I can’t stress this enough: You can get an extension on filing your tax return, but you can’t delay an IRS tax payment.
#File extension for business tax return how to
How to file a tax extension for your small businessįiling a tax extension is pretty painless. By April 15, 2021, you’ll need to pay either 100% of your 2019 tax liability or 90% of what you’re expecting to owe for 2020.
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Say you’re a sole proprietor who needs an extension on filing your 2020 taxes. You won’t face a failure-to-pay penalty if you pay by tax day 90% of the filing year’s tax liability or 100% of the previous year’s. Of course, you won’t know your exact tax liability until you finish filing your return, but you’ll have an idea of your income and small business deductions. The IRS failure-to-pay penalty will run you 0.5% of your tax liability for every month your payment is late, up to 25%. You’re still required to pay your taxes by the original deadline, and, if you don’t, you’ll face penalties. However, it’s a misconception that getting a tax extension pushes back your tax payment due date. Business returns follow different due dates, but the filing process is nearly identical. You may file for an automatic six-month extension, moving the return date to October 15.
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Usually, individual tax payments and returns are due by April 15. When you need more time to get your small business’s tax ducks in a row, you can file for an IRS extension that delays your tax return due date for up to six months. However, the IRS can help you out by granting an automatic six-month extension on filing your business tax return.
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Sometimes, 24 hours in a day doesn’t cut it, and you can’t appeal to the Earth’s orbit for an extra few hours.