penalties - Linkenheimer LLP CPAs & Advisors

It’s Almost That Time of Year Again! If You’re Not Ready, File for an Extension

The clock is ticking down to the April 18 tax filing deadline. Sometimes, it’s not possible to gather your tax information and file by the due date. If you need more time, you should file for an extension on Form 4868.

An extension will give you until October 17 to file and allows you to avoid incurring “failure-to-file” penalties. However, it only provides extra time to file, not to pay. Whatever tax you estimate is owed must still be sent by April 18, or you’ll incur penalties — and as you’ll see below, they can be steep.

Failure to file vs. failure to pay

Separate penalties apply for failing to pay and failing to file. The failure-to-pay penalty runs at 0.5% for each month (or part of a month) the payment is late. For example, if payment is due April 18 and is made May 25, the penalty is 1% (0.5% times 2 months or partial months). The maximum penalty is […]

By Linkenheimer LLP|2022-03-29T23:24:33+00:00March 29th, 2022|extension, extensions, irs, tax deadlines|0 Comments

IRS Extends More Tax Deadlines To Cover Individuals, Trusts, Estates Corporations and Others

To help taxpayers, the Department of Treasury and the Internal Revenue Service announced today that Notice 2020-23 extends additional key tax deadlines for individuals and businesses.

Last month, the IRS announced that taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. No late-filing penalty, late-payment penalty or interest will be due.

Today’s notice expands this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.

Extension of time to file beyond July 15

Individual taxpayers who need additional time to file beyond the July 15 deadline can request an extension to Oct. 15, 2020, by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. […]

By Linkenheimer LLP|2020-09-03T20:03:08+00:00April 9th, 2020|business, filing deadline, irs, tax deadlines|0 Comments

Do You Need to Make an Estimated Tax Payment by September 17?

To avoid interest and penalties, you must make sufficient federal income tax payments long before your April filing deadline through withholding, estimated tax payments, or a combination of the two. The third 2018 estimated tax payment deadline for individuals is September 17.

If you don’t have an employer withholding tax from your pay, you likely need to make estimated tax payments. But even if you do have withholding, you might need to pay estimated tax. It can be necessary if you have more than a nominal amount of income from sources such as self-employment, interest, dividends, alimony, rent, prizes, awards or the sales of assets.

A two-prong test

Generally, you must pay estimated tax for 2018 if both of these statements apply:

You expect to owe at least $1,000 in tax after subtracting tax withholding and credits, and
You expect withholding and credits to be less than the smaller of 90% of your tax for 2018 or 100% of the tax on your 2017 return — 110% if your 2017 adjusted gross income was more than $150,000 ($75,000 for married couples filing separately).

If you’re a sole proprietor, partner or S corporation shareholder, you generally have to make estimated tax […]

By Linkenheimer LLP|2020-09-03T20:04:29+00:00September 10th, 2018|New Tax Laws, tax planning, withhold|0 Comments

How to Avoid Getting Hit with Payroll Tax Penalties

For small businesses, managing payroll can be one of the most arduous tasks. Adding to the burden earlier this year was adjusting income tax withholding based on the new tables issued by the IRS. (Those tables account for changes under the Tax Cuts and Jobs Act.) But it’s crucial not only to withhold the appropriate taxes — including both income tax and employment taxes — but also to remit them on time to the federal government.

If you don’t, you, personally, could face harsh penalties. This is true even if your business is an entity that normally shields owners from personal liability, such as a corporation or limited liability company.

The 100% penalty

Employers must withhold federal income and employment taxes (such as Social Security) as well as applicable state and local taxes on wages paid to their employees. The federal taxes must then be remitted to the federal government according to a deposit schedule.

If a business makes payments late, there are escalating penalties. And if it fails to make them, the Trust Fund Recovery Penalty could apply. Under this penalty, also known as the 100% penalty, the IRS can assess the entire unpaid amount against a […]

By Linkenheimer LLP|2020-09-03T20:04:36+00:00July 9th, 2018|employer, income tax, tax|0 Comments

1099 Requirements for 2015

The IRS requires that you file information returns (1099’s) for cash and check payments issued by your trade or business to individuals not treated as your employees as well as non-incorporated entities. The IRS strictly enforces the requirements and aggressively audits this area of the law; additionally, there are numerous penalties that may be assessed if you fail to comply. We recommend that PRIOR to making payments for services, you obtain taxpayer identification (ID) numbers from all of your service vendors. If they don’t provide you a SSN or IRS business ID number (EIN), you are required to withhold taxes on payments to that vendor. A 1099 form must be filled in if:

Amount Requiring Reporting

Contract Labor, Commissions, Director Fees and
Other Non-employee Compensation $600 or more

Dividends, Interest and Royalties $10 or more

Professional Fees […]

By Linkenheimer LLP|2020-09-03T20:05:15+00:00March 11th, 2016|irs, Uncategorized|0 Comments