Tax Extensions 101 – Is a Tax Extension Right for You?
March 21st, 2012 by Skip McGrath
This guest post is brought to you by Outright.com, the simplest way to manage your business finances online.
Tax time is always very stressful, especially for ecom sellers. There just seem to be so many more steps involved so you end up with several sleepless nights of crunching numbers YET AGAIN because you accidentally skipped over a box of receipts. We know how it is.
So believe us when we say we fully advocate the use of the tax extension Many people ignore the fact that they can file a tax extension because they think it makes them look lazy or perhaps even a little shady. But believe me, the IRS doesn’t care and neither should you! Most small business owners who file for an extension genuinely need more time to finish their taxes for one reason or another.
If you are considering filing for a tax extension – you’re not alone. Let’s take a look at the process:
First and foremost, let’s get one thing out of the way. Many people say the tax extension is just for people who want to put off paying their taxes, but this is just flat out not true. How do we know? Because the tax extension doesn’t extend the time you have to pay your taxes, it just extends the time you have to file your tax FORMS.
Therefore, if you file for an extension, you have to pay the IRS what you owe. But how do you know how much you owe before you file? You simply have to send in a payment of what you estimate to owe, based on the information you have.
So even when you put off filing you have to at least start the process!
How to File
Though it seems like it would be complicated, filing for a tax extension is surprisingly simple. It’s so simple, in fact, that you’re almost guaranteed to receive an extension if you file! Since when has anything from the IRS been guaranteed?
Just grab Form 4868 from your local tax office, library, or post office, or use the link provided to print it out. Fill it out, including how much you estimate you owe, and send everything in. That’s it! There are some websites out there that help you file this form, too, like Turbotax.
Some ecommerce sellers have gone beyond the independent seller route and have registered as a corporation. If this is the case with your store, then you’ll want to file Form 7004, which is for corporations to have more time to file business income tax. (Unfortunately, either your taxes or this form was due March 15th, so I you’re behind file right away!) Filing Form 7004 is a little more complicated, but still worth it if you’ve run out of time need to readjust your tax strategy.
Found a box of old receipts and need more time for taxes? Outright.com has you covered. Sign up today for a free account and make tax time a little less taxing!