Does Georgia Follow Federal Extension?

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Does Georgia follow federal extension?
The State of Georgia will recognize your valid Federal extension and grant you a corresponding state extension. Make sure to attach a copy of Form 4868 (or the IRS confirmation letter if you e-filed your Federal extension) to your Georgia tax return when it’s filed.
Read more on www.taxextension.com

Businesses must submit their income tax returns to the state of Georgia by the 15th day of the third month following the end of their fiscal year. Businesses can, however, ask for a state extension if they need extra time to submit their state income tax forms. Businesses now have until October 15 to submit their returns thanks to the state extension, which gives them an extra six months to do so. Georgia, however, adheres to federal extension regulations?

No, is the response. Georgia does let companies to ask for a state extension, but it’s crucial to understand that this extension only pertains to the state tax return. Georgia disregards the restrictions on federal extensions. Therefore, companies must ask the IRS for a separate extension if they need extra time to file their federal income tax return.

So why would an LLC or C-corp seek the S Corp designation, given this?

By submitting IRS Form 2553, LLCs and C-corporations can elect to become S Corporations. Businesses with S Corporation status are exempt from paying corporate federal income tax. Instead, the income, credits, and deductions of the corporation are transferred to the shareholders’ individual tax returns. In order to avoid double taxation, the shareholders report the corporation’s income and pay taxes on it at their individual tax rates.

S Corporation status may also offer tax benefits to independent contractors. S Corporation owners who work for the company are permitted to pay themselves a “reasonable” compensation and receive dividends from the leftover earnings. Payroll taxes apply to the salary but not to dividends. Owners of S Corporations may experience large tax savings as a result.

Do you pay company tax prior to or following dividends in this regard?

Before paying dividends to shareholders, corporations must pay federal income tax on their profits. The name of this tax is corporate income tax. The firm can distribute the leftover profits to shareholders as dividends after paying its income taxes.

Taxes must be paid by individual shareholders on the dividends they receive from the corporation. The shareholder’s income tax bracket determines the dividend tax rate. If shareholders receive qualified dividends, their tax rate may be reduced.

In conclusion, Georgia does not adhere to federal extension regulations even though it permits businesses to ask for a state extension for their income tax returns. Choosing S Corporation status enables LLCs and C-corporations to avoid double taxation and may result in tax savings. Before delivering dividends to shareholders, corporations must pay income taxes; similarly, shareholders must pay taxes on the dividends they receive.