While business extensions are considered automatic, if you make mistake on your Form 7004 your tax extension will be denied.
Here are some tips for filing your business tax extension correctly: If an extension is needed, a personal tax extension can be requested with IRS Form 4868. A sole proprietor doesn’t file a business tax return - all information is reported on their personal tax return. Most companies should use Form 7004 to apply for an extension. You don’t need to even sign FORM 7004 or provide a reason to why you need time, as business extensions are automatic. If your business needs more time to properly prepare their taxes, they can request an extension with IRS Form 7004 (Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns).
So, if a business obtains a six-month extension and its original filing deadline was March 15, the new due date will be September 15. Keep in mind that the due dates for business tax extensions are often different than those for personal tax extensions.ĭepending on the type of business you run, the IRS will allow for five- or six-month extension period, starting from the original due date on the tax return. This will give your business more time to file their tax returns. Luckily, the IRS allows for both individual and business tax extension.
In this case, TIR 2021-05 would apply.įor more information, please see Tax Information Release 2021-05 – Details and Timing of Paycheck Protection Program Loan Forgiveness.Filing taxes for your business can be overwhelming and you might need a bit more time. If the PPP loan application was submitted specifically to cover the amount of the employees’ wages and any qualified expenses, then the PPP loan forgiven is NOT reported as taxable income and the sole proprietor is NOT allowed the deductions for the PPP amounts that were received to specifically cover the wages and qualified expenses.If a sole proprietor’s PPP loan was based upon their net income, aka their own wages, the PPP loan forgiven is excluded from income subject to the income tax and the sole proprietor is allowed to deduct all other expenses to determine their “wages.” There is no double benefit as the sole proprietor’s “wages” are never taken as a business expense of the sole proprietor.The treatment for including or excluding the expenses will depend upon what reason and amount the PPP loan application was filed.
More specifically, if Schedule C filers are allowed a double benefit for excluding forgiven PPP loans from income and still allow for expenses to be deducted.
#How to file extension for business tax return how to
Questions have arisen regarding Schedule C filers and how to report their forgiven PPP loans and expenses.
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