Your business tax return is due
March 15th is the tax-filing due date for 2023 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
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 the day after the March 15th due date, could cost a married couple who jointly own an S corporation $490 in penalties!*
Take action
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, remind your fellow owners to file on or before March 15. In addition to the penalties, filing late shortens the time you have to file your individual tax return.
Consider an extension. If your entity 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 flowthrough business on your Form 1040 tax return at this year's April 15 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 15th.
Challenge the penalty. If your business does get hit with an IRS penalty for filing late, try to get the penalty abated. This is especially important if you file and pay your personal taxes on time.
If you haven't filed your S corporation or partnership return for 2023, there's still time to get it done or file an extension.
*The penalty calculation for 2023 S- corporations and partnerships is $245 for each month or part of a month (up to 12 months) the return is late, multiplied by the number of shareholders or partners.