The deadline for this year’s income tax deadline is fast approaching. Maybe you are panicking because of lack of preparation, or worse, you feel calm about your taxes when the reality is, you should be worried.
Of course, in Louisiana, it is easy to get distracted by Mardi Gras, festivals, and other spring events. Also, with bad news spreading daily about the coronavirus pandemic, the last thing you want to think of filing your tax returns. Don’t worry, our staff at Estess CPAs are here to help.
We understand the challenges of managing small, family-run businesses because we’re one too! Our knowledgeable and experienced CPAs are happy to lend our expertise and knowledge to help make your life easier.
Our goal is to help you achieve your financial goals through proper planning and the knowledge gained from working with hundreds of businesses just like yours.
First, let us help ease your anxiety with information about deadlines:
- The federal individual income tax deadline is April 15, or if that day falls on a weekend or holiday, the next business day after. Currently, Congress is working on extending the deadlines due to the disruption caused by the Coronavirus Pandemic.
The American Institute of CPA’s (AICPA) sent a memo to the Treasury Department and the IRS on March 11, 2020, to request that they grant businesses an extension for filing their estimated tax payments as well as the waiver of penalties and interest due to the uncertainties caused by the virus.
- Louisiana’s income tax deadline is one month later, May 15. It is likely that the state’s filing deadline will be extended as well as some forgiveness of penalties and interest on estimated taxes due by businesses.
- In planning for 2021, employers should note that they are required to provide W-2’s by January
31. Financial institutions must provide 1098’s by this date.
• Taxpayers can request an extension to October 15 for filing their tax returns but must do so before the filing deadlines. This extension applies to the timing of filing your tax return, not paying any taxes due. Tax owed past the deadline will accrue interest and penalties.
Blindsided by a huge tax bill
It can happen to anyone not prepared, even well-educated individuals, like a physician in Shreveport, Louisiana. This doctor had a side business of consulting. The earnings didn’t include withholding for taxes. At the time of filing, his tax bill was $7,500 and included additional fees. “You can bet I’ll never make this mistake again. I talked to my accountant at the beginning of the following year about how much money I needed to put aside for taxes—and made sure to do just that,” the doctor told Forbes magazine.
Withholding the right amount
The Goldilocks principle, based on the children’s story, “Goldie Locks and the Three Bears,” puts forth the concept of “just the right amount”. In the story, a little girl named Goldilocks tastes three different bowls of porridge and finds that she prefers the one that neither too hot nor too cold. She chooses the one in between at the right temperature. Applying this principle to your individual income tax liability, at Estess CPAs, we would help you plan to withhold the right amount to avoid a high tax bill. Going too far in the other direction and withholding too much will mean missing out on investing and getting a return.
The IRS provides a table to assist taxpayers with calculating withholdings. If you are still unsure, feel free to contact our office and set up an appointment. We want to help and make sure you avoid costly penalties.
Estimated tax payments
If you are in a higher income tax bracket, just like the uninformed physician, you are required to make payments to both the federal and state governments. In Louisiana, the threshold for single filers is $1,000 and $2,000 for joint filers. Those failing to pay proper estimated tax, either through withholding, or through quarterly estimated tax payments are subject to penalties and interest on the amount due, accrued from when the payment was due.
Seek Professional Accounting and Business Audit Assistance
Contact Estess CPAs, serving the greater New Orleans area. Estess CPAs specialize in helping small and medium-sized businesses with accounting, payroll, bookkeeping, and taxes. We can help you stay organized, with customized services to meet your needs, including auditing and IRS representation. With the proper planning, you will not be afraid of tax season in the future.