How To File A Business Tax Extension In 2021
The first few months of 2021 have already been a rollercoaster of highs and lows. Just when we think we can catch our breath, though, tax season comes speeding at us like a freight train. Let’s face it — tax time was stressful in pre-COVID days. For many of us, taxes in 2021 has kicked up our stress levels (and our blood pressure!) a notch or two.
The good news is that the government is easing some of this stress by extending the April 15 annual tax return filing deadline (more on that later). If that doesn’t give you enough time to file, you can also file a business tax extension with the IRS. This allows you more time to gather your documentation, fill out all required forms, and ensure that your tax return is accurate before you file. In this post, we’re going to go into the details of filing a business tax extension — from deadlines to the forms you need and how to submit them to the IRS.
Before we dive into the specifics of filing a business tax extension in 2021, there are a few things you should keep in mind. Filing for an extension does not give you additional time to pay any taxes due to the government, so make sure that you pay by the current tax deadline. Otherwise, you will accrue penalties and interest that increase your tax liability. Failure to pay your taxes can also invalidate your extension. So make sure that you estimate and pay your taxes by the deadline. If you need additional time to get your records and tax forms in order, a tax extension can give you some extra breathing room. With that being said, let’s get your tax extension started.
Table of Contents
The Current Tax Deadline For 2021
For 2021, there are several important dates to remember when it comes to filing your taxes. Some of these dates differ based on the legal status of your business.
Individual Tax Returns
Let’s start with the individual annual federal tax return due date. Normally, individuals filing IRS Form 1040 would be required to file their tax returns by April 15. This year, however, individual annual tax returns for 2020 have an extended filing date of May 17, 2021. Taxpayers will get extra time to file their returns without having to file for an extension or take additional action. Additionally, taxpayers that owe taxes can wait until May 17 to pay if necessary. No penalties or interest will be charged for those taxpayers that opt to pay on this later date.
If more time is required, individuals can submit IRS Form 4868 to receive an extension through October 15, 2021, to file their tax returns. What’s important to note here is that while you will have additional time to file your return, you will not receive additional time to pay any tax liability. Therefore, if you opt to file an extension to gather documentation and get your tax return in order, also be prepared to make your estimated tax payment on or before May 17, 2021, to avoid penalties and interest.
Corporations & Partnerships
The filing deadline for businesses set up as corporations is different from the extended deadline for individuals. If your business is set up as an S-corporation, your tax return will be due on the 15th day of the third month after the end of your tax year. Let’s look at an example. If your business uses a calendar year-end of December 31, 2021, your return or your extension is due to the IRS on or before March 15, 2021.
The same rule holds true for partnerships. If your business is set up as a partnership, your tax return will be due on the 15th day of the third month after the end of your tax year. Using the same example as above, your tax return or extension would be due to the IRS on or before March 15, 2021.
If your business is set up as a C-corporation, your tax return will be due on the 15th day of the fourth month after the end of your tax year. Looking at the same example, a business that uses a calendar year-end date of December 31, 2021, will need to submit their tax return or extension on or before April 15, 2021.
Businesses Affected By Winter Storms
The IRS has offered some relief to individuals and businesses located in Texas, Oklahoma, and Louisiana. As a result of severe winter storms, businesses in these states will receive an automatic extension for filing their returns, remitting tax payments, or filing for an additional extension. The deadline for these businesses and individuals has been extended to June 15, 2021.
Quarterly Estimated Tax Payments
Now, here’s where things get a little tricky. If you are a business owner, entrepreneur, contractor, or self-employed individual that is required to pay quarterly estimated tax payments, deadlines for these payments have not been extended. Individuals including sole proprietors, partners, and S-corporation shareholders will be required to file Form 1040-ES and submit their estimated payment. In most cases, corporations will use Form 1120-W to calculate estimated tax payments.
In addition to your IRS form, you will also need to remit payment for your tax liability. Payments can be sent through mail, paid over the phone, or submitted online or through the IRS2Go mobile app.
