Filing a business tax return is part of owning a business, but sometimes the filing deadline arrives before you're ready. If you're still catching up on bookkeeping or sorting through receipts looking for tax deductions, don't worry. The IRS will give you an additional six months to file your tax return. All you need to do is file an extension. Here's how.
1. Estimate the Tax You Owe
An extension gives you more time to file your tax return, but it doesn't give you more time to pay the tax you owe. So if you owe money to the IRS, you're still expected to pay by the original due date. As a reminder, those dates are generally:
- March 15 for partnerships and limited liability companies (LLCs) filing Form 1065, U.S. Return of Partnership Income and S corporations filing Form 1120S, U.S. Income Tax Return for an S Corporation
- April 15 for sole proprietorships and single-member LLCs filing Schedule C, Profit or Loss From Business and C corporations filing Form 1120, U.S. Corporation Income Tax Return
The IRS can charge penalties and interest if you pay your taxes after the original due date, so estimate what you owe and make a payment with your extension request.
2. Select the Right Extension Form
Most businesses use Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, to request an extension. This includes partnerships and multiple-member LLCs, S corporations, and C corporations.
Two exceptions are sole proprietors and single-member LLCs. Sole proprietors and single-member LLCs don't file separate business tax returns. Instead, they report business income or losses on Schedule C. So these types of entities request a personal extension using Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
3. Complete the Extension Request Form
Completing the extension form is straightforward. You don't even need to sign the extension request or explain to the IRS why you need extra time.
To complete Form 7004:
- Fill in your business name, tax identification number, and address at the top of the form.
- In Part I, select the applicable form code to indicate the type of tax return your business files (i.e., Form 1120 for a C corp, Form 1065 for a partnership, etc.)
- In Part II,
- Check the box on line 2 if the extension request is for a foreign corporation that doesn't have a place of business in the U.S.
- Check the box on line 3 if your business is the parent company for a group of companies that file a consolidated tax return.
- Check the box on line 4 if your business qualifies for an extended deadline, making your tax filing deadline June 15. Companies that qualify for the extended deadline include partnerships and corporations that keep their books and records outside of the U.S., foreign corporations that maintain a place of business in the U.S., and domestic corporations whose principal income is from sources within the U.S. and its possessions.
- On line 5, fill in the blanks to indicate the calendar or tax year for which you're requesting an extension.
- On lines 6 through 8, enter your estimated tax liability, any payments you've already made or credits you intend to take that will reduce your tax liability, and the balance due that you'll pay with your extension request.
4. Submit Your Extension Request Form
You have a few options for filing your extension request and paying the tax due.
- Pay electronically. Most businesses must use the Electronic Federal Tax Payments System (EFTPS) to make federal tax payments. This system allows you to schedule direct debits of tax payments from your business bank account. To use EFTPS, you have to enroll online or call EFTPS Customer Service at 800-555-4477 to request an enrollment form. If this is your first time using EFTPS, the IRS will validate your information by mailing a personal identification number (PIN) to your IRS address of record. This process takes five to seven business days, so it's not a good option for last-minute tax payments.
- E-file through your tax software or a tax professional. If you file Form 7004 electronically, you may be able to pay via electronic funds withdrawal. You'll have to provide your business bank account's routing and account number and sign Form 8878-A, IRS e-file Electronic Funds Withdrawal Authorization for Form 7004.
- Paper file Form 7004 and mail a check. You can also mail Form 7004 to the IRS along with a check for the tax you owe. The mailing address for sending Form 7004 depends on which tax form you use and your business's state. See the IRS Instructions for Form 7004 for a list of mailing addresses. If you go this route, be sure to send your form and check via Certified mail, so you have proof it was mailed by the original tax filing deadline.
5. File Your Business Tax Return by the Extended Due Date
Requesting an extension generally gives you an extra six months to file your business tax return. For calendar-year taxpayers, the extended deadline is:
- September 15 for partnerships, multiple-member LLCs, and C corporations
- October 15 for sole proprietors and single-member LLCs
If any of the dates mentioned fall on a weekend or holiday, the deadline shifts to the next business day.
Don't forget about state income taxes! Some states accept the federal extension, and some require business owners to use a state-specific form. Check with your state's Department of Revenue or your tax preparer to ensure you don't miss your state tax filing deadline.