Tax Procrastinators, Unite!

Tax Filing 101:

Procrastinators of the World, Unite!

by Wayne M. Davies

For all you procrastinators out there, here's a nuts 'n
bolts guide on how to legally postpone the filing of your
Year 2004 income tax returns.

When it comes to putting things off, you can never plan too
far ahead!

In many cases the IRS allows you to file a 'no-questions-
asked' extension form. Which particular form you file
depends on what type of entity your business happens to be.

CORPORATIONS:
Whether you are a "C" Corporation or an "S" Corporation, you
must file Form 7004 by March 15. Doing so grants you an
automatic 6-month extension for filing Form 1120 ("C" Corp)
or Form 1120S ("S" Corp). So now you have until September 15
to file your corporate income tax return.

To get a copy of Form 7004, click here:

http://www.irs.gov/pub/irs-pdf/f7004.pdf

Note: The links in this article take you to the IRS
forms website. If "irs-pdf" is in the link, then you will
be taken to a pdf file that can be saved to your hard
drive or printed out; then you can complete the form by hand
and mail it to the IRS.

PARTNERSHIPS:
You need to file Form 8736 by April 15. This obtains
a 3-month extension to file Form 1065.

http://www.irs.gov/pub/irs-pdf/f8736.pdf

LIMITED LIABILITY COMPANIES (LLC):
LLC's with more than one owner are usually treated
like partnerships -- File 8736 by April 15 to get
a 3-month extension to file Form 1065.

If you are a LLC with only one owner, by default
you are treated like a Sole Proprietorship, unless
you've elected to be taxed otherwise.

SOLE PROPRIETORSHIP:
You need to file Form 4868 to get an automatic 4-month
extension to file your personal income tax return.

http://www.irs.gov/pub/irs-pdf/f4868.pdf

Now, before you start extending to your heart's content,
please keep the following guidelines in mind.

EXTENSION TIP #1:

Never forget the mantra of all tax extension forms:

The extension to file the return is NOT an extension to
pay any tax due. It's only an extension for the filing of
your tax return.

In other words, do not view the extension as an opportunity
to legally postpone the payment of your tax.

So if you have a balance due on the return, then
you must still pay the tax by the original tax return due
date. If you file the extension but do not pay the balance
due on time, then you will pay penalty and interest for late
payment of tax. (You will legally avoid the penalty for
late filing, however.)

So what's the point in filing an extension if you still have
to pay the tax?

Three possible scenarios -- first, some folks get most of
their "tax stuff" organized and are able to get enough of
their return done to get the big picture: "Do I owe or am I
getting a refund." You do the calculations, see where you
stand, and if you owe, send in the extension form with a
payment that's pretty close to the final figures.

You may have a few deductions that you need to research, one
last shoebox to peruse. You need more time, that's all.

Second, you're running way behind on tax matters this year.
Hey, it happens! There's no way you're going to get the
return done on time, and you know you'll probably owe, so,
be sure to file the extension, even if you don't know how
much you may owe or even if you can't make a payment with
the extension. The reason? Because there are penalties for
late filing and penalties for late payment of tax. By filing
the extension, at least you avoid the late filing
penalties.

In short, by filing the extension, you can save yourself
some money (in late *FILING* charges, but not necessarily
late *PAYMENT* charges; please understand the difference!).

The third scenario is even more common -- you know you're
getting a refund; you always get a refund. Maybe you're
self-employed and your spouse has a W2 job, and the spouse's
tax withholdings are always enough to cover both of you.
And you're in no hurry to get the refund.

Which brings me to:

EXTENSION TIP #2:

If you are getting a refund on your personal return, you
have 3 years to file the return to claim the refund, without
any fear of a late filing penalty.

That's right. As long as you file your return within 3 years
of the original due date (for Year 2004 returns due April
15, 2005 -- that would be April 15, 2008), you'll get your
refund and there is no penalty for "filing late" -- even if
you file after the extended due date of August 15.

Bottom line: if you think you may owe, if at all possible,
do enough calculating to send in a payment with the
extension; if you're getting a refund, still send in the
extension (just to be safe), but relax, you've got plenty of
time to get your money back (assuming you didn't need it
yesterday!).

Oh, one more thing:

EXTENSION TIP #3:

This article only deals with federal extension rules. State
rules vary considerably, so be sure to check with your
state's tax department or your local tax professional to get
the scoop on the extension rules for your particular state.

Some states simply piggyback off the federal rules. Others
don't. So be careful here or you could be penalized severely
for assuming that your state's rules are the same as the
feds.

Many Happy Returns!

Oh, one more thing -- to find out how I file my tax
return on October 15 every year (without any penalty),
send a blank email to:
procrastinate@YouSaveOnTaxes.com

I'll send you a report entitled:
"How To Procrastinate Your Way To An Audit-Proof Tax Return."

About The Author:

Wayne M. Davies is author of three tax-slashing eBooks for small business owners and the self-employed:

The Tax Reduction Toolkit
http://www.YouSaveOnTaxes.com/toolkit

Incorporation Tax Secrets Revealed
http://www.YouSaveOnTaxes.com/secrets

How To Incorporate Yourself For Free
http://www.YouSaveOnTaxes.com/how-to-incorp

Wayne's eBooks are available separately, or at a discount as a 3-volume set:

The Ultimate Small Business Tax Reduction Guide
http://www.YouSaveOnTaxes.com/ultimate-guide

To receive a free copy of Wayne's 25-page Special Report,

"How To Instantly Double Your Deductions"

click here:

http://www.YouSaveOnTaxes.com

www.YouSaveOnTaxes.com

A Division of Wayne M. Davies Inc.

4660 W. Jefferson Blvd., Suite 220

Fort Wayne, IN 46804