How to File A Tax Extension for S Corporations?

With many different business income tax deadlines around the corner, let’s address S-corporations. These organizations are required to file their business income tax returns by the fifteenth day of the fourth month following the close of their fiscal year. For many organizations that have a fiscal year that matches up to the calendar year, their deadline will be March 15, 2023. As this is just over two weeks away, the pressure is on them to either file their return or an extension.

This article will cover what S-corporations need to know about each of these.

What is the definition of an S-Corporation?

The S-corporation is taxed in a specific way by the IRS, making it different from C-corporations, Trusts, Estates, and Limited Liability Companies (LLC).

Corporations with 100 shareholders or less can apply to be treated as an S-corporation by the IRS. In an S-corporation, the losses, gains, and credits of the corporation flow through their shareholders. This means that shareholders claim these gains, losses, credits, deductions, etc., on their own personal tax returns. Therefore, the organization receives the benefit of being taxed like a partnership, and there is no double taxation.

Becoming an S-corporation is not as easy as just calling yourself one, these organizations must get written authorization from the IRS to be taxed in this way. To elect to become an S-corporation, organizations must file the
Form 2553, Election by a Small Business Corporation. Once this form is completed and signed by each shareholder, the IRS will make a decision and grant the application accordingly.

Which IRS business income tax return must an S-Corporation file?

Domestic corporations that are classified as S-corporations by the IRS are required to file Form 1120-S, U.S. Income Tax Return for an S Corporation. This form reports the losses, gains, credits, and deductions of the corporation.

In addition to Form 1120-S, the organization must attach a Schedule K-1 on behalf of each of its shareholders. This form summarizes each individual’s separate share of the S-corporation. In addition to attaching the K-1 to Form 1120-S, this must also be distributed to each shareholder. They will need this information to complete their own personal income tax returns.

When is the deadline to file Form 1120-S?

This form must be completed and filed with the IRS no later than the 15th day of the third month following the end of the organization’s tax year. For organizations that operate on a calendar year, this deadline is quickly approaching on March 15, 2023.

Can an S-corporation apply for an extension of time?

Yes, S-corporations do have the option to apply for an extension. To do so, they should file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

Because this extension is automatic, S-corporations can choose to file this 1120-S extension for any reason with no explanation to the IRS required. The organization must file this form correctly, with all information entered matches the information that the IRS has on file. In addition to filing Form 7004 accurately, it must also be filed on time to be accepted. Organizations must file the extension on or before the deadline of the original form for which the extension is being filed.

Filing Form 7004 electronically is a great way to guarantee that your form makes it to the IRS and that any errors can be corrected in time for the filing deadline.

How to file Form 1120-S?

The Form 1120-S is a five-page tax form that is not for the faint of heart. Remember, before taking a stab at filing Form 1120-S, you must be sure that your organization has already filed Form 2553, electing to be taxed as an S corporation. You must also be sure that the IRS has sent written acceptance and the election remains in effect.

To complete Form 1120-S successfully, you will need an extensive amount of information, including:

• Basic business information (name, address, EIN, Business Activity Code Number, total assets, the beginning and ending of your tax year, the date S-corp status began, etc.)
• The accounting method used by your organization (cash or accrual).
• Gross recipients, cost of goods sold, net gain, total income or loss, etc.
• Compensation of officers, salaries, and wages paid, bad debts, rents, depreciation, employee benefits, and all other deductions associated with the organization.
• Estimated tax payments (this is needed when filing Form 7004).
• In-depth information about company shares and shareholders.
• The balance sheet from the organization
• Reconciliation statement of Income and Loss

Where should Form 1120-S be mailed?

Although the IRS-preferred method of filing is electronic filing, your organization may choose to file the 1120-S on paper and mail it to the IRS. Choose from the 1120-S mailing addresses below based on the income and location of your business.

What penalties are associated with Form 1120-S?

If you file Form 1120-S late or make a late tax payment, you may become subject to IRS penalties.

If you file your organization’s Form 1120-S late with the IRS, but no tax is due, you could be charged up to $210 per month that you are late for up to 12 months. If there is a tax payment due, add 5% of this amount for each month that you are late up to 25% of the tax due. In total, once the return is 60 days late, the amount is $435, or the tax due, whichever is less expensive.

For late tax payments, the corporation can be charged one-half of 1% of the unpaid taxes up to 25% of the unpaid taxes.

Avoid Penalties, File an Extension Form 7004

There’s no need to pay unwanted penalties or threaten your elected status as an S-corporation. Especially when filing an extension is so fast and easy. This one-page, an automatic extension can be completed and transmitted to the IRS within minutes with ExpressExtension.

To file your Form 7004, all you need is the following information:

• Your legal name
• The name of your business
• The EIN
• The business address
• Your estimated tax payment

All of this information must match what the IRS has on file. If your business has moved since the last time you filed with the IRS, you will need to file a change of address form as well.

Filing your Form 7004 electronically

ExpressExtension makes filing extension Form 7004 as simple as possible.
Our streamlined process ensures that your filing is accurate and timely. Our application leads you through the form step by step. You can even make your tax payment while filing using our multiple payment options.

Watch the video below to learn more about filing Form 7004 electronically.

If your Form 7004 has errors, ExpressExtesnion allows you to address and resolve them quickly. You will know as soon as you transmit to the IRS that your automatic extension has been granted.

Create an account with ExpressExtension today and get your extension out of the way!