S Corp Extension: Everything You Need to Know
You can get an S corp extension request if your business requires one and if you can’t pay your taxes on time, simply apply for an extension from the IRS.3 min read
2. Form 7004
3. Extension Requests
4. Form 940
You can get an S corp extension request if your business requires one. If you can’t pay your taxes on time, simply apply for an extension from the IRS.
An S corp only pays taxes on certain gains, including passive income. Shareholders must pay taxes on all other forms of corporate income. To obtain the necessary forms, go to the IRS website, and go to “forms and publications” in the search engine.
Moreover, you need Form 7004 via the IRS website. Form 7004 applies to an S corp that’s requesting a six month extension on a tax return. From there, enter the following:
- Corporation Name
- Employer Identification Number
After, skip Portion I, and enter “25” as the code in Part II, which associates Form 1120S. You’ll then proceed to Part III. You only need to skip Question I of Section III if:
- Your corporation keeps records and books beyond U.S. borders and Puerto Rico
- Your business earns a majority of income from American possessions
- Your company is a designated foreign corporation
Regarding remaining questions, enter the taxable year and tax estate, if applicable, that your business would owe. After you fill out the form, you must submit it to the IRS before the tax return’s original deadline. The deadline would always be three months and 15 days after the closing of the tax year. You may file the form online or mail it directly to the IRS.
- Note: Mail to the following address if you’re east of the Mississippi: Department of Treasury, Internal Revenue Service, Cincinnati, OH 45999. To the west of the Mississippi: Ogden, UT 84201.
An S corp with income more than $10 million should send an extension to UT regardless of where the corporation is located. In addition, an S cop with such a high income stream should use an account to file extensions. In such instances, you should rely on a professional instead of researching on your own.
Also, check your state guidelines to know if you need to file a different extension request. When it comes to not owing money on a tax return, the penalty for filing late is $195 for each month that the document is late and will be multiplied by the shareholder number. For instance, you and a friend have an S corp and forget about the March 15 due date, filing on April 15 instead. You’ll then owe $390, with no due balance. In addition, you’ll pay $1,560 on the tax return if you do not file until August.
- Note: Extensions request are simple, but you should still have a professional file for you.
Having a tax professional do it for you is simple, and you’ll need the following information in most cases:
- Corporation Name
- Credit Card Number
After, a five-month extension would be granted for documents listed in Part I of Form 7004. A six-month extension is given in Part II of the same form. Before authorities grant five or six month extension, you need to file additional paperwork and include payment for additional tax owed.
An S corp should file an annual return by March 15th after the end of the taxable year. The corporation must report financial activity for Form 1120S and attach a Schedule K-1 for every shareholder. A Schedule K-1 reports a shareholder’s income portion relative to his or her share in the business. They use the form to record such information on their personal tax returns.
If an S corp issues wages to its employees, the business must withhold federal income taxes in the form of Medicare and Social security taxes from employee paychecks. This would require Form 941, which needs to be sent to the IRS. Form 941 calculates the aggregate balance every quarter.
The addition of employees forces the S corp to file the Federal Unemployment Tax return yearly. You would file such a return using Form 940. If the business pays $1,500 or greater in wages during a calendar quarter, or at least one employee works part of a day, or 20 or more different weeks, Form 940 must be filed. The goal of such a form is to record the wage amount that the S corp would owe in unemployment taxes. The due date in filing Form 940 is January 31st annually. With that, the IRS allows the deadline to be February 10th if you paid all taxes on time.
To learn more about an S corp extension, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s attorneys will help you through all matters pertaining to filing extension requests and any due dates you need to be aware of. In addition, they will help you maximize certain tax advantages that an S corp gives to small business owners.