A small business owner was overheard saying “I should better make out time and compute my business tax returns; I’m hunted with the guilt of not getting it done yet”. And the same person was asking if it is possible to get an extension in order to have more time to figure out likely deductions. Of course yes, you can file for a business tax extension; filing and extension request is nothing you should be shy about. You need to understand that the IRS doesn’t even need to receive any excuses from you. However, you need to know what is required of you in tax extension filing.


Learn about the requirement for tax extension filing
Filing of the extension must be done by the due date of the return which is April 15 for all business returns as well as personal returns.

The correct form must be used. If the extension filing is for a partnership or corporation, or multiple member limited liability company, Form 7004 is to be used for the extension filing. Keep in mind that if you are yet to file your corporate file return or extension, you are late with by a month; extension filing for a sole proprietorship or single member LLC has to be done using Form 4868.

Any taxes due must be paid by the time you file for the extension.

Under-estimating Penalties
It is necessary to present an accurate estimate of the taxes you are yet to pay; you can attract fines and penalties by the Internal Revenue Service if your estimated unpaid tax is far from the actual amount. Also, if the IRS determines that your estimate is not substantial, they can ignore your extension filing and ask you to pay taxes on the entire amount due, back to April 15.

It is discovered that those who do not owe money sometimes do file extensions, since obtaining refund provides an incentive to embark on an early return filing. However, the assumption for the purpose of this article is that the business owner who wants to file for a business tax extension is owing some money. The question is “how much do you own?”

Calculators for Tax Estimate
Business tax software such as the Turbo Tax has a free estimated tax calculator which can be used for personal tax filers which comprises of information on sole proprietorship/single-member LLCs that file a Schedule C along with the personal tax return.

Make use of the previous year’s return. Therefore you need to dig out all necessary information; this will assist you in determining the reasonable level of your quick estimate.

You do not have time to check all of the deductions and tax credits you may qualify for at this time. Therefore, your estimates is likely to be high; this implies that there is every tendency of paying more tax than necessary, and when you settle down with your tax preparer, you may likely see more items to reduce your final tax bill. If your estimate is high, you can anticipate a refund instead of a letter describing fines and penalties.