If you’ve filed for an extension for reporting last year’s federal income tax, your deadline is quickly arriving. Here are some important resources to help you meet that deadline.
Understanding that many small business operators are under pressure to meet the extensions they filed this past year, here is a six-week plan intended to guide small business owners through the steps needed to meet the IRS’ October 15th deadline.
If you follow this six-week plan, you’ll have the resources to not only meet the IRS’ deadline, but avoid excess penalties, interest payments, property liens, or even prosecution.
Sources: Patrick Cox | TaxMasters and Williams Keepers CPAs
This Six-Week Plan begins on September 1, 2011. Get out your calendar and get started:
September 1 – Call your Accountant. Walk through the next 6 weeks to ensure that you can provide him or her with the right paperwork within the current timeframe. If you don’t already have one, ask for a tax planner.
September 2 – Collect your paperwork. Take it out of the shoebox or the file drawer where it has been piling up. Set aside 2 hours to physically locate and collect your 1099s, W2s, interest income statements, and all income statements for 2009. You may think you have everything in one place, but go and physically put your hands on that stuff and confirm you have it. TIP: Don’t stop there. Call the IRS Telephone Assistance for Individuals (800-829-1040) and request that they fax to you all personal W-2 and 1099 forms they have on file for you for 2009. In addition, call the IRS Telephone Assistance for Businesses (800-829-4933) and request that they fax to you all business 1099 forms they have on file for you for 2009. Use what they fax you to cross-check your documentation. In most cases, go with what the IRS has on record if it differs from your information.
September 6 – Commit. Have your paperwork ready for September 10 so you can send it all to your accountant. TIP: Make sure you are using software that your accountant uses – this could be something like QuickBooks or Excel.
September 8 – Locate and collect all of your deduction information. Set aside four hours to find everything from mortgage interest to charitable contributions, investment losses as well as office and business expenses.
September 9 – Finish compiling all paperwork. TIP: Use IRS Form 1040-Schedule C to categorize your deductions on the spreadsheet for your accountant. Download 1040-Schedule C from http://www.irs.gov/pub/irs-pdf/f1040sc.pdf and refer to Part II of the form.
September 10 – Deliver everything to your accountant. Ask your accountant for the tax return to be ready on October 11 so that you have time for questions or problems preparing your return. Confirm that and make sure you are prepared to pay the accountant’s fee at that time.
October 11 – Pay the accountant and Pick up your return. TIP: Don’t sign it or send it yet. Take the return home; set aside 24 hours to review it a couple times.
October 12 – Review the return again. Compare it to your spreadsheet. Once you sign the return, you are responsible for its contents, so make sure you understand exactly what is in the return. If you have questions, call your accountant and work through the changes. Again, after you sign the return, the preparer is not responsible for it. You are. Make sure you understand everything in it.
October 13 – Resolve any remaining questions. If you had questions to work through with your accountant, everything should be resolved by this date. If you agree with the return, sign it.
October 15 – Pat yourself on the back for being compliant with the IRS. Write down any lessons learned and email them to yourself so next year will be easier.
What if you owe money to the IRS?
1. If you owe less than $25k to the IRS, send the return certified mail with a check for your payment. If you can’t afford to pay your tax liability in full, you can set up a payment plan using the IRS Online Payment Agreement Application http://www.irs.gov/individuals/article/0,,id=149373,00.html.
2. If you owe more than $25k to the IRS, you have much more work to do. First, file your paperwork so that you are in compliance, but then contact your tax representative. TIP: While working out a payment plan with the IRS is a way to pay off tax debt you can’t afford to pay in full, don’t expect to be able to set up payment plans multiple years in a row. The IRS has no patience for taxpayers who don’t correct their mistakes. Understand that you are paying interest first when engaging in an IRS payment arrangement. It may be more expensive to engage in a payment plan with the IRS than to take out a loan to pay the tax debt in full. Review your options before assuming that an IRS payment plan is the only path available to you.
3. Collections – If you owe more than $25k, do not mail your return. Certified mail does not prove that you sent a valid return to the IRS, but only that you sent an envelope. If you owe more than $25k to the IRS, you need to take more precautions. If you owe more than $25k or if you are in collections for a previous tax year, walk into your local IRS office with two copies of your return. Hand them one copy and have them stamp your copy as received and keep it for your records. This is the only way to prove you filed that return on that day.
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Below is a general schedule of tax deadlines throughout the year. If any due date falls on a Saturday, Sunday or legal holiday, the deadline is moved to the next business day. Deadlines for entities with a year-end other than December 31 are listed at the bottom of the page.
Information regarding any changes to the normal deadlines will be posted on our website.
Form 1040 – Individual Tax Return
Due date April 15
Final extension October 15
Form 1040-ES – Individual Estimated Tax Payments
1st Installment April 15
2nd Installment June 15
3rd Installment September 15
4th Installment January 15 (following year)
Form 1065 – Partnership Income Tax Return
Due date April 15
Final extensions September 15
Form 1041 – Fiduciary (Trust) Income Tax Return
Due date April 15
Final extension September 15
Form 1120 – Corporation Income Tax Return
Due date March 15
Initial extension September 15
Form 1120S – Sub-S Corporation Income Tax Return
Due date March 15
Initial extension September 15
Form 709 – Gift Tax Return
Due date April 15
Initial extension Same as 1040
Form 706 – Estate Income Tax Return
Due date 9 months from the date of death
Extension Additional 6 months
Form 5500 – Employee Benefit Plan Income Tax Return
Due date July 31
Extension October 15
Form 990/990-PF – Charitable/Private Foundation Income Tax Return
Due date May 15
Extension August 15
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Possible Critical Date: September 15, 2011:
– 3rd quarter estimated tax payments due for 2011 tax year.
– Final deadline to file corporate tax returns if an extension was requested. (Forms 1120, 1120A, 1120S).
– Final deadline to file trust income tax returns (Form 1041) if an extension was requested.
– Final deadline to file partnership tax returns (Form 1065) if an extension was requested.
Possible Critical Date: October 3, 2011
– Final deadline for self-employed persons or employers to establish a SIMPLE IRA for the year 2011.
Possible Critical Date: October 17, 2011
– Final deadline to file individual tax returns (with extension).
– Last day the IRS will accept an electronically filed tax return for 2010. If filing after October 17th, you’ll need to mail in your tax return for processing.
– Final deadline to fund a SEP-IRA or solo 401(k) for tax year 2010 if you requested an automatic extension of time to file.
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Rules of thumb for entities with a year-end other than December 31
Form 1120 – Corporation Income Tax Return
Due 2.5 Months after Year End
Form 1120S – S Corporation Income Tax Return
Due 2.5 Months after Year End
Form 1065 – Partnership Income Tax Return
Due 3.5 Months after Year End
Form 1041 – Fiduciary (Trust) Income Tax Return
Due 3.5 Months after Year End
Form 990/990-PF – Charitable/Private Foundation Income Tax Return
Due 4.5 Months after Year End
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