Businesses, Are You Prepared for the March 15th Tax Deadline?February 23, 2021
Pass-through entities…time to file your 2020 tax returns! Need more time to file? You may be eligible for an extension.
Attention Pass-through entities…are you prepared for the impending March 15th tax deadline? Here’s what you need to know.
Who does the deadline apply to?
The March 15th federal deadline applies to all pass-through entities, which include calendar year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships for tax purposes. These entities generally file returns on Form 1065 and Form 1120S.
What is a pass-through entity?
A pass-through entity is a business structure that reduces the effects of double taxation, (which occurs when income tax is levied once on corporate income, then again when profits are distributed as dividends to shareholders). Income or loss from pass-through entities flows through to the individual owners and is taxed only once on the owners’ individual tax returns. Therefore, these types of entities are not subject to income tax at the entity level.
All S corps, partnerships and LLCs treated as partnerships must file their 2020 calendar year income tax return (Form 1120S or Form 1065) and pay any taxes due. You must provide each shareholder or partner with a copy of Schedule K-1, which reports their allocated share of the pass-through entity’s income or loss. For an automatic six-month extension, you must file Form 7004.
Interested in being treated as an S corp beginning with calendar year 2021?
File Form 2553, Election by a Small Business Corporation by March 15th to be treated as an S corp. If you miss this deadline, the switch to S corp status will not take effect until calendar year 2022.
What if the entity isn’t on a calendar year basis?
In this case, the return is due the 15th day of the third month following the end of the tax year.
Need more time to file?
Avoid a late return by filing for an extension by March 15th. This gives you until September 15, 2021 to get your 2020 returns in.
Questions on the deadline? Having trouble with your filings? Contact a member of our Tax Services Team.