The Internal Revenue Service deadline for filing an S corporation income tax return is March 15. In addition, an S corporation must file quarterly payroll tax returns and the annual federal unemployment tax return. The penalties start running from the first day the return is late. If you miss the filing deadline or do not file Form 7004 for an extension of time to file and S corp late filing penalty can become expensive to pay.
If you file your S corporation income tax return late and no tax is due, an S corp late filing penalty is $195 per month or for any portion of a month the return is late multiplied by the number of corporate shareholders, according to Hall, Kistler & Company. For example, if you have three corporate shareholders and the tax return is filed one month late, calculate the penalty by multiplying the $195 monthly penalty by the one month the return is filed late multiplied by your three shareholders. The total penalty is $585.
If you file your income tax return late and the S corporation owes taxes, the IRS imposes an additional 5 percent penalty on the unpaid tax for each month or portion of a month the return remains unfiled. For example, if your S corporation's tax is $5,000, compute the penalty by multiplying the $5,000 by 5 percent to get $250. Now add the $250 penalty to the $585 late filing penalty for a total of $835. The maximum IRS-imposed penalty is 25 percent of the unpaid tax amount. The penalty and unpaid tax are added together to help determine how much you owe the IRS.
Advertisement Article continues below this adYou must use Form 941 to file your quarterly payroll tax reports. For each month or part of a month the return is late, the IRS imposes a 5 percent penalty on the unpaid tax, according to Intuit TurboTax. For example, if your S corporation has $2,500 in payroll taxes and you file the return three weeks late, multiply the tax of $2,500 by 5 percent to get the penalty of $125. The maximum penalty is 25 percent of the unpaid tax amount.
The IRS imposes a 5 percent late filing penalty for each month your federal unemployment tax (FUTA) return, Form 940, is filed late. The 5 percent is imposed on the unpaid tax amount. For example, if your S corporation's FUTA tax is $500 and you file the return one month late, compute the penalty by multiplying $500 by 5 percent multiplied by one month, or $25.