IRS Audit, IRS Audit Help, Tax Audit Help

Another Tax Deadline? Does it never end?

February 21, 2013 - IRS Audit, IRS Audit Help, Tax Audit Help

For those of you that have a business, it can seem like it is never ending. Just when one deadline is met, another deadline looms ahead.   Corporation tax returns are due March 15th. Big “C” Corporations use Big Accounting firms. We used to have the “Big 8” firms. They shrank to the “Big 4”. I am a smaller service firm and work with smaller companies. Some of them have elected “S” Corporation status and file the “S” Corp return.   Companies are owned by shareholders, mostly by individuals. Your individual tax returns are due April 15th. No matter “C” or “S”, your corporate business income tax returns are due MARCH 15th. If your business is a Partnership, that income tax return is due April 15th.   You may want more time to file these important once a year accountings. You account for your income and you account for expenses. That makes your income tax return an accounting. You may handle this accounting yourself with simple lined paper, or with still popular green column paper, or with simple spreadsheets that can also do the math. Be careful – the spreadsheet results are only as good as the formula you create for your calculations. Maybe you use accounting software and maybe you engage a professional accountant. Whatever manner you choose, you need those accounting results to file your tax return.   If you need more time to file your returns, you can request additional time by filing a form for extension. These extensions can be filed for your individual return and they can be filed for your business returns. The most important thing to remember here is that this is an extension of TIME to FILE. It is not an extension of time to PAY.   When you do complete your tax return and you learn you owe tax, will you be able to pay the tax before the date the return is due to be filed? if this tax is not paid by the due date of your return. the Internal Revenue Service will charge you interest and one or more of several penalties. And if there is tax due, then the extension you had asked for is considered invalid or not valid. And now your return is considered late. Late is not just tardy. Late is delinquent. There is no corner to sit in. There is no detention to attend. You just write another check for these “additions” to tax that IRS will assess.   How can you avoid these penalties for filing late and for paying late? You have two ways to avoid these penalties. First, understand that while “C” Corporations may have an income tax to pay with their Form 1120 tax return, “S” Corporations and Partnerships do not. Both “S” Corps and Partnerships use a Form K-1 to notify each shareholder or partner of their share of the business profit or loss. These profits (or losses) pass through to the individual and are included on their individual Form 1040 tax return.   Employees have taxes withheld from their paychecks. Shareholders can avoid these penalties by making what are called Estimated Tax Payments. When you do a good job of “estimating” what you expect your taxes might be next year, you make four payments to the United States Treasury during the year. And if you pay your estimated taxes on time (not late) you can avoid the late-payment penalty.   Always to you lowest legal tax, Nellie T Williams, EA