Most of us are familiar with the matriarch of all tax days—April 15—but there’s other federal tax deadlines to be aware of as well to stay in compliance with the IRS.
January 15 – 4th Quarter Estimated Taxes
If you own a business, have rental income, investment income or capital gains, you are receiving income without being taxed. In order to be compliant—and avoid unnecessary audits or penalties—you will need to make quarterly estimated tax payments. This allows you to pay small amounts over the year to ensure that the IRS is receiving the appropriate amount of taxes.
The federal estimated tax deadlines in 2020 are on January 15, April 15, June 15 and September 15. January 15 is right around the corner, so any fourth-quarter income from 2019 must be calculated for taxes owed and postmarked to the IRS by the due date.
So, how do you know how much to pay each quarter? Depending on your situation, calculating the tax owed can be tricky, but if you don’t anticipate changes in income or deductions, then the method is pretty straightforward. Check out your tax liability last year (including self-employment tax, income tax, and any other taxes), subtract any expenses or credits your foresee for this year, and then divide by four. This will give you a general snapshot of what you will owe throughout the year.
If you anticipate changes from the previous tax year, you will need to consider calculating a projection. Check out the IRS Form 1040-ES worksheet to help you discover what you owe and to find out current year figures for tax rates and standard deduction amounts. Typically, sole proprietors, partners, and S corporation shareholders use this form to figure out estimated tax.
The IRS expects taxpayers to pay the appropriate amount of taxes by the due date of each pay period, so if you forget to mail in the amount or fail to pay all together, you may be subject to a penalty fee…even if you’re owed a refund!
Get those estimated taxes in on time. If you need any advice on how to stay in compliance, you know where to find us. We’re here to help.
January 31 – W-2s and 1099s
The next important date is at the end of this month on January 31—the deadline for businesses to mail out W-2 Forms (statement of wages) to their employees and to provide 1099 Forms to independent contractors. It’s also the deadline to report a number of miscellaneous items such as bank interest, dividends, retirement plan distributions and non-employee compensation.
Questions?
If you have any questions about these approaching deadlines or how to accurately calculate your estimated taxes, call (781) 247-5569 or text the office line at (781) 790-4504. Visit www.erocktax.com to learn more about how we can help.
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About Stu: With more than 30 years of experience as a tax professional, Stu Steinberg brings a broad depth of knowledge to his work with his clients. Stu founded Erock Tax to help provide tax and financial planning strategies to individuals, families and small businesses and is passionate about empowering his clients through education about their money health. Stu is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.