The information below has been provided by Bennett Thrasher as a reference guide when filing your 2024 corporate taxes. Please note that this is basic/generic information and may not apply to some with more complex circumstances.
1) When is the deadline to file my state and federal corporate taxes?
- Federal Corporate Taxes: For calendar-year corporations, the federal income tax return (Form 1120) is due by April 15 of the following year.
- State(s) Corporate Taxes: Generally, most states comply with the federal filing deadline of April 15th.
- Delaware Franchise Tax: The Delaware Annual Franchise Tax Report and payment are due by March 1 each year.
- Note: If you have not yet filed, it's important to do so promptly to minimize penalties.
2) What forms do I need to file?
- Federal: Form 1120 (U.S. Corporation Income Tax Return).
- State Tax Filings: Each state has its own corporate tax forms.For example, if the Company has a filing obligation in Georgia, the Company will file form 600.
- Delaware Franchise Tax: Annual Franchise Tax Report.
3) Where do I find the forms?
- Form 1120: Available on the IRS website.
- States – Each states forms can be found on the state department of revenue website.
4) Where do I file the forms?
- Form 1120: File electronically through the IRS e-file system or by mail to the appropriate IRS address.
- States – The Company can mail the annual state income tax return or electronically file with the state department of revenue.
- Annual Franchise Tax Report: File online via the Delaware Division of Corporations' website.
5) What is the deadline to file an extension for state/federal returns?
- Federal: File Form 7004 by April 15 to request a six-month extension, moving the deadline to October 15.
6) How do I file an extension?
- Federal: Submit Form 7004 electronically or by mail to the IRS.
7) If I don’t file my taxes or an extension, what is the penalty?
- Federal: A penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25%. If more than 60 days late, the minimum penalty is the lesser of $510 or 100% of the unpaid tax.
- State – Each states penalties can vary depending on several factors.
- Delaware Franchise Tax: A $200 late penalty plus a monthly interest charge of 1.5% on the unpaid tax.
8) Are there potential negative impacts besides a financial penalty for not filing?
- Yes. Failure to file can result in the loss of good standing status, which may affect your ability to conduct business, secure financing, or enter contracts. Prolonged non-compliance can lead to administrative dissolution of the corporation.
9) If I’m an international founder, are there long-term impacts this could have (negative impact on Visa eligibility, etc.)?
- Non-compliance with U.S. tax obligations can have immigration consequences, potentially affecting visa renewals or applications. It's crucial to maintain compliance to avoid such issues.
10) When should I use a tax advisor versus filing my own taxes, especially if I don’t have revenue yet?
- Even without revenue, startups may have deductible expenses, potential tax credits, and specific reporting requirements. Consulting a tax advisor can ensure accurate filings and identify opportunities for tax savings. However, if your financial situation is straightforward, you might consider using tax preparation software.
11) If I want to file my taxes on my own, are there resources/platforms I can use like TurboTax?
- Yes, platforms like TurboTax, H&R Block, and others offer business tax filing services. Ensure the platform supports Form 1120 and any state-specific forms you need.
12) If I’m an international founder but our only corporate entity is a Delaware C corporation, is there anything extra I have to do to file?
- Yes, if any foreign individuals own 25% or more of the corporation, Form 5472 must be filed to report transactions between the corporation and related foreign parties. Failure to file can result in a $25,000 penalty per occurrence. Additionally, if the US entity has a foreign subsidiary, the US entity must report the activity on form 5471. The penalties for not filing the form start at $10,000
13) If I’m an international founder and we have a Delaware C corp. that owns subsidiaries in other countries, is there anything we need to do when filing US federal taxes?
- Yes, you may need to file Form 5471 for each foreign subsidiary to report their activities. Failure to file can result in a $10,000 penalty per subsidiary.
