Five Tax-Planning Strategies to Try Before 12/31/2020

It’s November. What comes to mind when you hear November? Holidays and turkey time? At my work, we are thinking about something a little different…tax planning! The tax year 2020 is drawing to a close. That means there’s still a good month left for tax planning. If you own a business, you still have time to make some crucial, time-saving, and money-saving tax planning decisions. The tax year 2020 has held some significant challenges navigating the COVID-19 pandemic. Tax planning is important; especially if your business has been significantly impacted by the pandemic. Contact your tax preparer to discuss some tax planning strategies. Next thing you know, the first quarter 2021 will be happening and it will be time to put that planning to good use.

Take the time to meet with your CPA and go over your books. Here are some tax-planning ideas to get the ball rolling:

  1. Claim quick disaster loss refunds. Businesses can claim specific losses attributable to a disaster on a prior-year tax return. This is meant to provide quicker refunds. The Trump COVID-19 disaster declaration designated all 50 states, the District of Columbia, and five territories as disaster areas. Almost every U.S. business is in the covered disaster area thus making it eligible for refunds, depending on the losses. A business may claim a COVID-19 related disaster loss occurring in 2020 on a 2019 amended return for a quicker refund. It may affect losses coming from many different circumstances, such as loss of inventory or supplies or office, plant, or store closures. The loss must actually be attributable to or caused by COVID-19.
  2. Payroll tax deductions. The CARES Act lets employers defer paying their 6.2% share of Social Security taxes for the rest of 2020. Half of it is due by Dec. 31, 2021. The second half is due by Dec. 31, 2022. Payroll taxes cannot be deducted until their share is paid. Some taxpayers may pay the taxes as late as 8½ months into 2021 but still, claim a deduction for 2020.
  3. Use above-the-line charitable deduction. In the past, there was no tax benefit for giving to charity unless you itemized deductions. The CARES Act, however, created an above-the-line deduction of up to $300 for cash contributions from taxpayers who don’t itemize. In order to take advantage of this provision, donate by 12/31/2020. 
  4. Make up a tax shortfall with increased withholding. COVID-19 caused cash-flow issues for many businesses this year. Your withholding and estimated taxes should align with what you actually expect to pay while you correct the cash flow issue. If you are in danger of being penalized for underpaying taxes, make it up through increased withholding on your salary or bonuses.
  5. Use low-interest rates and generous exemptions. Interest rates this year are historically low. Plus, lifetime gift and estate tax exemptions can still be utilized. COVID-19 is depressing many asset values but you can still use estate-planning strategies. The present gift and estate tax exemptions are scheduled to expire in a few years. 
  6. Claim AMT refunds. The Tax Cuts and Jobs Act (TCJA) repealed the corporate alternative minimum tax (AMT). Now, corporations may claim all their unused AMT credits in the tax years beginning in 2018, 2019, 2020, and 2021. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows corporations to claim credits in either 2018 or 2019. Companies have several options to file for quick refunds. They can file a tentative refund claim on Form 1139. It must be filed on 12/31/2020 to claim an AMT credit.

There are a number of tax planning strategies that may be in the best interest of your business. In order to customize your tax planning strategy, we need to meet with you, analyze the data, and discuss. The tax planning process takes some time, so don’t wait until the last minute. Contact us today and consult one of our experienced tax advisors. 

A.K. Burton, PC, can assist small business clients with their taxes. We are familiar with the CARES Act and TCJA and can advise our clients on being proactive in their tax planning by the end of the year. Call us at (301) 365-1974 for a consultation. Our office is open! We serve Bethesda, Rockville, and Montgomery County. MD area.

*** You can find more information about TCJA at the IRS website

Small Business Tax Preparation: The Five Biggest Mistakes People Make

We have finally reached the fourth quarter of 2020.

2020 has been a year like no other, especially for small businesses. Tax deadline changes, COVID restrictions, added tax laws…it’s hard to keep up with it all.

AK Burton, PC specializes in helping our small business clients keep up with their taxes. Is October the time to think about taxes? Yes. Now is the time to get in touch with your CPA if you have had an abnormal business year and plan how to close out 2020.

