WASHINGTON – The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.
 
The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
 
Key Takeaways
 

• Paid Sick Leave for Workers 
  • For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.
• Complete Coverage
  • Health insurance costs are also included in the credit.
  • Employers face no payroll tax liability.
  • Self-employed individuals receive an equivalent credit.
• Employers receive 100% reimbursement for paid leave pursuant to the Act.
• Fast Funds
  • An immediate dollar-for-dollar tax offset against payroll taxes will be provided
  • Where a refund is owed, the IRS will send the refund as quickly as possible.
  • Reimbursement will be quick and easy to obtain.
• Small Business Protection
  • ​​Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.

 

• Easing Compliance
  • Requirements subject to 30-day non-enforcement period for good faith compliance efforts.

 
To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
 
Background
 
The Act provided paid sick leave and expanded family and medical leave for COVID-19 related reasons and created the refundable paid sick leave credit and the paid child care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.
 
Paid Leave
 
The Act provides that employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis. An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or child care provider is unavailable for reasons related to COVID-19, and/or the employee is experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services can receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee’s pay. An employee who is unable to work due to a need to care for a child whose school is closed, or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional 10 weeks of expanded paid family and medical leave at 2/3 the employee’s pay.
 
Paid Sick Leave Credit
 
For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.
 
For an employee who is caring for someone with Coronavirus, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
 
Child Care Leave Credit
 
In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
 
Prompt Payment for the Cost of Providing Leave
 
When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees' share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.
 
Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.
 
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
 
If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.
 
Examples
 
If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
 
If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
 
Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.
 
Small Business Exemption
 
Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern. Labor will provide emergency guidance and rulemaking to clearly articulate this standard.
 
Non-Enforcement Period
 
Labor will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. Labor will instead focus on compliance assistance during the 30-day period.
 
For More Information
 
For more information about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov. Information regarding the process to receive an advance payment of the credit will be posted next week.        

Paying taxes is not optional – it’s the law. Taxpayers do have options when it comes to how they pay their taxes. The IRS offers several easy ways to pay taxes. Taxpayers can pay online, by phone or with their mobile device using the IRS2Go app, just to name a few.

Some taxpayers must make quarterly estimated tax payments throughout the year. This includes sole proprietors, partners, and S corporation shareholders who expect to owe $1,000 or more when they file. Individuals who participate in the gig economy might also have to make estimated payments.

Here are five options for taxpayers who need to pay their taxes. They can:

• Pay when they e-file using their bank account, at no charge, using electronic funds withdrawal.
• Use IRS Direct Pay which allows taxpayers to pay electronically directly from their checking or savings account for free. They can choose to receive email notifications about their payments when they pay this way. Taxpayers should watch out for email schemes. IRS Direct Pay sends emails only to users who request the service.
• Pay using a payment processor by credit card, debit card or digital wallet options. Taxpayers can make these payments online, by phone or through the IRS2Go app.
• Make a cash payment at more than 7,000 participating retail stores nationwide. To pay with cash, visit IRS.gov and follow the instructions.
• Pay over time by applying for an online payment agreement. Once the IRS accepts an agreement, the taxpayers can make their payment in monthly installments.

Gathering records before preparing tax return makes filing go smoother
As taxpayers are getting ready to file their taxes, one of the first things they’ll do is gather their records. To avoid refund delays, taxpayers should gather all year-end income documents before filing a 2019 tax return.
It’s important for folks to have all the needed documents on hand before starting to prepare their return. Doing so helps them file a complete and accurate tax return. Here are some things taxpayers need to have before they begin doing their taxes.

