Everything You Need To Know About Filing A Tax Extension
Welcome to Selfmade Finance School, our new money series with Block Advisors to help small business owners with their tax, bookkeeping, and payroll needs year-round. This week, we go over tax deadlines and when it's a good idea to file for an extension.
Surprise! Tax Day is
April 15 May 17 (the usual federal tax filing deadline has been pushed back by a month this year; state deadlines can vary and are not always the same as the federal filing deadline)! What many don't realize is that April 15th (usually) is just one of many important dates on the tax calendar. For example, if you run a small business, there are many other important tax dates to know about. Below, we will cover these and provide a timeline of dates to circle in red on your calendar. In addition, we will cover when and if you need to file an extension.
March 15: S-Corporations and partnership tax returns for calendar year filers are due, along with Schedules K-1! This is also the deadline to file for a 6-month extension on S-corporation and partnership tax returns.
April 15May 17: BIG DAY Folks! Here is a breakdown of all the events that usually happen on April 15th but this year happen on May 17.
- Your individual 2020 federal income tax return is due.
- This also applies to sole proprietors who also file a Schedule C as part of their personal return.
Still April 15:
- If you are a corporation (C-Corp) on a calendar year, April 15 is the due date for your corporate tax return.
- If you pay estimated quarterly taxes, the first quarter's payment is still due for 2021 on April 15
Dates To Know If You Pay Quarterly:
If you pay estimated quarterly taxes, you need to file and pay on the following dates:
April 15 for Q1 2021
June 15 for Q2 2021
September 15 for Q3 2021
January 18, 2022 for Q4 2021 (accounting for the weekend and MLK holiday)
When Should You File An Extension?:
I am still amazed by how many people wait until days before April 15th (May 17 this year) to file their taxes. If you do not act on or before tax day, you may be subject to penalties. You could be subject to a 'failure-to-file penalty' and a 'failure-to-pay penalty' for paying late. I suggest avoiding all of this by simply filing on time. If you simply cannot pull it together or you have a legitimate reason that you can't file (i.e. you are still waiting on K-1s to arrive), you can file an extension.
"Individual tax filers, regardless of income, can request an automatic tax-filing extension. Filing this form (Form 4868) gives you until Oct. 15 to file your tax return," said Cathi Reed, Regional Director, Block Advisors. "When filing an extension, a common misconception is that you get additional time to pay your tax liability. That isn't the case. In fact, to get the extension, you must estimate your tax liability while also paying any amount due."
Small business taxes can seem complicated and get overwhelming, but with Block Advisors, you don't have to go it alone. Let them take care of your taxes so you can focus on what you love. And if you need to file an extension, they'll handle that too.
Photos by Katie Harp and Sincerely Media for Unsplash.