As you and your accountant begin the tax taking a look at your small business taxes, keep in mind these five biggest mistakes people make in small business tax preparation:

  1. Misclassifying employees and independent contractors: Misidentifying a person as a contractor and not as an employee will lead to penalties and interest for non-payment of the employer share of employment taxes. The business must give every employee a W-2, and every contractor that was paid more than $600 gets a Form 1099-Misc.  
  1. Failure to pay “reasonable wages” to shareholders of an S-Corporation: The IRS states that for the 1120S income tax return that “Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.” The shareholder plays an active, day-to-day role in the business, so, they are an employee and have to be paid a market-based salary for that position.
  1. Missing valid deductions or overstating business expenses: If your business expenses exceed its income, you may get the unwanted attention of the IRS. All of your business expenses need to be considered. IRS rules are quite strict on home office expenses as whatever is used for business should not be used for any other purposes than business. The IRS is “generous” when it comes to some Schedule C expenses. Be sure to use the depreciation schedule that the IRS has for deducting business equipment, business vehicles, and buildings. ***
  1. Improperly mixing business and personal expenses: This is one of the most common business tax filing mistakes of all. Many business clients co-mingle their personal and business banking accounts. “Co-mingling” your personal and business checking accounts makes it hard to distinguish which expenses are tax-deductible. Please keep personal income and expenses out of business bank accounts.
  1. Failure to plan: Tax laws can be complex. Most business owners are too busy running their company to understand all of the tax law nuances. A CPA or tax attorney is experienced in these matters and can help the business properly manage their accounting and business processes. Tax advice can help businesses take advantage of their resources and avoid unwanted consequences that may unknowingly occur due to the complexity of the tax laws. If you are about to incur an unusual financial transaction such as a large asset purchase or sale that is not an ordinary part of your business activity, contact your CPA to discuss the tax implications of the transaction. There may be unforeseen and unexpected tax consequences.  

At A.K. Burton, PC, our specialty is assisting small business clients with their taxes. We are familiar with the tax laws and can advise our clients on being proactive in their tax planning for now and the future. Call us at (301) 365-1974 for a consultation. Our office is open! We serve Bethesda, Rockville, and Montgomery County. MD area.

*** You can find the IRS Depreciation Form 4562 here.

How to Use QuickBooks Services for Your Small Business Accounting

In these days of COVID, (I’ll be so glad when I won’t have to use that term anymore!) it’s good practice for small business owners to do much of their accounting online using software designed specifically for them. It saves money, time, and protects them from exposure to others. 

QuickBooks *** is a popular and economical program for business owners and accountants. Its features, functionality, and ease of use are all strong reasons to use this program. 

If you are considering QuickBooks as a tool to manage your books, here are some ways you can use it:

  1. Invoice customers: QuickBooks lets you invoice your customers to decrease accounts receivable and increase cash flow.
  2. Manage bills and accounts payable: Keep updated on your bills to your vendors and suppliers by using the enter bills and pay bills function. Keeping your vendors and suppliers happy is important as well.  You don’t want to fall behind on your outstanding bills with vendors. You just enter the payment and due date. No longer do you have to write and print checks. QuickBooks online pay function is easy and efficient. Plus, it saves you money from having to buy checks.    
  3. Employee time management: Enter the employee time data on the home screen. It can be a one-time event or a weekly payroll period. QuickBooks measures employee productivity and job costing, if applicable.
  4. Payroll management: QuickBooks lets you process payroll directly or you can integrate a third party for it. You will record your outsourced payroll in QuickBooks. You can also import your payroll data from QuickBooks to the accounting firm. 
  5. Memorized transactions: You should use QuickBooks memorized transactions to automatically enter transactions that occur on a regular and predictable basis.  This can include invoices, bills, journal entries, and payments.  The idea is to boost efficiency and have certain items be entered automatically into QuickBooks.  One example of good use of a memorized transaction is a bill that you have set up to be automatically deducted from your checking account like the monthly internet payment.  By memorizing a check you can have the payment automatically post to your checking account a certain number of days in advance. 
  6. Online banking: Major banks are now integrated into the QuickBooks software. So, you can set up your business to do all its online banking through it. 
  7. Printed checks: If you do need to print checks, you can keep cash flow analysis updated. Then you can print from it. It is extremely efficient!
  8. Journal entries: You may need to correct bookkeeping issues and create year-end entries per with your CPA so it matches your tax return. These detailed entries may be necessary when you file your tax return. 
  9. Online payments: The QuickBooks Intuit Payment Network gives your customer a convenient way to pay your invoices online. 
  10. Financial reporting: QuickBooks allows you to run reports to help get a snapshot of where your small business is at the moment. Your bookkeeping will be enhanced by its financial reporting.

