Companies Need to be able to get tax Extensions

Companies Need to be able to get tax Extensions:
By April 15 not far off, many small business owners get six months extension of the deadline to file their income tax returns. This year, the procrastinators his business as the economy makes fiscal matters complicated for everyone.
Changes in tax law resulting from the economic stimulus efforts mean some owners more time to gather information and return to complete. And Edward Smith, a partner of the accounting firm BDO Seidman in Boston, noted that many smaller companies have staff this year, so you the 2009 books closed, a necessary step in the tax process has taken longer.

"It is not much time to leave to return," says Smith.

Some owners routinely get an extension, because it gives them more flexibility in the funding of certain pension schemes. This year, many others with cash flow problems have extensions in the hope that they plan to contribute money for the new deadline of October 15 have come around.

Here's a quick guide to getting an extension for filing your return:

THE most important thing you NEED TO KNOW

At an enlargement you can hook for paying your taxes by April 15. As the IRS says on its Web site, http://www.irs.gov, to extend the deadline to file is NOT an extension of time to pay. "

The government should taxpayers filing for an extension of a good faith estimate of how much tax they owe and to make to pay that amount from April 15. If they do not, they will have late payment penalties and interest on unpaid taxes to pay.

Many owners are in the precarious position of not only unable to file their return, but not enough money to pay their taxes. They must go and one extension, make an estimate and pay what they can. They also want to apply for an installment agreement with the IRS.

The IRS does have an option for owners who are in extremely difficult circumstances. They can file Form 1127, application for renewal of a deferred payment of tax due to undue hardship. The form must be "a detailed account of the undue hardship that will result if you pay tax on or before the due date." A general statement of hardship will not do.

You will also need the IRS a list of your assets and liabilities and an itemized list of your income and expenses for the past three months.

REASONS FOR ENLARGEMENT getting one - and reasons not to worry about

If you're not willing to file because you've been dawdling or disorganized, you probably should get an extension.

If you rush to April 15 deadline, you risk sending in a return error or omission is. You can change your return, but many believe that tax professionals can increase your chances of being audited. It will cost your business time and money and your return visit. So getting an extension and get your return right can be a smart move.

If you are not together all your data - for example, if you try to gain speed on tax law changes, or wait for a partnership return is completed - you should also consider an extension.

Extensions are also a huge help for employers whose cash flow is unstable and who will contribute to pension plans. The contribution limit for many plans is the expiration date of the return of the employer, including extensions. So those who opt for an extension have until October 15 to get the money together.

Smith noted that some businesses get extensions as a matter of course because of the flexibility they offer a pension plan funding. This trend helps puncture one of the great myths of taxpayers: that obtaining an extension makes you vulnerable to an audit. Many entrepreneurs get extensions year after year, the IRS does not have enough people for her staff to anyone who gets more time to file target.

Smith noted that the IRS does not select returns for audits, until approximately one year after the deadline for submission. The agency has an automated system that attracts a number of returns for further investigation.

"It's just apples and oranges," Smith said of the supposed link between the extensions and audits.

The Mechanics

An extension is quite simple. A taxpayer must complete Form 4868, application for automatic extension of time File U.S. Individual income tax return, and either electronically or send it by mail or overnight service before the deadline for submission. Make sure you have proof of shipment, or at the post office or delivery service you use.

Form 4868, you can download from the IRS Web site, is short. You will need your name, address, Social Security number and estimate your tax liability.

If you make a payment, you can either add a check with a paper Form 4868. Or you can use one of the payment referred to in the Form 4868 instructions.