Updated: Jan 7, 2019
I know the Holiday season has come and gone and we are all anticipating the coming new year, but alas, tax season is upon us. Yep, I said it. Taxes. It is ironic that at the start of the new year, many of us have to spend time digging through the prior year to figure out what we did so we can file our taxes. On top of that, there have been tax changes (read our New Tax Law blog here). Filing your taxes can become one of the best ways to reflect on the prior year, receipt by receipt.
Selected Due dates: (without applicable extensions)
The 4th quarter estimate tax payment is due. If you made regular estimates or not, this is your last chance to make an estimated tax payment and avoid any potential underpayment of tax penalties. Please see my blog on ‘Self Employed’ for more details on what you should pay, but if deemed necessary this is your last chance.
IRS starts accepting tax filings. (This is the earliest you can file)
1099 –Misc. – (From IRS.Gov)
File Form 1099-MISC for each person to whom you have paid during the year:
at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest;
at least $600 in:
services performed by someone who is not your employee;
prizes and awards;
other income payments;
medical and health care payments;
crop insurance proceeds;
cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish;
generally, the cash paid from a notional principal contract to an individual, partnership, or estate;
payments to an attorney; or
any fishing boat proceeds,
direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment.
(*Delivered on or by February 15th)
W2’s, 940’s, 941’s – Employer’s must complete relevant payroll forms by the end of January (*Delivered on or by February 15th)
Business Listings (County) – Some state county’s require businesses (most of them) to file a business listing form. This form is a listing of relevant business assets. (From computers to supplies on hand) The county then will tax the business for this business property. -It is very important to ensure all relevant assets are listed, as well as any old assets disposed of during the year are taken off.
S-corporations are due (form 1120S).
Partnerships are due (Form 1065)– (includes LLC’s with more than one owner).
S-corporation Election – if your starting a new S-corp and want it affective at the beginning of the year, the election is due (form 2553).
Personal Tax Returns are due (form 1040).
C-corporations are due (form 1120).
Trusts are due (from 1041).
First quarter estimated tax payment due – Already prepaying for next year.
Other Tidbits: Preparing for Tax Season
1. Look through your prior year tax return.
See what items is on the return to help remember items for you to be looking for. The prior year tax return is the best guide you have for getting together your current year taxes.
Investment Account information (1099)
Business Income and Expenses (if Self Employed or reporting on Schedule C)
Rental Income and Expenses (if own rental property or receiving Rents)
2. Create your ‘tax pile’ and when items start coming in the mail add them to the pile.
3. Ask preparer to provide a list of items needed.
4. When to file?
It is recommended to wait for all your tax forms to come in prior to filing. (1099’s, W2’s, K-1’s, etc.)
You can file without, but if you omit a tax form or incorrectly guesstimate, it could generate a tax notice. The most popular tax notice is a CP-2000. A CP-2000 is a computer generated ‘matching’ notice that is looking for matches between items like a 1099 on your tax return, if it does not find the match, it will spit out this notice. Generally, these come about 18 months after filing due to the timing it takes to get all records into the IRS system. – All that being said, you can rush to file, but it may cause issues later on.
5. When to expect refunds – A common question.
The IRS states that if you elect direct deposit you can expect refund in as little as 8 days, and for 9/10 tax payers it is less than 21 days from date return is filed. From my experience, the expectation on states is about 2 weeks longer than the IRS. (depending on the state).
6. Do you need an accountant?
To start, no one has to have an accountant. Everyone can file their own taxes. That being said, sometimes outsourcing that burden becomes beneficial. Outside of having a professional advisor on your side, sometimes just having the professional keeping your records, and having the compliance is worth it. But no accountant can guarantee results (and if they do- look elsewhere). But the accountant does this for a living, and more likely than not, is aware of items that you may not be. I tend to tell my clients, who previously prepared their own tax returns, that a result very well may be more tax, because they were doing it wrong previously. The point is, a tax accountant does not ensure better tax results, but it does help ensure proper filing, with the added benefit of someone who is well versed in some of those unknown expenses and deductions.
7. If I hire an accountant, what should I look for?
When you’re looking for an accountant– beyond pricing and a general ‘good fit’ – look for availability, responsiveness, and eagerness to talk about your situation rather than just being a conduit between you and the IRS. At the end of the day, being able to adequately talk to and be heard is the most important aspect of hiring a good tax accountant.
John Michael Kledis EA, CFE, CVA is Principal and founder of Peridot Consulting, Inc.
Disclaimer: This is a brief synopsis and individual situations may vary. The above has left out many details for summation purposes. Do not take any advice from this column and please consult with relevant parties before making any decisions regarding the subject matter within. Any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog. This blog does solve everything, or give very good recipe’s for dinner. I find that googling ‘quick and easy dinner’ will solve that problem. Sometimes pizza night is the best result you can ask for.