In the event that you are unable to have a tax return ready for your filing deadline, or are unsure if you will be able to, your best course of action is to file an extension with the IRS. An extension provides you with an additional six months beyond your filing deadline in which to submit a tax return. For example, using the 2020 tax year:
- Partnerships + S-Corps: March 16th, 2021 + 6 months = September 15, 2021
- Sole Props, Single Member LLCs + C-Corps: April 15th, 2021 + 6 months = October 15, 2021
The most important thing to know about a Tax Extension is that an extension to file your taxes is not an extension to pay your taxes. Sole Props, Single Member LLCs, and C-Corps will need to remit their tax liability payments at the time of filing an extension. Partnerships and S-Corps will not owe a tax liability on March 16. As these entities pass the tax liability on to the individual, the payment of that tax liability is due at the time the personal return is filed - April 15, 2021.
If you have been making quarterly estimated payments, you may not need to remit further payment along with their extension. If you have not been, you will most likely need to remit payment for the entire tax year. With BenchTax, your Taxfyle Expert will be able to estimate your tax liability payment using a combination of your prior year’s tax obligation, as well as the 2020 bookkeeping we have available.
Simply put, filing an extension helps to avoid the financial penalties for a delayed return, which can quickly become expensive. Filing an extension is free and automatic, and avoids having to pay penalties or interest on unpaid liabilities. Your extension can be filed as late as the day of your deadline without incurring any late penalties.
Filing an extension buys you the extra time to thoroughly review your books and ask questions to your Taxfyle Expert, rather than feeling rushed to produce a return by your deadline. It is, of course, our intention to have our clients Tax Returns filed in advance of the IRS deadlines. In the event that extraneous circumstances prevent this from being possible, we will work with you to have an extension filed.
As a BenchTax client, if we are not confident we will be able to have your Tax Return filed in advance of your filing deadline, we will be initiating an extension filing job on your behalf. These jobs will be started during the following time periods:
- Partnerships or S-Corps: March 2-6, 2021 in advance of the March 16th deadline
- Sole Proprietors and C-Corps: March 30 - April 3, 2021 in advance of the April 15 deadline
It is important to note that we will still be doing everything we can to complete your 2020 Tax Return, and will be greatly appreciative of any help you can provide in order to get everything wrapped up as quickly as possible.