• Social Security numbers of everyone listed on the tax return. Many taxpayers have these number memorized. Still, it’s a good idea to have them on hand to double check that the number on the tax return is correct. An SSN with one number wrong or two numbers switched will cause processing delays.
• Bank account and routing numbers. People will need these for direct deposit refunds. Direct deposit is the fastest way for taxpayers to get their money and avoids a check getting lost, stolen or returned to IRS as undeliverable.
• Forms W-2 from employers.
• Forms 1099 from banks and other payers.
• Any documents that show income, including income from virtual currency transactions. Taxpayers should keep records showing receipts, sales, exchanges or deposits of virtual currency and the fair market value of the virtual currency.
• Forms 1095-A, Health Insurance Marketplace Statement. Taxpayers will need this form to reconcile advance payments or claim the premium tax credit.
• The taxpayer’s adjusted gross income from their last year’s tax return. People using a software product for the first time will need their 2018 AGI to sign their tax return.  Those using the same tax software they used last year won’t need to enter their prior year information to electronically sign their 2019 tax return.

Forms usually start arriving by mail or are available online from employers and financial institutions in January. Taxpayers should review them carefully. If any information shown on the forms is inaccurate, the taxpayer should contact the payer ASAP for a correction.

WASHINGTON ― The Internal Revenue Service successfully opened the 2020 tax filing season today as the agency begins accepting and processing federal tax returns for tax year 2019.

The deadline to file a 2019 tax return and pay any tax owed is Wednesday, April 15, 2020.  More than 150 million individual tax returns for the 2019 tax year are expected to be filed, with the vast majority of those coming before the April 15 tax deadline. 

"The IRS workforce has worked for nearly a year to prepare for the opening of tax season,” said IRS Commissioner Chuck Rettig. “Our dedicated employees are committed to help taxpayers, process tax returns and serve the nation − not just through the April 15 tax deadline but throughout the year.”

While the IRS’ Free File program as well as many tax software companies and tax professionals began accepting tax returns earlier this month, processing of those tax returns begins as IRS systems open today.

The IRS expects about 90 percent of individuals to file their returns electronically. Filing electronically and choosing direct deposit remains the fastest and safest way to file an accurate income tax return and receive a refund.

“The IRS reminds taxpayers there are many options to get help,” Rettig said. “Our website has around the clock information available and is the fastest way to get assistance. We’ve made improvements to the Free File program and filing electronically with direct deposit remains the best way to speed refunds and minimize errors. As always, experts in the nation’s tax professional community stand ready to help people navigate their tax issues. And we also remind people our IRS-trained community volunteers are ready to help file tax returns in locations across the country.”

Taxpayers: Rely on a reputable tax professional; IRS.gov can help
The IRS also reminds taxpayers that a trusted tax professional can prepare their tax return and provide helpful information and advice. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov.
No matter who prepares a federal tax return, by signing the return, the taxpayer becomes legally responsible for the accuracy of all information included.

Please remember that GLM can help!

Gather documents and organize tax records
The IRS urges all taxpayers to make sure they have all their year-end statements in hand before filing. This includes Forms W-2 from employers and Forms 1099 from banks and other payers. Taxpayers should confirm that each employer, bank or other payer has a current mailing address or email address. Typically, year-end forms start arriving by mail – or are available online – in January. Review them carefully and, if any of the information shown is inaccurate, contact the payer right away for a correction.
In 2019, taxpayers who engaged in a transaction involving virtual currency will need to file Schedule 1, Additional Income and Adjustments To Income. The Internal Revenue Code and regulations require taxpayers to maintain records that support the information provided on tax returns.  Taxpayers should maintain, for example, records documenting receipts, sales, exchanges, or other dispositions of virtual currency and the fair market value of the virtual currency.

To avoid refund delays, be sure to gather all year-end income documents before filing a 2019 tax return. Doing so will help avoid refund delays and the need to file an amended return. Filing too early, before receiving a key document, often means a taxpayer must file an amended return to report additional income or claim a refund. It can take up to 16 weeks to process an amended return and issue any related refund.

