Filing your taxes is complicated under the best of circumstances – especially when you have to file multiple forms depending on your personal and business tax situation.

One of the most overlooked forms is the 5500-EZ, designed for Solo(k) holders. While it’s wonderful that you have a self-employed retirement plan set up, don’t forget about the potential filing requirements. Luckily, the 5500-EZ is only required if the total assets in your Solo(k) are worth more than $250,000, so you may not be required to file this form.

This form is due a bit later than your standard taxes are filed, on the last day of the seventh month after the plan year ends. If your plan operates based on the calendar year, this means that for a plan year that ended 12/31/2023, you would need to file a return no later than July 31, 2024.

Fortunately, you can buy a bit more time to get your finances in order by filing for a Form 5500 extension.

How to Get a Form 5500-EZ Extension

If you need more time to get your affairs straight, you can easily file for a one-time extension of your 5500-EZ with the IRS by filing Form 5558. This form is due on or before the natural due date of your Form 5500-EZ, so you will need to be on top of things if you plan to file for an extension.

Form 5558 can be filed with the Department of the Treasury, Internal Revenue Service Center in Ogden, UT 84201-0045.

When you file Form 5558, you do not have to attach a copy of it to your Form 5500-EZ when you go to file. Instead, you will check the box for Form 5558 in Part I, Line B of the 5500-EZ when the time comes to file your extension.

Other Ways to Get a Form 5500-EZ Extension

Sometimes, you may not need to file Form 5558 in order to take advantage of an extension. Under certain circumstances, you may qualify for an automatic extension!

For example, Form 5500-EZ may not be required until the due date of the federal income tax return of your business, thus negating your need to file Form 5558.

It’s important to note that the automatic extension can be a month shorter depending on the entity type and the due date of your corporate tax return, including the extension.

To take advantage of this automatic extension, you must meet certain criteria:

• The plan year and your tax year are identical.
• You already applied for and were granted an extension on the federal income tax return for a date later than the due date of Form 5500-EZ.
• A copy of the application for an extension to file the federal income tax return is filed with the plan’s records.

If you meet these criteria and take advantage of an automatic extension, you will need to check the box for this extension in Part I, line B.

However, you may also qualify for an extension based on circumstances beyond your control. Presidentially-declared disasters may lead the IRS to accommodate extensions on some of these forms. Other extensions are granted if you are serving in or in support of any of the Armed Forces inside of a combat zone.

Both of these situations qualify for you to check the “special extension” box on Part I, line B where we have seen other types of extensions direct your attention.

What to Expect from a Form 5500 Extension

Successfully filing for an extension of Form 5500-EZ is a great opportunity if you need more time to do your taxes for your Solo(k). That being said, you should be aware of some limitations before you move forward.

First and foremost, the extension of your due date will only net you an additional two and a half months past the regular deadline when your taxes should have been filed. This may not be all the time that you hoped for, but there are no additional extensions.

You get just a one-time extension, no matter what the circumstances. In other words, you cannot stack the extensions together to delay your filing. If you received an automatic extension, you cannot then file Form 5558 for additional time.

You must have Form 5500-EZ filed by the new due date or face penalties for late filing.

Penalties for Late Filing

Oftentimes, business owners are confused about what tax forms they need to file and may have overlooked the need for Form 5500-EZ for their Solo(k). The unfortunate news is that there are pretty steep penalties if this is caught by the IRS and the DOL in the following year.

Any forms scheduled to be filed after December 31, 2019 will be subject to a penalty of up to $250 per day or a maximum of $150,000 for EACH late 5500 form. If you find out that you have not filed prior 5500s, contact our office before doing anything else to help avoid getting these penalties!

Get Help with Your Solo(k) Tax Filing

As a business owner, you have enough day-to-day responsibilities on your plate already. Don’t let these tax forms take up too much of your time and attention.

While you can manage a Solo(k) yourself and get away with only the annual required tax filing, Retire4one makes it even easier. When you set up a Solo(k) with us, only one 5500 tax form is required for the entire Group of Plans – and we do it for you! This means that you won’t need to file any tax forms for your Solo(k) or even worry about filing an extension.

Ready to get started? Retire4one is the easiest way to set up a Solo 401(k) and you can get your plan documents in just a few minutes. Sign up today!