Let's face it. If you're just starting to think about your taxes now, it's probably too late for you to learn what you need to know between now and April 17. So I've got one word for you--just one word: extension!
If you're a sole proprietor or single member LLC, you can get an automatic six-month extension of time to file your return (to October 16, 2006) by filing IRS Form 4868, "Application for Automatic Extension of Time To File U.S. Income Tax Return", by April 17. This form is available as a free download at www.irs.gov. You don't have to explain to the IRS why you need an extension; they just give it to you. An extension of more than 6 months cannot be granted if you are in the United States.
If you have a partnership, a corporation (regular or subchapter S) or an LLC with more than one member, you should still file Form 4868 for your personal tax return. But you will also need to file IRS Form 7004, "Application for Automatic 6-Month Extension of Time To File Certain Business Income Tax, Information, and Other Returns", by April 17 in order to get an automatic six-month extension to file your Form 1065 (for partnerships and multimember LLCs), Form 1120 (for corporations) or Form 1120-S (for subchapter S corporations). These forms are also available as free downloads at www.irs.gov.
Last but not least, you'll also need to file applications for an extension of time to file your state income tax returns These forms vary from state to state, but they're usually available as free downloads from your state's tax authority. Go to www.natptax.com/state_information.html and click on your state when the map of the United States pops up. You'll then be linked to your state tax authority's website. Click on "Forms and Publications," or search on the site for "extension forms."
When it comes to tax extension, keep in mind one important thing: When you file for an extension, you're only getting more time to file your tax return paperwork. If you think you'll owe the federal or state government any taxes for last year, you cannot extend the time required to pay your taxes. You'll have to "guesstimate" the amount you owe and pay it along with your Form 4868 or Form 7004. Otherwise, you'll incur interest and taxes on the overdue payment and make yourself more likely to be audited down the road. If, of course, you think the IRS owes you money, you won't be able to get it until you actually file your return.
Cliff Ennico is a syndicated columnist, author and host of the PBS television series MoneyHunt. His latest book is Small Business Survival Guide (Adams Media). This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. Copyright 2005 Clifford R. Ennico. Distributed by Creators Syndicate Inc.