If you need to file for an extension for the first time, or the 20th time, there are a few things you should know before you file.
When filing IRS Form 4868, you’re asking the Internal Revenue Service to allow you some time to file your personal and or business tax return specifically when filing a Schedule C with your personal return as a sole proprietor or as a single-member LLC. In some instances, an extension is automatically filed for members of the military serving abroad. In many situations, most extension requests are honored without need for explanation.
A filing extension effectively moves the filing deadline for personal tax returns from April 15th to Oct 15th. The question comes down to one thing, “Is taking one the right move?” You might not have a choice under some circumstances, but there are both pros and cons to filing for an extension.
Benefits of Filing an Extension:
Provides you extra time to file your return
Helps you reduce penalties if you paying them in full by the deadline
Up to 6 months extra time to finish and file your return
Reduction of Late Penalties when compared to filing late
Tax Refund Preservation
Extra Time to Explore and Make Various Elections on Your Tax Return
Improvement of the Accuracy of Your Return
Reduction of Tax Preparation Fees
Negatives of Filing an Extension:
Does not give you more time to pay taxes you owe
Interest Still Accrues on an monies owed the IRS
There’s No Extra Time to Fund an IRA
No Extra Time to Switch From Joint to Separate Returns
No Time to Make the Mark-To-Market Election for Professional Traders
Confusing the IRS if you don’t need to file a return
How Do I File An Extension For My Business Taxes?
If your business is a corporation, partnership, or multiple-member LLC, you should schedule a consultation with an accountant to determine a safe and logical course of action. Many businesses will probably fall under filing Form 7004 where different rules apply.
Can I File Extensions For Personal And Business Tax Returns?
Yes, it’s not uncommon to file an extension for your business tax return and for your personal tax return. Touch base with a licensed accountant to make sure that you have an understanding of both your business and personal taxes that may require an extension.
Is Filing An Extension Hard?
No, it just requires working through the details. Personal and 1040 Schedule C filers can usually file IRS Form 4868 extension online. If you are a corporation, partnership, or multiple-member LLC, there are a few items you need to be aware of before filing for an extension. This is where the value of a licensed accountant is invaluable.
Here is some of the information you will need in order to successfully submit your extension request.
Full name and spouse’s full name if married filing joint
Social Security number(s)
Estimated total tax liability for the year
Total of any payments made toward your tax obligation
Remaining balance owed
Amount submitted as payment
Hit submit and you’ll receive a confirmation code from the IRS that your extension was received. The alternative method is mailing Form 4868 directly to the IRS.
If you have any more questions about filing for an extension, find a local professional accountant or call us and we’d be more than happy to assist!