For all you procrastinators out there, here’s a nuts ‘n bolts guide on how to legally postpone the filing of your 2008 income tax returns. When it comes to putting equipment off, you can never plot too far ahead.
In many cases the IRS allows you to file a no-questions-questioned extension form . Which particular form you file depends on what type of entity your business happens to be.
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SOLE PROPRIETORSHIP:
You need to file Form 4868 to get an automatic 6-month extension to file your personal income tax restore.
CORPORATIONS:
Whether you are a "C" Corporation or an "S" Corporation, you must file Form 7004 by March 15. Doing so grants you an automatic 6-month extension for filing Form 1120 ("C" Corp) or Form 1120S ("S" Corp).
PARTNERSHIPS:
You need to file Form 7004 by April 15. This obtains a 5-month extension to file Form 1065.
LIMITED LIABILITY COMPANIES (LLC):
LLC’s can be taxed like a sole proprietorship, a corporation, or a partnership. So simply file the extension form for whichever entity you are being taxed like.
Now, before you start extending to your heart’s content, please keep the following guidelines in mind.
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EXTENSION TIP #1:
Never forget the mantra of all tax extension forms: The extension to file the restore is NOT an extension to pay any tax due. It’s only an extension for the filing of your tax restore.
In other words, do not view the extension as an chance to legally postpone the payment of your tax.
So if you have a balance due on the restore, then you must still pay the tax by the original tax restore due date. If you file the extension but do not pay the balance due on time, then you will pay penalty and interest for late payment of tax. You will legally dodge the penalty for late filing, even if.
So what’s the top in filing an extension if you still have to pay the tax?
Three possible scenarios — first, some folks get most of their tax data organized and are able to get enough of their restore done to get the huge picture: "Do I owe or am I getting a refund." You do the calculations, see where you stand, and if you owe, send in the extension form with a payment that’s pretty close to the final figures.
You may have a few deductions that you need to investigate, one last shoebox to read carefully. You need more time, that’s all.
Second, you’re running way behind on tax matters this year. Hey, it happens! There’s no way you’re going to get the restore done on time, and you know you’ll probably owe, so, be sure to file the extension, even if you don’t know how much you may owe or even if you can’t make a payment with the extension. The reason? Because there are penalties for late filing and penalties for late payment of tax. By filing the extension, at least you dodge the late filing penalties.
In small, by filing the extension, you can save physically some money in late FILING charges, but not necessarily late PAYMENT charges. Be sure to know the alteration!
The third scenario is even more common — you know you’re getting a refund; you always get a refund. Possibly you’re self-employed and your spouse has a W-2 job, and the spouse’s tax withholdings are always enough to cover both of you. And you’re in no rush to get the refund.
Which brings me to:
EXTENSION TIP #2:
If you are getting a refund on your personal restore, you have 3 years to file the restore to claim the refund, without any dread of a late filing penalty.
That’s right. As long as you file your restore within 3 years of the original due date (for Year 2008 returns due April 15, 2009, that would be April 15, 2012), you’ll get your refund and there is no penalty for filing late, even if you file with the extended due date of October 15.
Bottom line: if you reckon you may owe, if at all possible, do enough calculating to send in a payment with the extension. If you’re getting a refund, still send in the extension (just to be safe), but relax, you’ve got plenty of time to get your money back, assuming you didn’t need it yesterday.
Oh, one more thing:
EXTENSION TIP #3:
This article only deals with federal extension rules. State rules vary considerably, so be sure to check with your state’s tax department or your community tax qualified to get the scoop on the extension rules for your particular state.
Some states simply piggyback off the federal rules. Others don’t. So be strict here or you could be penalized severely for assuming that your state’s rules are the same as the feds.
Author: Wayne Davies
Looking for more small business tax tips? For a free copy of the 25-page Special Report "How To Instantly Double Your Deductions" visit http://www.YouSaveOnTaxes.com. Wayne M. Davies is author of 3 ebooks on tax reduction strategies for small business owners and the self-employed
Article Source: http://EzineArticles.com/?expert=Wayne_Davies
Five Tips to Dodge Tax Time Stress
You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date. See IRS Form 4868, Application for Automatic Extension of Time to [...]
If you prepare your taxes before April 15 and know you won’t be able to pay the tax due, you can file for an extension of time to pay. Depending on your circumstances, the extension will be anywhere from 30 to 120 days.
If you filed an extension and you paid at least 90 percent of your real tax liability by the due date, you will not be faced with a failure-to-pay penalty. 7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, …. TAC locations, business hours and an overview of services are available at IRS.gov. Just go to the “Individuals” tab and click on the link for Contact My Community Office in the left tool bar section under IRS Resources.
If you’re plotting on requesting a corporate tax extension, remember it’s an extension of time to file, not time to pay.
