William’s business is tourist-dependent and earns most of its money during the warmer months. He has always filed his tax return based on the calendar year but would like to change it to a fiscal year ending in October. What does he need to do?
First, William should make sure he is eligible. The IRS says if you file your first return using the calendar tax year and later become a sole proprietor, a partner in a partnership, or a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or meet one of the exceptions listed in its Form 1128 instructions.
William may qualify for automatic IRS approval to change his tax year. A tax professional can help determine whether changing the tax year is the right course of action.
Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.