Form 7004
Sub-Chapter S Corporation tax returns (1120S) are due on March 15th. Are you done yet? If not, you might need to file for an extension. Here’s how:
First, make sure you really are a Sub-S Corp. I know that sounds silly, but every year (really, every year) I run into someone who thinks they have a Sub-S Corporation and doesn’t. It’s really important not to file paperwork for an entity that you’re not. If you’re an LLC that wants to be a Sub-S and you’re filing a “Whoopsie, I forgot to do the right paperwork clause,” you can’t file an extension, you’ve got to get your stuff in by March 15th.
But if you’re already a Sub-S corporation, then you can file for an extension if you need to. What you want is Form 7004. Here’s a link to it: http://www.irs.gov/pub/irs-pdf/f7004.pdf.
It’s easiest to just file it online and be done with it. But if you don’t have access to the software, you can paper file. Here’s the official list of mailing addresses: http://www.irs.gov/file/article/0,,id=177836,00.html . Basically, if you’re east of the Mississippi you’ll mail it to:
Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0045
If you’re west of the Mississippi it will go to:
Ogden, UT 84201-0045
For some reason Florida and Louisiana are listed with the “west of the Mississippi states.” Anyway, Florida and Louisiana get mailed to Ogden. Also, any Sub-S with income of over $10 million sends its extension to Ogden no matter where the business is located. (Any Sub-S with income of over $10 million should have an accountant that can file the extension for them and you shouldn’t be reading a how-to blog about it. Seriously.)
You’ll have to check with your state to determine if you are required to file a separate extension for your state. Here in Missouri, your federal extension will serve as your state extension – you’ll just attach a copy of your Federal 7004 to your Missouri 1120S when you file it. You only need to file a MO 7004 if you have a franchise tax liability.
Why should you care about filing an extension? Money! If you don’t owe any money on your tax return, the penalty for filing late is $195 for each month (or part of a month) that the return is late, multiplied by the number of shareholders. So let’s say you and a buddy have a Sub-S corporation and you forget about the March 15th deadline and file on April 15th instead. You’ll owe a $390 penalty on a tax return with no balance due. That stinks. Of course, if you totally blow things off and file in August, the penalty will be $1,560 – on a tax return with a zero balance due! See why it’s important to file that extension?
Sub S corporations generally don’t pay tax with their corporate form, but if you do owe money for some reason the penalties are even higher.
Even though extensions are fairly simple forms, you still might not want to do it yourself. This is one form that Roberg Tax Solutions can prepare for you over the phone for $25. You’ll need your business name, address, EIN number and a credit card and we can do it while you’re on the phone with us. It’s that easy. You have no reason not to get your extension in on time.
Hi Brian,
Sorry I’m getting back to you so late. Sorry, but if you try to file an extension after the deadline–the IRS won’t accept it.
So, what’s going to happen is that you’re going to get a nasty little letter from them saying you owe them $195 for filing your S Corp return late.
If this is the first time you’ve ever been late, you can ask for an abatement of the penalty. They’re usually pretty nice about giving you an abatement if you’ve never had a late filing before. But if you don’t ask, you won’t get it so do call them and ask (after you get the letter.)
i did not file an extension for my s corp yet for 2013. i expect to complete and file the 1120s (and schedule ks by april 15.
should i still file the extension (by march 31) even though it is past the march 15th deadline.
Thanks, Jan. I will give them a call. I just faxed it 10 days ago, so I doubt I would have heard anything from them by now anyways. I don’t want to file a personal return with a Schedule C now, and then find out that I am later required to file a 1020S for my S Corp and then amend my 1040 to match.
Hi Will,
I’m kind of wondering if the IRS ever got that 2553 in the first place. You say they haven’t acknowledged it, so maybe they never received it. I think your first job is to call them as say, “Hey, did you ever get the election?” If they didn’t, then no harm no foul. Do that first before you try to correct the 2553. You might not even need to.
Hi Jan. Great website. I inadvertently faxed the IRS a Form 2553 in January of 2014. I did not mean to fax it, but I have electronic faxing and the file names were almost identical. I asked to make a late election and be treated as an S-Corp for 2013. The problem is, as you may guess, is that I did not file quarterly 941’s. The IRS has not yet accepted my Form 2553. I was wondering if I could file a corrected Form 2553 with an explanation and take the election for 2014, which is what I meant to do.
Hi Carla,
that’s an excellent question. No, you don’t issue preliminary K1s. But realize that when you don’t file the Sub S on time, the partners may not be able to file their taxes on time either. So the sooner you get that done, the better. (Unless the shareholders would be filing their own returns late anyway.)
That said, if you have a pretty good idea of where the K1 stand–it would be a kindness to let the shareholders know. That way, if they’re going to owe taxes, they can have a good estimate for paying their taxes on time.
Question: If you file a form 7004 for an S corp do you need to issue preliminary Schedule K-1’s or do you wait until the return is filed?
Hi Wanda,
I’m probably a bit late for you but I spent my day filing extensions for people. That kind of day. So–you’re a corporation. You want to make the election for being an S corp. You’re going to wind up making a late election and providing for an explanation as to why you are filing a late election. In the meantime, if you haven’t already filed your 7004–you’ve got a couple of hours to e-file.
Here’s the information on filing the late election–you’ll do that with your 1120S form. http://www.irs.gov/pub/irs-pdf/i2553.pdf You’re going to look at page 2, the part about late elections.
About the reimbursement plan–I prefer having the corporation reimburse the employee over claiming it on your 2106 employee reimbursement expenses. Generally it makes more sense tax wise.
Go file that extension!
Follow-up to How to File an Extension for Your Sub-Chapter S Corporation
I incorporated last summer but have not filed 2553, becauce I received my notice about incorporation after the deadline to file for Sub S. I was informed to file the 2553 with my 1120-S. I did pay myself wages, and filed/paid employment taxes. Can I file an extension? Would I be at risk to be denied Sub S by filing the extension.
Mileage deduction for owner/employee of S-Corp
I see suggestions for deducting the mileage in Sch A vs. an accountable plan where S-Corp reimburse owner/employee. Looking for a recommendation of one over the other. I kow which ever one I chose I’ll have to stick with it.
Very stressed considering its the 14th.
Thanks
Hey Rich,
Here’s my question for you–Did the taxpayer pay himself a wage and make quarterly payments of his employment taxes on form 941? I’m guessing the answer is no. So–if he really wants to be an S corporation, I’d send in that 2553 separately before March 15th and then I’d file him as a schedule C for this year.
Now in fairness, I’m guessing if you asked someone else, you’d get a different answer. But I kind of think the payroll issue gives his S corp status more weight. Without the payroll issue, I’m thinking why even bother?
Here’s a twist for you. We have client, Single member LLC, wants to file as S-Corp for 2011. Has not filed either 8832 or 2553. Not clear answer from IRS on this. Can they file prior to 3/15 Form 8832 (late election) with Form 7004 and claim C-Corp status with extension (IRS won’t allow Extension for non-existent Corp). Then file Form 2553 with Return to elect S status?