Attention Businesses: File on Time or Pay the Price!
March 15th is the tax-filing due date for calendar year S-corporations and partnerships. While this filing deadline does not require making a tax payment, missing the due date could cost you a hefty penalty.
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 on April 16th, could cost a married couple who jointly own an S-corporation $880 in penalties!*
Here are some ideas to help you avoid penalties:
- File on time. If you are a partner or shareholder of an S-corporation or partnership, 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 the taxes due by this year’s April 18th filing deadline.
- Consider an extension. If you cannot file the tax return in time, file an extension on or before March 15th, which 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 18th filing deadline.
- Your personal tax return may be delayed. Do not file your Form 1040 tax return until you receive all your K-1s from each of your S-corporation and partnership business activities. But be prepared if your business files an extension, as it’s possible you may need to extend your personal tax return while you wait for the K-1. Remember that an extension to file doesn’t mean an extension to pay your taxes. You may need to estimate how much you’ll owe so you can make a payment by April 18th.
- Challenge the penalty. If your business does get hit with an IRS penalty for filing late, try to see if you can get the penalty abated. This is especially true if you file and pay your personal taxes on time. Kindly remind the U.S. Treasury it is still receiving the taxes owed to them in a timely manner.
If you haven’t filed your S-corporation or partnership return for 2022, there’s still time to get it done or file an extension. Please call if you need assistance.
* The penalty calculation for 2022 S-corporations and partnerships is $220 for each month or part of a month (up to 12 months) the return is late, multiplied by the number of shareholders or partners. So an S-corporation or partnership return filed on April 16th is considered two months late!