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March 15th Tax Filing Deadline for S Corp and Partnerships

March 15th, the tax-filing due date for the 2023 calendar year for S corporations and partnerships, is less than three weeks away. While this filing deadline does not require making a tax payment, missing the due date could result in penalties.

Penalties for Filing Late

The IRS charges a penalty if an S corporation or partnership tax return is filed after the March 15th deadline. The penalty is $235 for each person who was a shareholder or partner at any time during the tax year, for each month or part of a month that the return was filed late, for up to 12 months.

The penalty is calculated based on each month the tax return is late multiplied by each shareholder or partner. 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 $470 in penalties.

The penalty calculation for 2023 S corporations and partnerships is $235 for each month or part of a month (up to 12 months) the return is late, multiplied by the number of shareholders or partners.

Steps to Take Before March 15th

To avoid penalties, consider the following:

  • 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 a payment, if necessary, by April 15th.
  • Challenge the penalty. If your business does receive 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.

As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.