Tax Extensions

Preparing and filing tax returns is never fun, but paying your federal income taxes to the IRS can be stressful and even financially challenging in some cases. While the April 15th tax filing deadline is a date that may be etched into your mind, the fact is that you can request an extension of time to file if necessary, and a skilled and experienced CPA can assist you with filing the proper paperwork with the IRS.

Extensions may be filed for personal returns or business returns. In many--if not most--cases, an extension may be necessary due to business related issues. Maybe you are waiting on a piece of information from another entity, preventing you from being able to file your tax return. If filing a tax extension for your individual income tax return, you would need to fill out form 4868. If you are filing an extension for a corporation, partnership, REMIC, or certain types of trusts, you would need to fill out form 7004.

When you request an extension of time to file with the IRS, you should be aware that this is a short-term extension. The request for an extension must be paid by the tax filing deadline, and a second extension may be granted by the IRS in some cases. This essentially provides you with more time to gather together your tax documents for your Idaho Falls tax preparation in order to have your accountant prepare the taxes and more. There are times when the days simply fly by, and the filing date may have approached more quickly than you realized. In other cases, major life events like the loss of a job, a divorce, or other circumstances may have consumed all of your attention.

Some individuals who need additional time to pay taxes may believe that an extension of time to file is an extension of time to pay taxes, but this is not the case. If you owe taxes to the IRS and you request an extension to file, you will be responsible for interest owed on the amount due. If you are able to file now and need extra time to pay, you can speak with your CPA about other options. For example, you can request a payment plan through the IRS. This way, you can begin making regular payments to the IRS, and this may decrease the total amount of interest that you pay on your tax bill.

There are many reasons why you may not be ready or able to file your tax return by the tax deadline. When you speak with your CPA about your circumstances, you can learn more about the options available to you to file and pay your taxes.

Self-employment Tax and Quarterly Tax Payments

Being self-employed definitely has its perks. No one is giving you orders, and you get to pick your own projects and hours. Despite the fact that a boss is no longer breathing down your neck, you can’t escape IRS tax requirements. If you own a small business and want to avoid being penalized for missing a tax payment, consider this information about self-employment tax obligations.

Self-employment Tax

According to the official IRS website, self-employed means you are the sole proprietor, independent contractor, or a member of a partnership with a business or trade. If you fall into one of these categories, you have certain tax obligations that you should be aware of. As a general rule, self-employed individuals file an annual return as well as pay estimated taxes quarterly. This includes self-employment tax, which, according to the IRS, is a “Social Security and Medicare tax primarily for individuals who work for themselves.” Note that this is a separate requirement from income tax.

Estimated Tax Paid Quarterly

To take care of your self-employment tax, you will most likely be asked to pay an estimated tax four times a year. Estimated tax is exactly what it sounds like. You simply use last year’s return and the 1040-ES form to approximate the amount you owe each quarter. In short, four times a year, you are required to pay taxes on a quarter of your return from the previous year. If you discover that your estimate is too high or too low, don’t worry. Just fill out a 1040-ES worksheet to correctly recalculate your estimated tax, and you will get a refund or pay the difference.

Don’t miss the deadline for your quarterly taxes. The IRS does not take kindly to late payments, and you will be penalized for missing your deadline.

Paying taxes quarterly can be a pain, but once you learn the rules and stick to the schedule, it is much less of a hassle. If you are struggling with understanding every tax hill you have to climb, you might want to consult a company that specializes in these types of services. Whether you live in Chicago or Idaho Falls, small business financial services companies can help you during stressful tax times.