What To Do When You Can’t File Your Taxes on Time

Are you scrambling to get your books in order for tax time? Rushing to file your taxes opens the door to a higher risk of errors and letters from Uncle Sam. The good news is that you have extension options, giving you additional time to prepare your books and file your returns. In this article, we’ll cover what to do when you can’t file your taxes on time, including the important deadlines you need to know and how to level your cash flow with estimated tax payments.

Small to medium-sized businesses filing a Partnership or S Corporation tax return have two and a half months from their year-end to submit the return and pay any amount due. This means for a December 31, year-end, you will have until March 15th to file your taxes on time.

Single-Member LLCs and Sole Proprietorships that report all income or loss on Schedule C will have until the individual deadline to submit business information, which is April 15th. The April 15th deadline also applies to C Corporations.

If the tax return deadline falls on a weekend or holiday, the IRS and state agencies give you until the next business day to file your return. It’s important to note that the filing deadlines for state returns can differ from the IRS. Check with your local Department of Revenue or contact an accountant for state-specific information.

Gathering your financial information within two and a half months of year-end can be hard, especially if are busy issuing payroll tax forms and you are behind on bookkeeping. As a result, the IRS allows business owners to request a six-month extension if you can’t file your taxes on time. Businesses will file Form 7004 to request a six-month extension, while individuals will submit Form 4868. Here’s the extended deadline based on your business structure:

• Sole Proprietorship – October 15th
• Single-Member LLC (Schedule C Filer) – October 15th
• Partnership – September 15th
• S Corporation – September 15th
• C Corporation – October 15th

Remember, the same holiday and weekend rules apply. If the extended deadline falls on a non-business day, the IRS gives you until the next business day to file your return.

Even though the IRS gives you the ability to extend the filing date, you aren’t able to extend your payment timeline. This means that any expected tax owed is still due on the original filing dates of March 15th and April 15th. There are two types of fines the IRS imposes on underpaid balances:

1. Penalties – The underpayment penalty is based on the amount underpaid, the period the underpayment was due, and the associated interest rate.
2. Interest – The IRS will also charge you interest on your late payment from the day the payment is due (March 15th or April 15th) until the date the amount is filed.

To avoid underpayment penalties and interest, it’s important that you submit all expected tax due by the deadline. If the filing deadline falls on a weekend, the payment date will also be extended to the next business day.

One way to avoid any underpayment penalties is to remit estimated tax payments throughout the year. For certain small to medium-sized businesses, the IRS requires you to remit quarterly payments based on your expected amount due. For example, if you usually owe $20,000 each year, you will remit four $5,000 payments throughout the year. This can also help you level cash flow when planning for a large amount due, which is important for small to medium-sized businesses. Here is the schedule of estimated tax payments:

• 1st Quarter – April 15th
• 2nd Quarter – June 15th
• 3rd Quarter – September 15th
• 4th Quarter – January 15th

There are two ways you can use to calculate your estimated tax payments. The first option is to use last year’s tax liability. The IRS will not impose an underpayment penalty and interest if you pay 100% of the tax owed last year. For example, if you owe $15,000 and submitted estimates throughout the year totaling that amount, the IRS will not charge you an underpayment penalty even if you owe $5,000 when you file your return. This is known as the Safe Basis method.

The second way to estimate your payments is to use current-year financial information. The IRS will not charge an underpayment penalty if you pay at least 90% of the current year’s taxes. For example, if you estimate that you will owe $10,000 for the year, you will need to pay at least $9,000 throughout the year. To get an accurate amount of your upcoming filing obligation, you will need the right financial reports, which is why many small to medium-sized business owners use the Safe Basis method.

Whether you are trying to file your tax return by the deadline or need financial information to calculate estimated tax payments, there are ways you can prepare your business. For one, prioritize regular bookkeeping and accounting. Reconciling your accounts shortly after month-end ensures that you can swiftly close out the books when the year does close.

In addition, timely reconciliations and regular bookkeeping give you more insights throughout the year. For example, if you need to determine the amount for your second quarter payment, you can pull financials for the first half of the year to project your upcoming tax liability.

Moreover, working with a qualified tax accountant is the best way to prepare for tax deadlines. Tax accountants monitor the deadlines and can submit extension requests on your behalf, helping you maximize compliance and prepare for deadlines, including quarterly estimated tax payments.

Tax season can be a stressful time, especially when deadlines loom and you find yourself struggling to gather all necessary documents to file your taxes on time. Fortunately, knowing how to manage extensions, estimated payments, and your overall cash flow can ease some of that pressure. Whether you’re grappling with a tight filing deadline or aiming to avoid costly penalties, timely preparation and informed decisions are key.

For personalized advice and assistance tailored to your specific needs, consider reaching out to KDG’s expert tax accountants. Our team is here to help you navigate the complexities of tax deadlines, maximize your compliance, and create a tax strategy that fits your business perfectly. Don’t let tax season overwhelm you—contact us today and take the first step toward financial peace of mind.