Most refunds sent in less than 21 days; however, some require further review and take longer
Just as each tax return is unique and individual, so is each taxpayer's refund. There are a few things taxpayers should keep in mind if they are waiting on their refund but hear or see on social media that other taxpayers have already received theirs.

Different factors can affect the timing of a taxpayer’s refund after the IRS receives the return. Also, remember to take into consideration the time it takes for the financial institution to post the refund to the taxpayer’s account or to receive a check in the mail.

Even though the IRS issues most refunds in less than 21 days, some tax returns require additional review and take longer to process than others. This may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. The IRS will contact taxpayers by mail when more information is needed to process a return.

Choosing electronic filing and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS expects about 90 percent of individual tax returns will be prepared electronically using tax software.

The IRS reminds taxpayers that, by law, the IRS cannot issue refunds claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. This applies to the entire refund − even the portion not associated with the EITC or ACTC. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if the taxpayer chose direct deposit and there are no other issues with the tax return.

After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers.
​
Refund information will generally be available within 24 hours after the IRS acknowledges receipt of an electronically filed return on the Where's My Refund? ‎tool on IRS.gov and the IRS2Go phone app. These tools will be updated with projected deposit dates for most early EITC and ACTC refund filers by Feb. 22, so those filers will not see an update to their refund status date on Where's My Refund? ‎or through their software packages until then. The IRS, tax preparers and tax software will not have additional information on refund dates. Where’s My Refund? is the best way to check the status of a refund.

WASHINGTON ― The Internal Revenue Service confirmed that the nation’s tax season will start for individual tax return filers on Monday, Jan. 27, 2020, when the tax agency will begin accepting and processing 2019 tax year returns. 

The deadline to file 2019 tax returns and pay any tax owed is Wednesday, April 15, 2020. More than 150 million individual tax returns for the 2019 tax year are expected to be filed, with the vast majority of those coming before the traditional April tax deadline.  

“As we enter the filing season, taxpayers should know that the dedicated workforce of the IRS stands ready to help,” said IRS Commissioner Chuck Rettig. “We encourage taxpayers to plan ahead and use the tools and information available on IRS.gov. The IRS and the nation's tax community are committed to making this another smooth filing season."

The IRS set the Jan. 27 opening date to ensure the security and readiness of key tax processing systems and to address the potential impact of recent tax legislation on 2019 tax returns.

While taxpayers may prepare returns through the IRS’ Free File program as well as many tax software companies and tax professionals before the start date, processing of those returns will begin after IRS systems open later this month.

“The IRS encourages everyone to consider filing electronically and choosing direct deposit,” Rettig said. “It’s fast, accurate and the best way to get your refund as quickly as possible.”
 
Filing electronically flags common errors and prompts taxpayers for missing information.

Taxpayers can get free help preparing and filing taxes through IRS Free File online or free tax help from trained volunteers at community sites around the country. The IRS also reminds taxpayers that they don’t have to wait until Jan. 27 to start their tax return or contact a reputable tax preparer. 

In addition, IRS tax help is available 24 hours a day on IRS.gov, the official IRS website, where people can find answers to tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.

Of course, even if High School math did teach taxes, by the time you needed to use it the tax laws will have changed... a lot.

High School Math would NOT:

• Get you prepared for what you need to do DURING the tax year to save on taxes.
• Show you how to keep good records all year long.
• Tell you what part of you Home Office is Tax Deductible
• Help you eliminate Tax Errors
• How to carry Family Members into your business
• Set up a new business during the tax year.
• Show how to expense more deprecation using Section 179
• More Tax Tips from Previous Blogs

When you do your own taxes, you may just get it done, which is OK. But, as AT&T commercials are showing, "Just OK is not OK"​ 

What to do before the tax year ends Dec. 31

WASHINGTON –The Internal Revenue Service reminds taxpayers there are things they should do now to get ready for the tax-filing season ahead.

