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!
 

About The Author:

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

The Internet Tax Helper
www.InternetTaxHelper.com

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

Note: by: Wayne M. Davies