Filing Form 4868 for a Small Business Tax Extension
When and How to File for More Time to Prepare Your Business Taxes
What is IRS Form 4868? It's a reprieve. It's what you file with the Internal Revenue Service when you realize it's mid-April and you're nowhere near ready to file your business's income tax return. The Internal Revenue Service understands that things happen, and it offers automatic extensions of time to file.
Filing an Extension Automatically
There is an easy way to file an extension for your personal tax return, including your small business taxes, is by paying all or part of your income taxes due. The most common payment methods are Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. (Direct Pay and a credit/debit card are the easiest to use.) Or see this IRS page on making tax payments for more options. This way you won’t have to file a separate extension form and you'll get a confirmation number for your records.
The July 15 extended tax return deadline for 2020 has passed. There's no extension of time to make 2019 tax payments after July 15, 2020. If you didn't make a payment by July 15, pay as soon as possible to avoid late payment penalties.
Which Extension Form Do You Need?
Form 4868 is used for an automatic extension of time to file your personal tax return. If you pay your business taxes as part of your personal tax return on Form 1040/1040-SR, you use Form 4868 to file your extension application.
- Sole proprietors and single-member LLCs reporting business taxes on Schedule C
- Partners in partnerships and LLC owners of multiple-member LLCs who receive a Schedule K-1 showing their share of partnership income
- S corporation shareholders receiving a Schedule K-1.
Corporations, S corporations, and partnerships use Form 7004 instead of Form 4868, and different rules apply.
What Does Form 4868 Do?
Filing Form 4868 grants you a six-month extension, typically until October 15, or six months from the actual date when tax returns were due in any given year.
Form 4868 must be filed on or before the April due date unless you were out of the country at that time -- you live in and your place of business is outside the U.S. or Puerto Rico. In this case, you have until June 15 to file for an extension.
How to Complete Form 4868
Form 4868 is a short form by IRS standards. It asks for:
- Your name and your spouse's name if you're married and filing a joint return
- Your address and Social Security number(s)
- The estimate of your total tax liability(the amount you must pay, from your calculations) for the year
- The total of any payments you've already made toward the taxes you owe
- The balance you still owe
- The amount you're paying with your extension request
You can pay all or part of your estimated tax balance by direct debit from your checking or savings account at no cost by accessing IRS Direct Pay online. You can also pay by debit or credit card on the IRS website or by phone for a small service charge. If you want to take care of things the good old-fashioned way, print out Form 4868, fill it out and mail it to the Internal Revenue Service Center for your geographical area. Addresses are provided with Form 4868.
Form 4868 doesn't give you more time to pay what you owe – that balance was still due by April and penalties and interest will be added to any remaining balance you have after that date. This is still generally less costly than not filing the extension because the late filing penalty can be up to 10 times more. So go ahead and file Form 4868, claim your automatic extension, then pay the IRS any balance you owe as soon as possible.
This article is a general overview of this form, not tax advice. Get help from your tax professional to make sure your extension application is complete and correct.
IRS. "Form 4868 Automatic Extension of Time to File U.S. Individual Income Tax Return." Page 1. Accessed July 16, 2020.
IRS. "Taxpayers should file by July 15 tax deadline; automatic extension to Oct. 15 available." Accessed July 16, 2020.
IRS. "Form 4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return." Page 2. Accessed July 28, 2020.