Tax Extension FAQs

You've probably heard about tax extensions but maybe never really understood the purpose or advantage. Tax extensions give you extra time to file your personal and business tax returns 

What does filing an extension do?

Filing an extension is a formal request to the IRS for more time to submit your federal tax return. An extension:

• Extends your filing deadline by up to six months
• Does not extend the time to pay taxes owed
• Requires you to estimate and pay any taxes due by the original deadline to avoid penalties and interest

At Collective, we help estimate your extension payment so you can submit a tax payment on time when your extension is filed.

What’s the difference between filing an extension for my S Corp and for my personal tax return?

S Corp owners often need two separate extensions—one for the business return and one for the personal return. The business return is always due first.

For your S Corp (Form 1120-S)

• Original due date: March 15
• Extended due date: September 15
• Form used: IRS Form 7004 (Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns)

Key points:

• The S Corp return is informational since S Corps don’t generally pay federal income tax directly
• Business income and expenses “pass through” to you as the owner, reported on your individual tax return via Schedule K-1
• No federal extension payment is due for the S Corp (unless required by your state, such as California’s minimum franchise tax)

Collective proactively files S Corp extensions for active members.

For your Individual Return (Form 1040)

• Original due date: April 15
• Extended due date: October 15
• Form used: IRS Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return)

Key points:

• This extension is separate from your S Corp extension
• An extension payment is typically required if you expect to owe taxes
• You’ll need to provide your filing status, estimated income, and other details to calculate that payment accurately

If you have a Single-Member LLC (SMLLC) and your business income is reported directly on your personal return using Schedule C, your extension is filed as part of your individual return using Form 4868 — a separate business extension isn’t required.

What about state tax extensions?

Each state has its own rules for extensions — including whether they’re automatically granted when you file a federal extension.

Important notes:

• Some states (like California) automatically follow your federal extension
• Others require a separate state extension form or state extension payment
• State deadlines and requirements may differ from federal ones

You can check your state’s Department of Revenue website for the most current information. (Rates, forms, and due dates are subject to change.)

Why should I consider filing an extension for  my tax return(s)?

There are several valid reasons to extend:

• Incomplete information: You haven’t received all tax documents or finalized bookkeeping
• Pending information: You’re waiting for K-1s, investment forms, or other required details
• Legislative changes: You want to wait for clarification on new or pending tax laws
• Retirement contributions: Extending your return allows additional time to make contributions to plans like a SEP IRA or Solo 401(k)

Filing an extension ensures accuracy and prevents the stress of rushing — it’s far better than filing incomplete or incorrect returns.

Am I more likely to be audited if I extend my tax return?

Filing a tax extension on its own does not typically increase the likelihood of an IRS audit. The IRS is primarily focused on the accuracy and completeness of tax returns, rather than when they’re filed. In many cases, filing an extension can actually help reduce errors by giving you and your tax preparer more time to gather accurate information.

Submitting a complete and accurate return, even if it’s extended, is generally the best way to stay compliant and avoid issues later.

What should I expect when I need to file an extension?

• Extension payments are still due by the original deadline (March 15 for S Corps, April 15 for individuals).
• Provide your available tax information early so we can calculate your extension payment accurately.
• Once the extension is filed, we’ll continue preparing your returns and aim to file them as soon as all information is available — well before the fall deadlines.

If I file an extension, does that mean nobody will look at my tax information until the fall?

No, we’re here to assist you year-round. We aim to finalize and file your tax returns as soon as we have all necessary information. Don’t wait until the fall to provide details—we won’t delay in preparing your returns.

Summary of Key Deadlines

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed  adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.