What is the extended federal tax deadline in 2023 for business and individual filers?
Individuals who filed a tax extension on time for their 2022 tax return have until October 16, 2023, to file their tax return. Sole proprietorships, which are filed with an individual tax return, also have an extended federal tax return due date of October 16, 2023.
Calendar-year pass-through entities, such as partnerships and S-corporations, that file a tax extension on time have an extended federal tax return due date of September 15, 2023. The extended federal tax return deadline for calendar-year C-corporations is October 16, 2023. For a fiscal year partnership, S-corporation, or C-corporation, the rules for the extended due date vary depending on the date of their fiscal year.
The extended federal tax return deadline for LLCs can vary since an LLC can be taxed as either a disregarded entity, partnership, S-corporation, or C-corporation, depending on the number of members and if any elections have been made with the IRS. As an LLC, the extended federal tax due date is based on your tax status with the IRS. Reach out to a tax professional if you need assistance determining how your LLC is taxed.
Businesses and individuals that were impacted by certain natural disasters in 2022 or early 2023 may have additional time to file and pay their taxes, even if they did not file an extension. You can learn more about which natural disasters qualify here.
Am I required to file different tax forms if I am filing after receiving an extension?
No, a tax extension does not require you to file different tax forms, whether filing as an individual or a business. You or your tax professional use the same tax forms regardless of whether you received an extension of time to file.
What happens if I do not pay any or all of the taxes I owe when I file for my extension?
An extension provides only an extension of time to file your tax documents. An extension does not extend the amount of time that you have to pay any taxes that are due. If you do not pay all taxes due by the original due date, then you may incur a failure to pay penalty along with interest charges.
For partnerships and S-corporations, the original tax due date for 2022 tax returns was March 15, 2023. For C-corporations, the original tax due date was April 18, 2023. The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month the taxes remain unpaid. The failure to pay penalty is typically capped at 25% of the unpaid taxes. The interest rate charged for unpaid taxes can vary, but is currently 7% annually in most cases.
The original tax due date for individual tax returns was April 18, 2023. The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month the taxes remain unpaid, with a maximum penalty of 25% of the unpaid taxes in most cases. Again, the interest rate charged for unpaid taxes due varies but is currently around 7% annually.
You may be eligible for failure to pay penalty relief in some cases. Contact a tax professional to help assess your situation and find out if you meet the criteria for relief.
What happens if I file my taxes after the extension deadline?
If your taxes are filed after the extension deadline, then you may incur a failure to file penalty.
For partnerships and S-corporations, the failure to file penalty is $220 per member or shareholder for each month or part of a month that the tax return is filed after the extension deadline (or after the original due date if a valid extension is not filed). The failure to file penalty is capped at 12 months for partnerships and S-corporations. The failure to file penalty for partnerships and S-corporations applies even if the business had no tax due on the tax return.
For C-corporations, the failure to file penalty is only assessed if the C-corporation has taxes that are unpaid after the original due date. The penalty is generally 5% per month, or part of a month, that the return is not filed, and the taxes remain unpaid. The maximum failure to file penalty for a C-corporation is usually 25%.
For individuals, the failure to file penalty is only assessed if the individual has an unpaid tax balance due after the original due date. In most years, approximately 75% of individual taxpayers get a refund. For individual taxpayers with a balance due, the failure to file penalty is typically the same amount as the failure to file penalty for a C-corporation.
What if I am receiving a refund?
For individual taxpayers who are receiving a refund, the failure to file penalty does not apply since they do not owe anything. However, it's worth noting that most taxpayers are allowed only three years to claim a tax refund. If the tax return is not filed within that three-year period, the taxpayer forfeits the refund and the money becomes the property of the U.S. Treasury. For tax year 2022, most individual taxpayers would need to file by April 18, 2026, to receive a refund or October 16, 2026, if the individual taxpayer filed an extension. Additionally, if you wait too long to file a tax return, the IRS may file a substitute tax return on your behalf. The substitute tax return may not claim all of the tax credits and deductions that you are entitled to, so it is important to file your tax return timely.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.