If you are not using QuickBooks services, you may want to consider it. For the reasons listed above it may benefit your business to look into purchasing and using a software such as QuickBooks.

At A.K. Burton, PC, we help our small business clients with their taxes. We are familiar with QuickBooks as it is one of the many software that we use to serve our clients. Call us at (301) 365-1974 for a consultation. Our office is open! We serve the Bethesda, Rockville, and Montgomery County. MD area.

*** For more about QuickBooks Small Business Services, click here.  

Ask Your Financial Advisor: Deductions for Charitable Donations During the Pandemic

Charities have been busier than ever since the COVID-19 pandemic hit back in March as millions of people lost their jobs and went on unemployment. Food banks, utilities help, rent and mortgage assistance, and other similar non-profits are dispensing everyday aid to needy citizens. 

You may have been led to donate to charities, both local and national, to help others who have fallen into serious financial straits. *** So, if you are able to give during this pandemic, there are some deductions for charitable organizations that you need to know during this time:

  1. Required Minimum Retirement Distributions Waived in 2020: For 2020, the IRS has waived mandatory distributions from retirement accounts such as IRAs. This waiver was allowed for IRA account holders to have time to recover what may have been lost during the year. You may be planning to donate retirement assets to charity, too. The minimum age for making a tax-free transfer from an IRA to a non-profit is still 70½. The $100,000 annual limit has not changed. There is still time to increase donations to charitable organizations and offsetting an IRA withdrawal with a deduction.
  2. Non-itemizers have a new $300 Charitable Deduction: Taxpayers who do not itemize deductions can now deduct up to $300 single filing or $600 for a married couple. The CARES Act was amended so that donors to charities could give a little more cash gifts which are above the standard deduction.
  3. 100% of Adjusted Gross Income Available in 2020 for Cash Gift Deductions: Charitable donors can 100% of their adjusted gross incomes for cash gifts that are made to public charities. This is for 2020 only as, historically, the largest share of income that a donor could deduct was 60%. It is a 40% increase. Just note that this is for 2020 only.
  4. Donations of appreciated securities or other property: These donations do not qualify for the new charitable contribution provisions in the CARES Act as they are not considered Qualified Charitable Contributions. The only exception is for food inventory for C Corporations.
  5. Carryover Contributions: Charitable contribution carryovers from previous years and not for the 2020 tax year are different. Now, the current year contributions are deducted first, then the carryover contributions are subject to the normal ordering rules.
  6. Philanthropic taxpayers with traditional IRA accounts: It may be more advantageous to do a 2020 ROTH IRA conversion. Qualified Charitable Contributions for 2020 may offset 100% of the income recognized on such conversions.

This year has been a difficult year for us all. We will persevere! These tax law changes benefit charitable organizations and donors. As always, before making a significant financial decision, we recommend that you discuss these changes with an experienced financial advisor. 

A.K. Burton, PC, has experienced financial advisors who can help you navigate through the numerous tax changes in 2020 due to the COVID pandemic. Call us at (301) 365-1974 for a consultation. Our office is open! We serve the Bethesda, Rockville, and Montgomery County. MD area. *** For more on the losses charities have sustained, click here.       

Business Tax: Planning During the Pandemic

As we write this blog, unfortunately, the whole CVOID-19 pandemic is still with us and maybe for a while, though we are hopeful it ends soon. 

