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 to help avoid penalties
File on time. If you are a partner in a partnership or a shareholder in an S corporation, file your company's tax return on or before March 15th. In addition to the penalties, filing late shortens the time you have to file your individual tax return and pay any taxes due by this year's April 15th filing deadline.
Consider an extension. If you cannot file the tax return by the due date, file an extension on or before March 15th. This gives you an extra six months to file your business return. Remember, you pay the taxes for your flow-through business on your Form 1040 tax return at this year's April 15th filing deadline.
Your personal tax return may be delayed. Do not file your Form 1040 tax return until you receive all Form K-1s from each of your S corporation and partnership business activities. But be prepared — if your business files an extension, it's possible you may also need to extend your personal tax return while you wait for the K-1s. Remember that an extension to file doesn't mean an extension to pay your taxes. You'll need to estimate how much your 2023 tax bill will be so you can make any necessary payment by April 15th.
Challenge the penalty. If your business does get hit with an IRS penalty for filing late, ask to have the penalty abated. This is especially important if you file and pay your personal taxes on time. Kindly remind the U.S. Treasury it is still receiving the taxes owed to them in a timely manner.
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.
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