Charitable Contributions
For most taxpayers, Dec. 31 is the last day to take actions that will impact their 2019 tax return. For example, those who plan to itemize deductions should know that charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2019 count for the 2019 tax year, even if the bill isn’t paid until 2020. Checks to a charity count for 2019 if they are mailed by the last day of the year.

Retirement Plans
Taxpayers who are over age 70 ½ are generally required to take distributions from their individual retirement accounts and workplace retirement plans by the end of 2019. However, a special rule allows those who reached 70 ½ in 2019 to wait until April 1, 2020, to receive them.
Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2019 IRA contributions until April 15, 2020. For 2019, the basic limit for 401(k) contributions is $19,000, plus another $6,000 for those who are at least age 50.
For 2019, total contributions to all traditional and Roth IRAs cannot exceed $6,000, or for taxpayers age 50 and older, $7,000. Taxpayers should check IRS.gov for more information about contribution limits, as well as cost-of-living adjustments affecting pension plans and other retirement-related items for tax year 2019.

Some taxpayers may be eligible for the Retirement Savings Contributions Credit, also known as the Saver’s Credit. The income limit is $64,000 for married couples filing jointly, $48,000 for heads of household, and $32,000 for singles and married individuals filing separately for 2019.

Refunds
The vast majority of taxpayers get their refunds faster by filing electronically and using direct deposit. It is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.

Just as each tax return is unique and individual, so is each taxpayer's refund. Here are a few things taxpayers should keep in mind if they are waiting on their refund but hear or see on social media that other taxpayers have already received theirs.

Different factors can affect the timing of a refund. Even though the IRS issues most refunds in less than 21 days, it's possible a particular taxpayer's refund may take longer. Some tax returns require additional review and take longer to process than others. It may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. The IRS will contact taxpayers by mail when more information is needed to process a return.

By law, the IRS cannot issue refunds to people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund, including the portion not associated with the credits. This helps ensure taxpayers receive the refund they're due by giving the IRS more time to detect and prevent fraud.

Taxpayers should not count on getting a refund by a certain date, especially when planning major purchases or paying other financial obligations.

Update address
Taxpayers who moved during 2019 should tell the US Postal Service, employers and the IRS. Notify the IRS by mailing IRS Form 8822, Change of Address, to the address listed on the form’s instructions. Taxpayers who purchase health insurance through the Health Insurance Marketplace should also notify the Marketplace when they move out of the area covered by their current plan.
For name changes due to marriage or divorce, notify the Social Security Administration so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed. A mismatch between the name shown on a tax return and SSA records often causes refund delays.

Recordkeeping
Keeping copies of tax returns is important. Taxpayers may need a copy of their 2018 return to make it easier to fill out a 2019 return. Anyone using a software product for the first time may need the Adjusted Gross Income (AGI) amount shown on Line 7 of their 2018 return to file their 2019 return electronically.
 
Taxpayers can also visit View Your Tax Account on IRS.gov. Anyone using the tool must verify their identity. Taxpayers can learn more about that process and electronically signing a return at Validating Your Electronically Filed Tax Return.

Connect with the IRS
The IRS uses traditional and social media tools — available in English and other languages — to share the latest information on tax changes, scam alerts, initiatives, products and services.  
The IRS uses several social media tools including:

• Instagram: The IRS Instagram account will share taxpayer-friendly information on a variety of topics to help people get ready for tax season.
• YouTube: The IRS offers video tax tips in English, Spanish and American Sign Language.
• Twitter: Taxpayers can follow @IRSnews for tax-related announcements and tips. @IRStaxpros tweets news and guidance for tax professionals. Tweets from @IRSenEspanol have and the latest tax information in Spanish. @IRSTaxSecurity tweets tax scam alerts.
• Facebook: News and information for taxpayers and tax return preparers.
• LinkedIn: The IRS shares agency updates and job opportunities.

