How to File for an Extension for Your Small Business Tax Return

The Internal Revenue Service (IRS) has made filing an extension for your small business tax return easier. In the past, you needed to request a three month extension first for an unincorporated business. You would have to keep filing an extension to get more time. Now, you only need to fill out Form 7004, which replaces three other forms: 2758, 8736 and 8800. Those forms are now obsolete. A corporation and an unincorporated business can request an automatic six-month extension. Here's how:

Determine Tax Filing Strategy

How you file all your taxes will determine how you file an extension for your small business tax return. If you plan to use your favorite online or CD-Rom tax software program, it will include Form 7004. The software will ask you questions and guide you step by step to complete the form. If you use a business tax service or a small business tax account, the tax preparer will fill out the form for you. If you plan to do your own taxes without using a tax preparation software, you'll have to fill out Form 7004 yourself.

Part I vs. Part II

The IRS instructs small business owners to fill out Part I or Part II, but not both. Part I is a request for an automatic 5-month extension, and it applies to Form 8804, 1041 (for estates and trusts) and 1065. Part II is a request for an automatic 6-month extension and includes the following forms:

  • 706 GS(D), GS(T)
  • 1041 N, QFT
  • 1042
  • 1065-B
  • 1066
  • 1120
  • 1120 C, F, FSC, H, L, ND, PC, POL, REIT, RIC, S, SF
  • 3520-A
  • 8612
  • 8613
  • 8725
  • 8831
  • 8876
  • 8924
  • 8928

There's only one other part that you have fill out after completing Part I or Part II, and that's Part III.

Part III

The information required in the last section is straightforward, except for two things: tentative total tax, total payments and credits and balance due. You'll have to figure out your taxes anyway, which is why you might consider using a tax software or tax preparer if doing your own taxes seems too complex. You'll have the pay the balance due, based on what you fill out in Part III. You can pay online at www.irs.gov.

Due Date

A small business has to file many tax forms. Figure out the due dates for each form that you have to file. Each form has its instructions with the due date for filing included. As soon as you know that you have to file an extension for a particular return, make sure you submit Form 7004 before the due date. You can e-file Form 7004 if you're short of time, and if you want to benefit from an online confirmation from the IRS. It's critical that you don't file Form 7004 late, or you'll expose yourself to audits and other tax problems.

Don't make the mistake of thinking that filing an extension using Form 7004 will somehow delay payments for taxes you owe. You still have to pay taxes on or before the due date.

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