After Tax Day: What’s Next – Top 10 List
Wednesday, July 15, 2020 was the Due Date for Form 1040, Form 1120, and state returns or extensions.
Here are some things to know:
1. $100,000.00+ income tax refunds
– Planning starts NOW. Feel free to ask us HOW.
One of the secrets to making money in real estate is the cost segregation study. It’s got an unusual name and you probably haven’t heard it before. Very few people know about it and that includes people in the real estate industry. But rich people know about it and if you want to be rich you should know about it too.
This is a short video explaining the process.
2. How to pay taxes:
The easiest way to pay is by navigating to the IRS PAYMENTS PAGE
The instructions are as follows:
3. You can’t afford to pay your taxes: what to do…
Tax Attorney Charles Zimmerer’s Advice: Call (786) 464-0403 for a free consult.
4. Estimated Tax Payments
We ALL forget to file our quarterly payments. Strike that, a few of us are on top of them, but most are not. Here’s what you should know.
5. The S-Corp Election
Have you made the s-corp election?
You may want to keep the S-Corp Election Acceptance Letter in your permanent records.
There seems to be a lot of confusion regarding the federal tax treatment of a Limited Liability Company, or LLC. For federal income tax purposes, an LLC does not exist. This may come to a shock to you, but it is true.
There is only a Corporation, Trust, Partnership, Sole Proprietorship, and an Estate. An eligible entity can make an election to be treated as a Small Business Corp or an S-Corp.
A corporation or an LLC can elect to be an S-Corporation. Some other entities can also elect to be treated as an S-Corporation, but in all cases, those entities need to have a primary characteristic, limited liability for all owners. Whether an organization is an entity separate from its owners for federal tax purposes is a matter of federal tax law and does not depend on whether the organization is recognized as an entity under local law.
An LLC’s tax classification is determined by a default set of rules contained at 26 CFR 301.7701-1, et seq., which say that a single member LLC is a Sole Prop and files Form 1040 Schedule C. A two member LLC is a partnership by default and files Form 1065. An eligible entity may file Form 8832 or 2553 to become either a C-Corp or an S-Corp, respectively.
Tax classifications are not determinative or binding on state courts regarding entity liability. IRS liability differs. Federal tax classification impacts federal tax liability. So, if you elect for the entity to become a Corp, the IRS will treat it as a corp.
Why choose an S-Corp. The upside to the S-Corp election is reduction in taxes, etc. The downside is higher compliance costs. Those include stand-alone returns, more supervision, and additional time etc. spent.
6. S-Corps Form 1120-S and Partnerships Form 1065.
Unfortunately, those returns are late. The IRS can impose some hefty penalties such as $195 per partner per month or portion of the month the return is late. The best thing to do is tackle the return as quickly as possible, and if the IRS assesses the penalties, then request they be removed for good cause or first-time penalty abatement. Compliance Check! Make sure you have filed all prior 940s, 941s, RT-6s, and F1120s.
7. Tax due dates.
Generally, S-Corp and partnership returns are due to be filed on Tuesday, September 15, 2020. Individual and Corporate returns are due to be filed Thursday, October 15, 2020.
8. Don’t forget about the States!
Corporations or C-Corps are required to file Florida Income Tax Returns and Florida Additional Tax Information. If your business or you receive income in other states, then generally you are required to file income tax returns in those states in addition to your state of residence. In most cases, for income tax purposes, income equates to sales or revenue whereas taxable income is income minus deductions. This means you or your entity is required to file an income tax return in every state where you have Gross Income even if your taxable income is $0 after considering deductions. For example, if you own a rental property in another state, you should probably be filing a return in that state as well as reporting it in your home state.
On a side note, even if a business has $0 activity, it still needs to file a return every year. This is true for a corporation, s-corp, and a partnership.
9. There’s still time to make a Retirement Contribution for 2019
Generally, there is still time to establish a SEP-IRA and make a contribution to a SEP-IRA. This is possible because SEP-IRA contributions should be made prior to the filing of your income tax return including extensions. Before running out and setting it up, please contact us to make sure you are eligible and whether you have to make contributions to your employees accounts too. You can call us about this too because we’re kinda experts in this area too!
10. You forgot to file: what to do…
Generally, the best thing to do is tackle your return as soon as possible. Some people wait to file because they don’t think they can pay. I’m my view, this worsens the matter. The IRS will give you 9 months to pay if you ask. Of course, it charges interest and penalties. They also offer payment plans, and if you cannot pay at all, you can go into Currently Not Collectible Status.