Attention businesses: File on time or pay the price
The deadline for S-corporations and partnerships to file their tax returns for the calendar year is March 15. Although no tax payment is required by businesses for this deadline, not filing on time could result in significant penalties.
The penalty is the multiplication of each shareholder’s or partner’s portion by the number of months the tax return is overdue. So, penalties on a business tax return with no tax owed and filed on April 16 might total $880 for a married couple who jointly operate an S-corporation!
Here are some ideas to help you avoid penalties:
- File on time. You must submit your company’s tax return by March 15 if you are an S-corporation or partnership partner or shareholder. In addition to the penalties, completing your individual tax return after the April 18th filing deadline will give you less time to complete it and pay the taxes owed.
- Consider an extension. If you cannot file the tax return by the deadline, then file an extension by March 15 at the latest. Therefore, you will have an additional six months to do so. Remember that when you file your Form 1040 tax return by the deadline of April 18 this year, you must pay the taxes for your flow-through business.
- Don’t delay your personal tax return. If you have yet to receive all your K-1s from your partnership and S-corporation business activities, do not file your Form 1040 tax return. However, if your company files an extension, be ready. Because it is probable that you will need to wait longer to file your personal tax return. Remember that a filing extension does not equate to a payment extension for your taxes. You might have to make an educated guess on how much you will owe to pay by April 18.
- Challenge the penalty. If the IRS does fine your company for filing late, try to see if you can have the fine waived. This is particularly valid if you timely file and pay your individual taxes. Please notify the U.S. Treasury that it continues to receive the taxes due from you on time.
For businesses not filing on time
For 2022 S-corporations and partnerships, the penalty is calculated as $220 multiplied by the number of shareholders or partners for each full or partial month (up to 12 months) if the return is late. So, a partnership or S-corporation return submitted on April 16 is two months overdue! There is still time to complete or submit an extension for your 2022 S-corporation or partnership return. If you require assistance, contact our RRBB accountants and advisors.
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