All corporations, irrespective of the fact that whether they are subject to paying taxes under Subchapter S or C of the Internal Revenue Code, have this legal obligation of filing their yearly tax returns with the IRS. It is to be noted that this filing compulsion is not conditional on corporations earning a taxable income. The corporations that happen to incur major losses also need to file their tax returns within the due dates. Nevertheless, if these corporations require some extra time for filing their tax returns, they must consider attaining a tax extension by filing Form 7004.
What Does Form 7004 Actually Do?
Form 7004 actually extends the time to file taxes for the corporations. It gives them a maximum time extension of six months for filing Form 1120 for their businesses or 1120S for valid S corporations. Getting this extra time is highly beneficial for the corporations as they save themselves from the burden of paying late fees or penalties.
Making the Tax payments
All tax payments need to be made along with tax extension in order to avoid paying penalties and late fees. Corporations who have the responsibility of filing their corporate tax returns should make their payments along with Form 7004 for ensuring that they get saved from paying late-payment penalties that keep on accruing at a monthly rate of .5% till the taxes are paid. Taxpayers can also reach the maximum penalty of 25%. However, it is to be noted that is the tentative tax amount calculated on Form 7004 is 90% or even more in comparison to the income tax that is reported on tax return filed eventually, with the outstanding amount being paid by the extended filing deadline, corporations will not be charged late-payment penalties.
The Deadline for Filing Form 7004
Corporation income tax returns are generally due within 15th March post the closing of the tax year. 15th March is always the tax paying deadline for all those corporations that keep a track record and maintain books by making use of the calendar year. However, if fiscal years are used- last day of corporation tax year generally ends on some day other than 31st December. Here, the deadline seems to be completely different.
Form 7004 Filing
Whether Form 7004 is being filled out on paper or being submitted electronically, there is very little time needed for filling the information required on the form. The most important information that need to be there in the form include name of the corporation; address of the corporation’s main office; the employer identification number of the corporation; amount of the estimated taxes paid during a year; tentative tax liabilities; tax year applicable and the right code corresponding to specific tax forms that will be filed eventually.