Here at AK Burton PC, we are working with our clients to create tax plans tailored to their unique situation. Now, during the uncertainty that the pandemic has caused; it is important to answer the questions business clients have now and plan for their future. Here are a few examples of some business tax planning strategies: 

  1. Depreciate idle business equipment (idle asset): The pandemic has caused a lot of business equipment to become idle. The business owner needs to show that they plan to use them again as soon as the business returns to full operations. It is known as the “idle asset” rule. If the equipment is abandoned or disposed of then the rule is no longer in effect.
  2. Automatic changes in accounting method: A business owner can make accounting changes right up to the due date of the tax return. Such changes may include: changing the treatment of prepaid expenses, accrued compensation, advanced payments received, reviewing the class lives used for depreciation, and reviewing the application of the uniform capitalization rules on inventory.
  3. Transfer-pricing arrangements: Due to the pandemic, businesses have lost thousands or millions in sales. This has decreased cash flow. So, now customs declarations or adjustments must be revised. Thus, the transfer-pricing for goods may not be relevant due to the three-month (or longer) cessation of business due to the COVID-19 pandemic which did not provide U.S. multinational companies a way to shift tax burdens between jurisdictions. (As we always say, consult with your professional and licensed tax planning consultant.) 
  4. Review business receivables to see if there are any write-offs: A “bad debt deduction” is only allowed for debts that are worthless during the tax year that the deduction is taken. The true worthlessness of the debt and the fact that is was taken during the tax year must be determined.
  5. Inventory values: Lower-of-cost-or-market (LCM) inventory valuation may bring inventory write-downs before the inventory is sold. (See your accountant about regulations.) All inventory items must be considered separately so correct values can be determined. (A percentage write-down is allowed for accounting.) 
  6. Verify that there is adequate stock and debt basis for S Corps/Partnerships: Coronavirus Aid, Relief, and Economic Security (CARES) Act may result in increased deductions and taxes paid for potential refunds. Relief provisions come from a partnership or S corporation and the partner/shareholder must have an adequate tax basis for any deduction or loss that comes from the entity to benefit in the current year from these favorable provisions. if an additional basis needs to be created by making additional capital contributions or loans before the end of the year.

These are just a few examples that may apply to your 2020 business tax planning strategy. While COVID-19 has made tax planning even more challenging, you and your accountant can still work within the guidelines to maximize the benefit of tax planning for your business. 

A.K. Burton, PC, has experienced tax advisors who can help you with your 2020 COVID-19 business tax planning. Call us at (301) 365-1974 for a consultation. Our office is open! We serve the Bethesda, Rockville, and Montgomery County. MD area.        

*** For more information on the forms and other IRS documents, click here.

Tax Preparation Alert: Individual Taxes Are Due July 15, 2020

As you read this blog, the day is getting closer. Which day?

That day is July 15, 2020, and it is the extended filing deadline for all individual tax returns this year.

The federal government changed it to July 15 because, of course, the Coronavirus pandemic put millions out of work and set back deadlines. Now, States are reopening, and as people are returning to their job (if it is still available); it’s important not to forget this tax return filing date.

The later filing date has been a relief to many people who were laid off when the pandemic closings began. Millions were thrown out of work and have been unemployed or finding work where they can. This spring will be one for the books as it has stressed us all. Your individual Federal tax return is due July 15th. Check with your tax preparer for when your state tax return is due. Here, at A.K. Burton, PC we have been monitoring the everchanging Federal & State guidance striving to give our clients the best service possible during a period of such unprecedented legislative turbulence.  

While the three-month extension to file Federal individual taxes has given taxpayers 3 extra months to pay any tax due on the deadline, it has also given people a chance to procrastinate. Before we know it, July 15 will arrive and many taxpayers will not be ready. Let’s fix that. First, you need to send all of your tax documents to your tax preparer.

