- The Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns application is commonly known as Form 7004.
- Corporations and partnerships can complete Form 7004 to receive a six-month extension on filing their tax return.
- Form 7004 only extends the due date of filing tax returns, not the due date of tax liability payment.
If your small business is filing as a partnership or corporation, you can request an extension by filing an Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns application, also known as Form 7004.
Although it is possible to extend the deadline for filing your business tax returns, there are a few guidelines you should be aware of. First, the extension only pertains to your tax return; you are still responsible for paying any business taxes you owe on or before your original tax return due date. Second, if you are unsure of what those tax numbers will be, you are still responsible for paying the estimated income tax amount. It is crucial that you estimate this number as accurately as possible, since underpaying can result in penalties from the IRS.
Can I get an extension on my business taxes?
Yes, corporations and partnerships can get an extension for filing their business tax returns; however, they cannot get an extension for paying their business tax liability. Daniel Henn, CPA and author of The No Holds Barred, Candid Talk About Small Business Success in Florida, said that late-payment penalties and interest rates begin to accrue from the original due date. If you need an extension to file your business tax return, file Form 7004 as soon as possible.
It is often advised that you work with a certified professional to file tax documents for your business. "If you use a professional for the filing of your business returns and related extensions, verify that the extension was filed and request proof," Henn told business.com. "This is one area that is very difficult to prove reliance on a tax professional to get penalties removed."
What is Form 7004?
Form 7004 is an IRS tax form that corporations and multiple-member LLCs filing as partnerships can file to extend the due date of their tax returns. This form needs to be filled out correctly and submitted on time for an extension to be warranted.
Who uses Form 7004?
According to the IRS, most businesses can use Form 7004 to request an automatic extension. This form gives the business the extra time they need to gather the documents required to properly file their taxes. Keep in mind that it doesn't provide an automatic payment extension; organizations reduce their chances of being charged with penalties or fines when they use Form 7004. These are some company types eligible to use Form 7004:
- S corporations
You won't use Form 7004 if you are filing as a sole proprietor or LLC – unless you are a multi-member LLC filing taxes as a partnership. Trusts and estates can also file Form 7004 in most incidences if they need an extension.
You shouldn't file Form 7004 if you can't complete your tax return by the six-month extension deadline. The IRS reserves the right to cancel the extension provided through Form 7004 at any time.
"The extension period is typically six months; however, certain filers, such as Form 1041 and Form 1120 filers with fiscal tax years ending June 30, will have an extension period of five and a half months and seven months, respectively," said Jessica L. Smith, an enrolled agent at Slate Law Group. "Several entities are eligible to use this form, but the most common business entities include Form 1065 [for] partnerships, Form 1120 [for] C corporations, Form 1120-S [for] S corporations, and Form 1041 [for] trusts and estates."
Henn said businesses can use Form 7004 in relation to Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons) and various forms related to excise tax reporting and withholding.
Businesses that file Form 7004 are still required to pay the expected tax liability on or before the original due date of the tax return.
"The failure-to-file penalty is calculated at a maximum of 25% of the unpaid tax liability, so it is recommended that the entity pay the tax liability in full or pay what they are able by the original due date of the tax return," said Smith.
How to fill out Form 7004
Form 7004 is one of the simplest tax forms available through the IRS. The IRS only requires a few brief details to process the extension for your business. Start off by providing your name, address, and the tax identification number for your business. A tax ID number is usually the same as your employer ID number. Enter the following codes based on your business type:
- Corporations: Code 12
- S corporations: Code 25
- Partnerships: Code 09
The form will then ask about your foreign business status. You must divulge whether you're a foreign corporation or a domestic corporation that manages accounts outside of the U.S. If either of these situations apply to your business, you must assert that you qualify under Regulations section 1.6081-5 of the IRS code.
You must also indicate on the form whether it will be a short tax year for your organization. If you don't follow a typical calendar year, write in the beginning and ending dates for the tax year. A box is provided to allow you a chance to explain why you've experienced a short tax year.
On the form, you must also write in your total tax amount, including the expected amount of taxes you owe to the IRS. Review the instructions to calculate the correct tentative tax amount. Write in 0 if you don't anticipate owing taxes.
Next, you must provide your total payments and refundable credits. Review the instructions if you need assistance calculating payments and credits.
Does Form 7004 need to be signed?
Unlike most taxation documents, Form 7004 does not need to be signed prior to filing.
Where do I file Form 7004?
You have two options: You can file Form 7004 online or mail it to the IRS. Smith recommended e-filing. If you are using a tax professional to file your request for an extension, they will likely utilize tax software with e-file capabilities.
If you are unable to file Form 7004 online, there is a PDF version of the form you can print, fill out and mail to the IRS. Your entity type and location determine which IRS location you need to mail your form to, so follow the IRS' specific instructions on how to properly file.
"We always recommend mailing them via certified mail (e.g., USPS) to prove the date of mailing," said Henn. "This is your get-out-of-jail-free card when you are dealing with due-date-sensitive forms and filing with the federal (or state) government. The IRS has been known to misplace documents from time to time."
Make a note on the green Certified Mail tear-off slip of what you sent so you can identify which Certified Mail receipt goes with which form you filed. Regardless of which way you file the extension, submit it prior to the due date of the tax return.
Business tax deadlines and extensions
The type of business you are filing for will determine which return you must use. For example, if you are a corporation or multi-member LLC filing as a partnership, you will likely be required to complete Form 1120, Form 1120-S or Form 1065. To extend the filing deadline for one of these forms, follow the guidelines on Form 7004.
Tax return due dates vary. Smith listed the following due dates as a general guideline:
U.S. Corporation Income Tax Return (Form 1120)
- Form 1120 with a calendar year end is due April 15.
- Form 1120 with a fiscal year end is due by the 15th day of the fourth month following the close of the tax year.
U.S. Income Tax Return for S Corporation (Form 1120-S)
- Form 1120-S with a calendar year end is due March 15.
- Form 1120-S with a fiscal year end is due by the 15th day of the third month following the close of the tax year.
U.S. Return of Partnership Income (Form 1065)
- Form 1065 with a calendar year end is due March 15.
- Form 1065 with a fiscal year end is due by the 15th day of the third month following the close of the tax year.
U.S. Income Tax Return for Estates and Trusts (Form 1041)
- Form 1041 with a calendar year end is due April 15.
- Form 1041 with a fiscal year end is due by the 15th day of the fourth month following the close of the tax year.
Generally, an extension of six months will be granted to these entities if they properly complete Form 7004 and pay their estimated tax (if applicable) by the due date of the return for which the extension is requested. The IRS will not notify you that your extension has been approved; it will only send notifications if it is denying your request for an extension.
A few deadline extension exceptions may apply for certain entities filing Form 1041 (five and a half months) and for C corporations with tax years ending June 30 (seven months). Be sure to check the guidelines on Form 7004 to see what deadline extension your business qualifies for, and don't forget to check for any state extensions you may be required to apply for as well.