Tax filers can apply for extension of the due date for filing their tax returns. Such extension form needs to be filed before the due date of tax filing. Extension can be filed if the filer wants more time to calculate or plan their taxes, or due to unforeseen circumstances they were unable to file timely return, etc. But IRS does not ask for any such reasons for filing the extension form.
There are different forms applicable to different category of filers. For Partnerships, Corporates and Multiple-member LLC firms IRS Form 7004 is applicable. Whereas for individual filers, the applicable form is Form 4868.
Form 7004: Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns
Federal tax extension Form 7004 can be filed for application of automatic extension of six months to file your return of income.
Some of the information that the form will ask to fill in Name & address of the entity, Tax Identification Number, Code of form, Tax year, Tentative tax, payments, and balance due.
After filing for the extension form on the IRS portal, you will receive acknowledgement of your submitted form. But no communication will be sent from IRS for acceptance of extension. In case of rejection of extension application, IRS will communicate on the filer/ tax preparer’s mail provided.
Following documents shall be handy, for filing the Extension Form:
- EIN Letter
- Business Mailing Address
- Last filed tax return if applicable
- Officer Name, SSN and Title
- Estimated Revenue and expenses to calculate profits/ loss and estimated taxes thereon.
- Bank details, if tax payer is liable to pay any tax
Due date of filing Form 7004 is on or before the due date of filing the applicable tax return. So, in case of a corporate, deadline to file Form 7004 is April 18th. In case of a Partnership, due date of filing Form 7004 is March 15th.
An extension filing will give you more time to file your tax return but not more time to pay your taxes, they are needed to be paid on or before the due date. If the taxes due are not paid within the stipulated time, you will be liable to pay interest and penalty.
Penalty for failure to pay tax is 0.5 % of the unpaid tax for each month or part thereof till tax is unpaid, up to maximum of 25% of the unpaid tax.
If a tax-filer misses to file his return or extension until the due date:
- There is no penalty to file late return in case of a nil return/ refund is due. In case the tax is payable, you will be liable to pay penalty/ interest.
- In case of failure to file timely return Form 1120, penalty is 5% of the unpaid taxes applied for each month or part thereof until the default continues. Maximum Penalty cannot exceed the limit of 25%
- In case of failure to file timely return Form 1065, penalty is $220 for each month or part thereof until the default continues, multiplied by the number of partners during any part of the tax year.
Form 4868: Application for Automatic Extension of Time to File US Individual Income Tax Return
Federal tax extension Form 4868 can be filed for application of automatic extension of six months to file your return of income.
There is no requirement to mention or tell the reason to apply for extension of deadline for filing tax return. IRS give discretion to every individual tax payer to file for automatic extension.
Such an extension can be filed electronically or by mailing paper copy.
Some of the information that the form will ask to fill in are Name & address of the person, Tax Identification Number, Code of form, Tax year, Tentative tax, payments, and balance due.
A U.S. citizen who is living abroad during tax season, will be automatically granted an extension for a period of two-month and in that case, last data will be 15th June. But to avail for full 6 month of extension one will need to file for extension.
Following details are required to file the Extension Form:
- Name
- Business Mailing Address
- SSN of the filer
- SSN of filer’s spouse
- Officer Name, SSN and Title
- Estimated Revenue and expenses to calculate profits/ loss and estimated taxes thereon.
- Bank details, if tax payer is liable to pay any tax
An extension filing will give you more time to file your tax return but not more time to pay your taxes, they are needed to be paid on or before the due date. If the taxes due are not paid within the stipulated time, you will be liable to pay interest and penalty.
Penalty for failure to pay tax is 0.5 % of the unpaid tax for each month or part thereof till tax is unpaid, up to maximum of 25% of the unpaid tax.
If a tax-filer misses to file his return or extension until the due date:
- There is no penalty to file late return in case of a nil return/ refund is due. In case the tax is payable, you will be liable to pay penalty/ interest.
- In case of failure to file timely return Form 1040 NR, penalty is 5% of the unpaid taxes applied for each month or part thereof until the default continues. Maximum Penalty cannot exceed the limit of 25%.