Don’t remember what documents to provide your tax preparer? Here are some tips on what to bring them:

1.    Wages and salary income (W2)

2.    State tax refunds and unemployment compensation  (1099-G)

3.    Dividend & Interest statements

4.    Stocks, bonds and other investments

5.    Rental income & Expenses

6.    Forms K-1 from Partnerships and S Corp

7. Forms 1099 (MISC) 

8. Schedule C- Business Income & expenses

9. Forms 1099-R for Pensions & IRAs

10.Property tax bills

11. Medical Expenses

12. Mortgage interest (form 1098)

13. Charitable donations

14. Moving expenses

15. Child care expenses

16. Tuition Paid (Form 1098-T)

17. Student Loan Interest Paid (Form 1098-E)   

Organize these documents. That will help your accountant or tax preparer get your tax returns completed more efficiently. Then, upload the documents to a secure link your tax preparer sent you or bring them to your accountants’ office ASAP as time is running out.

Late filings beyond July 15, 2020, may incur interest and penalties, so you may have to file an extension. Any tax you owe is due by the filing deadline. This is done by filing Form 4868. If you don’t have all your tax documents gathered, give your tax preparer all the documents you have and ask for an extension to be filed.

The main thing to remember if you have not filed your 2019 income tax returns is: See your tax preparer now! You don’t want to get any late fees or correspondence letters from the IRS.

A.K. Burton, PC, is open for business and we can prepare and file your taxes for you and your business. We are working extended hours to prepare our client’s returns.  Call us at (301) 365-1974 for a phone consultation. We serve the Bethesda, Rockville, and Montgomery County. MD area.        

*** For more information on the forms and other IRS documents, click here.  

Tax Planning During the COVID-19 Crisis

It’s the middle of May 2020, when spring is ending and summer is just around the corner. We’re looking forward to Memorial Day and the warmer weather. Unlike last year, we are in the middle of the COVID-19/Coronavirus Crisis in the DMV/Beltway area. The pandemic has put a kink in our summer plans as well as our tax plans. 

Our new normal is where some businesses are closed. Quarantines are still in place. The streets and parks are quiet. Life, as we know it, has been put on hold until the government issues new guidelines. It is only speculation as to when life will resume with the same kind of normalcy before the pandemic gripped our country. How can we possibly plan ahead in an uncertain world, let alone a tax plan?

At A.K. Burton PC, we are still open for business. We are available by phone and execute our work virtually and remotely. We are working to help our clients during this unprecedented global pandemic. Our clients are our first priority. Even though the pandemic has turned our lives upside-down here’s a friendly reminder of some tax planning strategies:  

  1. Health Insurance: If you’ve had a major change in income for 2020, and you have your health insurance coverage through the marketplace; update your income information. It may lower your monthly premiums. If you have had a major life change such as losing your job, you may qualify for a “Special Enrollment Period” and be able to enroll in health insurance coverage through the marketplace at healthcare.gov. 
  2. Home office deduction: Since the COVID-19 epidemic, you may have needed to work from home. Depending on the method your income is earned you may or may not qualify for business use of home deduction on your 2020 tax return. If you do qualify for a deduction, your office must be the square footage in your home that is EXCLUSIVELY used for business. It can not be the sofa where you watch TV or your bed where you sleep at night. Keep track of expenses for your home including electricity, WiFi, water, and phone expenses. Keep track of any office supplies such as printer ink or computer paper. 
  3. Capital gains/ losses: Keep records of your trades and holdings in stocks, cryptocurrencies, and commodities. Save all of your trade data so you can report all reportable transactions accurately. 
  4. Online software for business: In order to do business from home, you may have had to purchase or rent certain software. This may include subscriptions to Zoom or other pertinent software programs. Keep accurate records of these receipts. 

A.K. Burton, PC, has experienced tax advisors who can assist you in this unprecedented time. We are here for our clients working to file their tax returns. Call us at (301) 365-1974 for a phone consultation. We serve the Bethesda, Rockville, and Montgomery County. MD area.    

Financial Advisor during COVID-19: How to Save Money in Crisis Times

I do not like to start any blog with the term, “In these uncertain times,” but here we are.

We’ve heard that overused cliché in TV and radio commercials and it is getting old. We are all tired of the quarantine, social distancing and wearing masks and gloves. 

