IRS Audit Help, IRS Problems, IRS Tax Problems

March 15th. April 15th. What do these two dates have in common?

March 15, 2013 - IRS Audit Help, IRS Problems, IRS Tax Problems

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