March 15th is the tax filing due date for the 2023 calendar year for S corporations and partnerships. This deadline to file a business return does not require making a tax payment. However, missing the due date could cost you a hefty penalty.

Missing the deadline

The penalty is calculated based on each month the tax return is late multiplied by each shareholder or partner. So a business tax return with no tax due filed the day after the March 15th due date, could cost a married couple who jointly own an S corporation $490 in penalties! The penalty calculation for 2023 S corporations and partnerships is $245 for each month or part of a month (up to 12 months) the return is late, multiplied by the number of shareholders or partners.

Filing a business return

Here are some ideas to help you avoid penalties:

• File on time. If you are a partner in a partnership or a shareholder in an S corporation, file your company’s tax return on or before March 15th. In addition to the penalties, filing late shortens the time you have to file your individual tax return and pay any taxes due by this year’s April 15th filing deadline.
• Consider an extension. If you cannot file the tax return by the due date, file an extension on or before March 15th. This gives you an extra six months to file your business return. Remember, you pay the taxes for your flow-through business on your Form 1040 tax return at this year’s April 15th filing deadline.
• Your personal tax return may be delayed. Do not file your Form 1040 tax return until you receive all Form K-1s from each of your S corporation and partnership business activities. Prepare! If your business files an extension, it’s possible you may also need to extend your personal tax return while you wait for the K-1s. Remember that an extension to file doesn’t mean an extension to pay your taxes. If necessary, you’ll need to estimate your 2023 tax bill to make a payment by April 15th.
• Challenge the penalty. If your business does receive an IRS penalty for filing late, ask to reduce the penalty. This is especially important if you file and pay your personal taxes on time. Kindly remind the U.S. Treasury that it is still receiving the taxes owed to them in a timely manner.

If you still need to file your S corporation or partnership return for 2023, there’s still some time left. Otherwise, you may need to file for an extension. Please contact our RRBB advisors if you need assistance.