It is important to make sure your tax extension application is accepted, be it individual or business tax extension. The IRS does not reject many tax extension applications but there are several reasons why they will not accept tax extension applications. Reasons why the IRS will reject a tax extension application will be explained below and will also show how to make sure your application passes all of these tests. This applies to small business and personal tax return extension applications for their business along with their personal tax return, using Form 4868.

Corporate and partnership extensions (on Form 7004) are automatic. But you still have to submit the application before the deadline and pay taxes before the IRS can accept any tax extension application.

FILE FOR YOUR TAX EXTENSION ON TIME

Knowing when to file your extension is difficult. Generally, your extension application is due when your return is due. But knowing when a tax return – and especially a business tax return – can be due can be difficult. Each year, the exact deadlines change, because the due date falls on the calendar. If a tax return is on a weekend or holiday, the deadline is the next business day. For this current year, the deadline for tax extension remains 21st October 2020. There is no payment extension, which is why it is important to pay taxes before the deadline. For fines and penalties to avoid, make sure you include the payment for your taxes.

FILE THE CORRECT FORM AND INPUT NECESSARY DETAILS

If you report your business tax on Schedule C, or if you report income from a partnership or Limited Liability Company, you will file your business tax as part of your personal tax return. You will need to use Form 4868. Note that Schedule C is a tax form filed by most sole proprietors and it is used to report both income and losses. The process of submitting the extension application is fairly easy, but there are some potential pitfalls to look out for.

Your name and address and your tax identification information – Make sure you use the correct Individual Tax ID number (ITIN). The Individual tax ID number on your extension is your personal social security number, not the number for your business, as this application is for your personal tax return.

An estimate of your tax liability – Your estimate should include your personal income, your business income, and your self-employment tax, if applicable. Individuals can make use of a quick tax estimator for this purpose. It will not be exact, but it does not have to be. Failure to correctly estimate the tax due may result in fines being interrupted and rejection of tax extension application.

How much you’ve already paid– This shows your withholding taxes (retention taxes), estimated taxes and other payments. Withholding tax is an income tax to be paid to the Government by the payer of the income rather than the recipient.

The balance that is due 

How much you pay – You send your payment with your renewal application or you can pay another way. But don’t forget any payment made after the due date is subject to fines and penalties.

You do not have to download Form 4868 if you pay your balance electronically. The IRS will automatically process your renewal application when you pay part or all of your taxes electronically or by phone. Taxpayers should explore the various tax payment options to pay their taxes without any complications.

 

REVIEW YOUR APPLICATION BEFORE SUBMITTING IT

Check for errors and report changed information. Make sure you use the correct extension application form for your business taxes and the correct extension application form for your personal taxes. Check your application to make sure you have not made any mistakes. Also make sure that your business or personal information has not been altered. For example, if you have changed your address since your previous communication with the IRS, your tax information may not match the extension program information. If your business or personal information has changed, you must notify the IRS in a specific way, using the Form 8822.

 

MAKE SURE YOU INPUT THE CORRECT YEAR

Before loading form 4868, make sure it is for the right year. The review year is in the top right corner of the first page. The year of review must correspond to the year of return. For example, if you submit an application for your 2020 tax return, the review date should be on Form 4868 for 2020.

 

USE TAX SOFTWARE OR A TAX PROFESSIONAL

The best way to make sure your extension application is accepted is to use tax preparation software or a tax preparer. You can file your extension application online using the software, or have your tax preparer file for filing. If you want to make use of a tax preparer, make sure that you find a professional because not everyone has the knowledge to prepare tax efficiently. For the tax software, the software will walk you through the process, tell you if you are missing something and make sure you are using the correct form.The seven best tax software programs that can be used for filing in this current year (2020) are;

·  Tax Slayer

·  Liberty Tax

·  TurboTax

·  Jackson Hewitt Premium

·  H&R Block

·  Tax Act Premium

·  Credit Karma

Turbo Tax is the most recommended software to use.

Tax payers may wonder if they should submit an IRS extension application even if they don’t owe anything. If you do not owe tax or receive a refund, you will not be fined for failure to pay or for underpayment. So, technically, you do not need to file an extension application. But you can still submit the application. Just to be sure.

There may be cases where your tax extension form will be rejected. This is not the end. If your extension is rejected, you may reapply, but if you did not submit the application until the tax return date, you may have fines and penalties. If so, if your tax extension application for renewal is rejected, you will be able to resubmit before the tax deadline.

Finally, do not forget the deadline for completing and submitting the comprehensive tax return. The time you need to complete depends on your business type.