How To: Request More Time to File Your Small Business Taxes
by Christina Lee on April 10th, 2009
If filing your small business taxes by April 15 does not seem feasible this year, do not fight against the IRS. Instead, work with the agency to eliminate any reason for last-minute stress.
Over the past two years, about 7 percent of all Form 1040 filers have requested time extensions, accounting for nearly 10 million returns. If you do the same, make sure to:
- Understand the terms and conditions of the extension. While a typical extension lasts for six months, small business owners must still pay any amount due by April 15. They will otherwise owe a late-payment penalty and interest on the unpaid amount.
- Figure out which extension application you will need to fill out. The standard one is Form 7004 – “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns” – though quite a few others also exist. Forms can be ordered by phone, 800-829-3676, though they can also be downloaded at the IRS official Web site. If you are not sure which one to fill out, consult your accountant if not the IRS itself.
- Estimate how much you will owe the government, if anything, to the best of your ability. Not only does the IRS require this amount in the application, but the agency may also charge penalty and interest charges if it is underestimated.
- Fill out this particular application on time – if not right now. Requests for an extension are due before April 15. You could face a failure-to-file penalty otherwise, which is 5 percent of the unpaid taxes for each month or part of the month after the due date, plus 3 percent interest.
Also consider other advice and help that the IRS has to offer:
- If you don’t have all of the money, then look immediately into a payment plan. Online registration is available, so that you can figure out as soon as possible what your monthly installments will be like. The IRS charges $105 for setting up the agreement, $52 if the payments can be deducted directly from your banking account.
- If you don’t have a lot of time, then consider filling electronically. By using an online service, then choosing direct deposit, you can receive your tax refund in as few as ten days. Regardless of which method you choose though, be sure to double-check everything – the Social Security numbers, the signatures and the figures, most importantly.
For more information, visit the IRS official Web site.