Business Taxes: Top 10 Tips for Correctly Filing Extension Form 7004

Do you own a corporation but don't think you'll complete the 2008 corporate income tax return by the March 16 deadline? This article explains how to file an extension without a hitch, giving you until September 15 to file the return.

If your small business is a corporation, your 2008 corporate income tax return is due on Monday, March 16, 2009. Normally the due date is March 15, but since that day is a Sunday, the due date is changed to the next business day.

If you don't think you're going to have the return done on time, do not despair. As long as you file Form 7004 on or before March 16, you'll be given an automatic no-questions-asked 6-month extension of time to file the return.

Here are ten of the most critical rules for filing Form 7004:
1. Be sure to input the corporation's full name, employer identification number (EIN), and address at the top of the form.

2. Form 7004 works for both regular C corporations filing Form 1120 as well as S corporations filing Form 1120S. In fact, Form 7004 is the extension form for a plethora of business returns, including both C and S corporations. There's a list of all the possible returns in Part II, along with a corresponding code that must be entered on Line 1b. For C corporations, use code 12. If you are an S corporation, use Code 25.

3. Don't miss Line 5a. That's where you tell the IRS what tax year this extension is for. Simply put "08" right after the words, "The application is for calendar year 20".

4. If you are an S corporation, you are probably not required to pay any tax with Form 7004 because S corporations typically don't pay corporate income tax with Form 1120S. If that's the case, you can skip Line 6, 7 and 8.

5. If you are a C corporation that may owe tax with Form 1120, don't forget that filing Form 7004 only extends the time to file the corporate income tax return. Form 7004 does not extend the time to pay any tax due with the return. So if you think you might owe, it is in your best interest to calculate an estimate of the balance due and pay that amount with the extension form. This is done on Lines 6, 7 and 8. Failure to pay the balance due by March 16 may result in late payment penalties and interest, even if you pay the tax by the extended due date of September 15.

6. Check the instructions for the proper address to send the form. There is more than one possible address, depending on your state and the size of your corporation.

7. Believe it or not, no signature is required on Form 7004.

8. Use some type of mailing service that provides proof of mailing, such as the U.S. Postal Service Priority Mail with Delivery Confirmation, which costs less than $5. Why risk the possibility that the IRS loses your form and then penalizes you for not having proof of mailing?

9. For a tax form, this one is pretty easy to complete. It only has eight lines. But if you prefer not to risk a mistake and the rejection of your extension application, seek out your local tax professional who should be able to handle this task for you in minutes.

10. Assuming your tax pro is an authorized IRS e-file provider, he should be able to e-file Form 7004, saving you a trip to the post office.

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