The IRS also has its own app, IRS2Go. Taxpayers can use this free mobile app to check their refund status, pay taxes, find free tax help, watch IRS YouTube videos and get IRS tax tips by email. Like Instagram, the IRS2Go app is available from the Google Play Store for Android devices, or from the Apple App Store for Apple devices. IRS2Go is available in both English and Spanish.

The IRS has a special page on IRS.gov with steps to take now for the 2020 tax filing season.​

Recordkeeping is an important part of running a small business. In fact, keeping good records helps business owners make sure their business stays successful.
Here are some things small business owners should remember about recordkeeping:

• Good records will help business owners:
  • Monitor the progress of their business
  • Prepare financial statements
  • Identify income sources
  • Keep track of expenses
  • Prepare tax returns and support items reported on tax returns
• Small business owners may choose any recordkeeping system that fits their business. They should choose one that clearly shows income and expenses. Except in a few cases, the law does not require special kinds of records.
• How long an owner should keep a document depends on several factors. These factors include the action, expense and event recorded in the document. The IRS generally suggests taxpayers keep records for three years.
• A good recordkeeping system includes a summary of all business transactions. Businesses usually record these transactions in books called journals and ledgers, which business owners can buy at an office supply store, or keep them electronically. All requirements that apply to hard copy books and records also apply to electronic business records.
• The responsibility to validate information on tax returns is known as the burden of proof. Small business owners must be able to prove expenses to deduct them.
• Business owners should keep all records of employment taxes for at least four years.
• Businesses that keep paper records should keep them in a secure location, preferably under lock and key, such as a desk drawer or a safe. 
• Businesses that keep records electronically on a computer should always have an electronic back-up, in case the hard drive crashes.

Small business owners should find out if they can benefit from claiming this deduction

The home office deduction can help small business owners save money on their taxes. Taxpayers can take this deduction when they file their taxes if they use a portion of their home exclusively, and on a regular basis, for any of the following:

• As the taxpayer’s main place of business.
• As a place of business where the taxpayer meets patients, clients or customers. The taxpayer must meet these people in the normal course of business.
• If it is a separate structure that is not attached to the taxpayer’s home. The taxpayer must use this structure in connection with their business
• A place where the taxpayer stores inventory or samples. This place must be the sole, fixed location of their business.
• Under certain circumstances, the structure where the taxpayer provides day care services.

Deductible expenses for business use of a home include:

• Real estate taxes
• Mortgage interest
• Rent
• Casualty losses
• Utilities
• Insurance
• Depreciation
• Repairs and Maintenance

Certain expenses are limited to the net income of the business. These are known as allocable expenses. They include things such as utilities, insurance, and depreciation.  While allocable expenses cannot create a business loss, they can be carried forward to the next year. If the taxpayer carries them forward, the expenses are subject to the same limitation rules.
There are two options for figuring and claiming the home office deduction.

• Regular method: This method requires dividing the above expenses of operating the home between personal and business use. Self-employed taxpayers file Form 1040, Schedule C, and compute this deduction on Form 8829.
• Simplified method: The simplified method reduces the paperwork and recordkeeping for small businesses. The simplified method has a set rate that is capped at $1,500 per year, based on $5 a square foot for up to 300 square feet.

There are special rules for certain business owners:

• Daycare providers complete a special worksheet, which is found in Publication 587.
• Self-employed individuals use Form 1040, Schedule C, Line 30 to claim deduction.
• Farmers claim the home office deduction on Schedule F, Line 32.

If all this seems complicated, please contact a GLM professional.

Four common tax errors that can be costly for small businesses

A small business owner often wears many different hats. They might have to wear their boss hat one day, and the employee hat the next. When tax season comes around, it might be their tax hat.
They may think of doing their taxes as just another item to quickly cross off their to-do list. However, this approach could leave taxpayers open to mistakes when filing and paying taxes.
Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. Using a GLM accountant is the easiest ways to avoid these kinds of errors.

Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:

Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.

Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers.  If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.

Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.

​Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.