The due dates for submitting your forms and payments in 2021 are as follows:
- April 15, 2021 (except for businesses in Texas, Oklahoma, and Louisiana)
- June 15, 2021
- September 15, 2021
- January 18, 2022
Remember these important deadlines. Failure to pay your estimated quarterly taxes on time or calculate them properly may result in penalties and fees from the IRS.
For businesses in the states of Texas, Oklahoma, and Louisiana, the April 15, 2021, due date has been extended to June 15, 2021.
Deadlines For Filing A Business Tax Extension
Do you need more time to make sure your return is accurate and that all of your records are in order? Do you understand that a business tax extension does not extend the date your payment is due, and failure to pay your taxes on time may result in penalties and interest? If you answered yes to these questions, then filing a tax extension may be the right choice for your business.
In order to receive an extension, you need to file the proper forms with the IRS by the deadline. Your deadline is determined by your business structure.
- Individuals (Including Sole Proprietors & Single-Member LLCs): Individuals will need to file their 2020 tax return or file for an extension on or before May 17, 2021.
- S-Corps & Partnerships: S-Corps and partnerships must file a business tax extension on or before March 15, 2021.
- C-Corps: C-Corporations must submit their business tax extension on or before April 15, 2021.
- Business In Louisiana, Texas, & Oklahoma: Businesses in Louisiana, Texas, and Oklahoma must submit their business tax extension on or before June 15, 2021.
Did You Get Both Economic Impact Payments? If Not Here’s How You Can Get Them
In 2020, many individuals were eligible to receive two Economic Impact payments. While some taxpayers received theirs as expected, there were some complications that caused others to not receive one or both of these payments. Fortunately, you can still receive your payment if you were left out in the cold.
If you were eligible to receive one or both stimulus payments in 2020 but didn’t receive the funds, you will need to claim the Recovery Rebate Credit on your 2020 tax return. The Recovery Rebate Credit Worksheet in the 2020 Form 1040 and 1040-SR can help you determine eligibility and how much you’re eligible to receive. After filing your 2020 tax return, these funds will be sent as a tax refund. The fastest way to get your funds is by setting up direct deposit through the IRS. If you do not have direct deposit, you may receive a check or preloaded debit card in the mail. However, receiving your funds through check or debit card can take weeks longer than direct deposit.
Sound confusing? Fortunately, tax software has all this built-in so it can help you determine eligibility, calculate the amount you are owed, and help you submit the appropriate forms to the IRS.
If you only received a portion of your funds but qualified for a higher payment, you can also use this method to receive the money you are owed. Visit the IRS website to learn more about claiming this credit on your 2020 tax return.
How To File Your Business Tax Extension In 2021
Once you’ve decided to file a business tax extension, the process is surprisingly simple. You will use one of two forms from the IRS to file your extension.
- Form 4868: If you are self-employed, a contractor, or a single-member LLC, you will fill out and submit Form 4868 Application For Automatic Extension Of Time To File U.S. Individual Income Tax Return.
- Form 7004: For corporations, partnerships, or multi-member LLCs, you must file Form 7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.
Both of these forms are easy to fill out and takes just a few minutes to complete. Many of the most popular tax programs and software can help you complete your form and e-file it for free or for a small fee.
When It’s Time To File Your Business Taxes
You’ve done it — you filed your business tax extension! You submitted the proper form on time, paid your quarterly taxes, and now have some time to make sure your 2020 tax return is in order. Don’t sit back and procrastinate, though. Those months can pass quicker than you think!
Now, it’s time to look ahead to filing your business taxes. With all of the new changes as a result of the pandemic, your tax return can feel more overwhelming than ever. You don’t have to do it alone, though. Check out our top tax software choices to help simplify the process. You won’t have to shuffle through a pile of confusing forms, you can take advantage of accuracy guarantees and audit protection, and you can even find hidden savings with a number of business tax deductions. Do your research, find the software that’s right for you, and make filing your taxes in the months ahead a breeze. Good luck!