Welcome to 2024.
2024 carries forward 2023’s high interest rates which increase the cost of lending, creating less favorable conditions for borrowers. However, this change will not affect the tax filing and payment obligation of businesses and individuals, as stated in the 16th Amendment, which was ratified in 1913 and gave Congress the power to levy income tax.
The months ramping up to the big day, (March 15th or April 15th, depending on your corporate structure) can be stressful. Rushing to get your records and receipts together can cause serious errors resulting in high penalties and interest.
No taxpayer wants to get that dreaded letter from the IRS or State Taxing Authority saying that income was underreported, or asking them to provide documentation to support expenses.
Below are a few areas of focus that can help make the tax-season less stressful.
Key Dates to Remember
2023 W-2s and 1099s must be postmarked or made available to employees and contractors respectively by January 31, 2024. Employers must electronically file or mail copy A of the Form W-2 to the Social Security Administration with a transmittal Form W-3. Form 1099s must also be filed with the Social Security Administration with the Form 1096 transmittal form by the same date.
Verify the amounts being reported as compensation on these forms along with the employees’ and contactors’ names, social security numbers, or employer identification numbers (EINs). Confirm that their addresses are correct. Remember to verify your company’s name, address, and EIN prior to filing and providing the forms to taxpayers. Rest assured that even if an error is discovered after the forms are filed, amendments can still be made.
C corporations may be required to pay estimated taxes, which can be submitted through the IRS Website using Form 1120-W. When making the payment, confirm that the type of tax being paid and the tax year to which the payment should be applied is correctly reported.
Remember, pass-through entities can affect the shareholders’ individual liabilities. Shareholders of pass-through entities may be required to make estimated tax payments resulting from business activities. Consult with your tax preparer to discuss your position and what is required.
The 2024 tax season filing deadlines for the following entities are as follows:
Sub-chapter S Corporations and Partnerships – March 15, 2024
C Corporations and Single-member LLCs – April 14, 2024
If the tax records are not ready to allow the preparation of the tax return by the tax filing deadline, it is advisable to file for an extension. The extension will extend the tax filing deadline for the entity by 6 months. If there is an estimated tax liability for the filing period, the payment will be required at the time of filing the extension.
Accuracy is Everything
Accurate accounting of a company’s activities is at the heart of all tax filings. The taxing authorities want taxpayers to accurately report the financial results of their activities. This information is reported on the tax filing forms including applicable schedules and forms as dictated by the authorities.
1. Be sure to report all income earned. This may include payments made through ACH, PayPal, and Zelle, among others.
2. Report only business expenses and have documentation to support each expense, amount, and vendor. Include expenses paid via credit cards, bank accounts and through cash.
3. Remember to include interest and principal payments of any liability accounts such as lines of credit, loans, and credit cards. This information will be required on different schedules or forms on the tax return.
4. Include purchases and/or dispositions of assets such as equipment, vehicles or real estate. A tax advisor can help to identify the best course of action on how to report/treat these assets for tax purposes.
5. If any business activities were undertaken with the purpose of earning tax credits available to businesses, such as the Empowerment Zone Employment Credit, Disabled Access Credit or Work Opportunity Credit, let your preparer know. States can have specific credits for businesses.
We all understand how stressful the tax season can be. Use this time to your benefit by setting up a structure that can be implemented for years to come. Being organized and keeping good records all year ‘round will mitigate the stress of tax preparation, enabling you to keep the primary focus on your business operations during the tax season.
Founder and CEO of LEK Management Inc., Lynn Karam has two decades of experience in finance, operations, and strategic planning. Karam is an Enrolled Agent authorized by the United States Department of the Treasury to represent clients who are undergoing an audit and to negotiate with the IRS on her clients’ behalf. Her success rate in resolving even the most challenging of IRS scenarios has become the cornerstone of her success. As CEO, Karam uses her financial expertise to establish sustainable strategies that result in significant business growth for her clients.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : ContractorMag – https://www.contractormag.com/management/taxes/article/21282262/get-ready-for-the-2024-tax-season
