This is not our usual springtime 15th tax season. This is our fall, extension time tax season.
In April, the Internal Revenue Service has been known to sprinkle the news with stories that scare taxpayers into compliance. The IRS knows that scare tactics can help people be more honest when filing their returns.
Lately, the IRS has been in the news for their misdeeds. This is not the kind of publicity they choose for themselves. They are showing their human side.
Every government office is staffed with individuals. These employees are human beings, just like you and me. Sometimes a single person may forget they are a civil servant. They forget their job is to serve the public. The fall victim to the emotional pull of power and greed.
When I was an auditor in training I heard a story about a former co-worker. Former is the key word here. Usually, when management gets wind of a choice of action that is outside an employee’s job description, that employee gets noticed. A good manager will first counsel the employee. The manager will give that person a chance to clean up their act. They will give that person an opportunity to “fly right”. Sometimes, though, the misdeed is so wrong that the person is fired and maybe also arrested for committing a crime.
This story was one I heard years ago. The story I heard was about taxpayers writing their checks for taxes due. Most people just wrote their checks payable to “I R S”. I wrote my checks to IRS, too. Then we were instructed to completely spell out the words “Internal Revenue Service”.
Would you have thought that somebody was changing the letters “IRS” to “MRS” and adding a last name? That is exactly what happened. That employee was altering the taxpayers’ checks. (More than one!) That employee was stealing the taxpayers’ tax money and putting it in their own bank account. The crime was against both the taxpayers and against the government. Today we are asked to write our checks to the “United States Treasury”.
Every year I must attend a certain amount of what is called continuing professional education, CPE, to maintain my credentials. Every year the tax laws change and I focus on knowing what I need to know in order to do my best job for you. My mind was never figuring out how to break the laws. But there are plenty of people who do just that.
Lately the IRS has been caught with their hand “in the cookie jar” so to speak. They have delayed the applications of certain groups asking for legitimate tax-exempt status. They have wrongly targeted certain individuals for audit. These are examples of human beings who have let their access to power cloud their judgment. If you keep your eyes on doing the right thing, you’ll never have to be worried about any negative consequence. You’ll be able to sleep soundly every night.
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OMG! It’s almost April 15th. I’m not ready. What do I do now?
Relax. Breathe. Take inventory. Do you have all your W2 forms? Do you have all of your interest and dividend 1099 forms? Do you have your other income records? Gambling? Alimony? Hobby? Small Business? More?
What about deductions? Is this your challenge? Your papers are all over the place. Some are in this box over here, some are in that file over there. Oh, where IS that receipt? It’s not too late to start getting organized for THIS year. But what do you do now about last year’s information? It is the 2012 tax return we file in 2013. And the 2013 tax return will be filed in 2014.
They are both deadlines to file tax returns with the Internal Revenue Service.
Individuals are familiar with April 15th. If you are a business owner, you must also be aware of March 15th!
Did you start a new business this past year? Did you form a corporation?
If you formed a corporation but did NOT file the paperwork to elect to be taxed as an “S” (or small) Corporation, then you are automatically considered a “C” Corporation. “C” Corporations pay tax on the profits they earn PLUS the shareholders who receive the dividends pay tax on those dividends on their individual income tax return. This is why they say “C” Corporation profits have “double taxation”.
“S” Corporations do not pay tax. The “S” Corporation gives the shareholders of that corporation a Form K-1. The K-1 is sort of like a W2. It shows each shareholder their share of income or loss, deductions and other items to include on their own individual 1040 tax return. The shareholders pay the tax for their share of the corporation’s profit.
Corporation tax returns are due on March 15th. If your “C” Corporation had a profit, the taxes on that profit must be PAID by March 15th. Corporations, like individuals, can REQUEST an extension of TIME to FILE their tax returns. There is NO extension of time to PAY the taxes due. If the taxes are not paid by March 15th, and you have requested an extension of time to file, your extension will be considered invalid, or not valid. You will incur PENALTIES and INTEREST on the taxes due.
What else is important about March 15th?
If your business has employees, you, the employer, withhold taxes from their paychecks. Withholding includes federal and most states’ income taxes, social security tax, and medicare tax. You, the employer, match the social security and medicare taxes withheld from your employees’ paychecks. All of the taxes withheld and the employer’s matching taxes must be paid to the IRS by a certain date. Sometimes that date is at the end of the quarter when filing the quarterly Form 941 report. Sometimes that date is at the middle of the month in a quarter.
If you are a small employer and your total 941 taxes will be $2500 or less for the first quarter of the year (January, February and March), you can pay this amount with your report which is due April 30th. If you will owe more than $2500 for the quarter, then you must make monthly deposits. These deposits are due by the 15th day of the month following the end of the month. March 15th is that date following the end of February.
Is this clear as mud to you? It took me some time and marking a calendar for me to “see” when my different important dates were. I still put a date on my calendar to keep me from missing my deadlines. I encourage you to mark your calendar, too.
Always to your lowest legal tax,
Nellie T Williams, EA 
Can you really save a bundle in taxes when you work from your home?
I know many very successful business people who do work from their home. I work from my office space in my home. This blog is all about the basics of what you need to know qualify for this deduction. You will know what you need to do to protect your deduction.