Shawn’s business is touristdependent and earns most of its revenue in the warmer months. He has always filed his tax return on a calendar-year basis but would like to switch to a fiscal year ending in October. What does he need to do?
First, Shawn should confirm his eligibility. The IRS states that if he files his first return using the calendar tax year and later becomes a sole proprietor, a partner in a partnership, or a shareholder in an S corporation, he must continue to use the calendar year unless he obtains IRS approval to change it or meets one of the exceptions listed in the IRS’s Form 1128 instructions.
Shawn may qualify for automatic IRS approval to change his tax year. Your tax professional can help determine whether changing the tax year is the right decision.
Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.