the tax return due date, and not signing paper copies of Form , there are also a couple of other S corp tax extension mistakes to avoid.
The first of these concerns S corp status. This is done by filling out and filing IRS Form Before Form is filed and processed by the IRS, corporations cannot file taxes as S corporations.
In some cases, the application Form has not been sent yet. If Form is filed, requesting an S corp extension, when the company in question is not yet an S corporation, the IRS will turn down the application on the grounds of an incorrect entity type. If this happens, taxpayers can take this up by phoning the IRS and enquiring about the S corp status, or consulting their tax professional.
If S corp status has not yet be instated, then taxpayers should file an extension application for a C corporation instead. After the extension has been granted, taxpayers can then focus on finalizing their approval for S corp status. As luck would have it, corporate extensions are often filed very close to the return deadline. If you have filed within the last few days before the return deadline, and a complication like an error in S corp status crops up—there might not be enough time to file a C corporation extension application before penalties are charged.
Another common and costly mistake to avoid with S extensions is filing them too close to the tax return deadline. In some instances, this might work out, but in many cases, leaving the application to the last minute can cause detrimental delays.
The reason for this is that a tax extension on the part of the S corporation will inevitably delay the issuing of Schedule K This means that the shareholders will not be able to file their personal taxes until the S corp has filed its taxes return and they have received their Schedule K For this reason, any time an S corp applies for an S extension all shareholders should also apply for extensions on their personal tax filing deadline.
To do so they will need to fill out and file IRS Form This extension will grant taxpayers an additional 6 months in which to file their personal times, which will allow for any delay on the part of the S corp. Like S corp extensions, extensions for individual taxpayers are also automatic and are very rarely declined. Reasons for the IRS declining an application are similar to those for S corps.
If an application is sent after the personal income tax return filing deadline or is not signed when sent in hard copy , this could cause the IRS to deny the extension. Another important thing to be aware of when applying for an S corp extension is that extensions do not affect payment deadlines. Extensions merely allow more time for an entity or individual to file taxes. In the meantime, it is still required to make estimated tax payments.
In the cases of S corps, it is very rare that an S corp will owe any taxes on its return, as these are passed through to the shareholders. This means that any shareholders of an S corp that have applied for an extension will still need to pay taxes that are due on time.
As the shareholders will not be able to use their return to see what they owe, they will need to calculate their taxes themselves or have a tax professional do this for them.
Once that is done, shareholders can then make estimated payments to the IRS. Lastly, when it comes to extensions, do not forget about state tax deadlines. Some states that impose income tax go along with the IRS extension. However, there are other states, such as New York, which require corporations and individuals to file separate applications for extensions. If your S corp is running late on filing its return the best thing to do is apply for an extension as soon as possible.
The next crucial thing is to get all the applicable documents prepared for filing that tax return. If this process is proving complex, it is a good idea to seek out the assistance of a tax expert. If you need help with preparing to file for an S corp tax return or an S corp extension, we offer tax consulting, assistance for unfiled returns , and emergency tax services. If you have any questions about what we do and how we can help you, contact us and we will be happy to answer your queries.
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