However, until this trauma known as “Coronavirus” is over, we have to live with it. In our position as financial advisors at A.K. Burton, PC, we care about our clients during good times and bad times. Unfortunately, it’s the bad times right now. Hopefully, sooner rather than later, life in the United States and in the DMV will return to normal. 

Until then, we have some tips on how to save money during the COVID-19 crisis: 

  1. Put all large purchases on hold: You may have planned to buy a vehicle for personal or business use. Even if it may have been a necessary purchase; if you have not signed a contract to buy it, then wait. A large car payment would become an unnecessary monthly expense. What about it you pay for it in cash? Still, not a good idea. With this novel virus, it is uncertain when business and life will be back in the swing of things. Postpone the purchase for now, unless you will put it to work right away (as a driver for UBER or delivering items) providing income for you to pay bills. Otherwise, a car payment is a burden and will take away needed funds for other bills. Avoid buying any other large purchases considered luxury items such as: furniture, boats, bikes and unnecessary home improvements until you have some money saved for emergencies and your income is steadily coming in after this crisis is behind us.
  2. Call credit card companies about payments: If you have one or several credit cards that are too expensive to pay right now, call the credit card companies and ask them to lower your payment amounts. They may even put your payment and interest charged on hold. ***
  3. Take advantage of free fitness classes: Many fitness center franchises are offering free live streaming videos. Download their app or access their website for instructions. 
  4. Sign up for free TV: Netflix isn’t the only channel offering free access. Hulu, CBS All Access, Sundance Now, Amazon Prime Video, Showtime, YouTube Premium, Xfinity Flex, and VRV all are offering a month-long free trial. Disney+, Apple TV+, HBO Now, Philo, Boomerang, and fuboTV are also offering a free week of programming. Free TV is available on apps such as Tubi TV, Pluto TV and IMDb TV. Whatever you do, don’t pay for them! Enjoy the free time and delay purchasing until later.
  5. Buy groceries and limit restaurant purchases: Of course, restaurants are not dine-in now, so consumers have decided to either get curb-side service or delivery. A more cost effective option is to buy groceries and eat at home. Eating at home is still the best and most economical choice. As much as we want to support the local restaurants, it is still as much as 25%-40% more expensive than buying groceries. Try to save even more while buying groceries by buying generic products over the name brand. 
  6. Save energy: Buy LED bulbs, lower the thermostat 2-3 degrees, pack the dishwasher and clothes washer before using, and use the microwave to heat up food. These simple measures will lower your electricity bill. 

COVID-19 has changed our world. It is a temporary situation that is continuously evolving.In the meantime, we are all doing our best. We are in this together. I encourage you to spend as little as possible and when you do spend, spend wisely. Frugality in times of crisis is not only smart, it’s common sense. 

A.K. Burton, PC, has experienced financial advisors who can assist you in budgeting during the good times and the bad times. Call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville and Montgomery County. MD area.    

*** For a list of credit card companies that may be willing to negotiate your credit card payment, click here

Why You Need a CPA to Do Your Tax Returns in 2020

Albert Einstein once said, “The hardest thing to understand in the world is the income tax.”

Even Einstein, the smartest man in the world at that time, didn’t even understand how income taxes work! So, why does the average person tackle their income tax returns every year, thinking they can do it? 

We are not elitists here as we know most people do their tax returns to save money and also to keep their earnings confidential. However, most tax filers miss important information or commit several common errors. ***

So, as July 15, 2020, (the new Tax Day date due to the COVID-19 crisis) draws closer, you may want to consider having a certified public accountant (CPA) complete and file your taxes for these reasons:

  1. The tax laws are always changing: Every year, Congress makes changes to the tax laws which are then sent to the Internal Revenue Service to enforce. Most people do not have the time or patience to keep up with these laws. CPAs keep up with all these new laws and changes and can advise you on them.
  2. Earn $200,000 or more: Top income earners are always in the bullseye for the IRS. Thus, they are more likely to be audited. CPAs can assist the high-earner in filing everything correctly and also in watching for any red flags that might bring an audit.
  3. Back taxes are owed: Your CPA will help the client find out how much they owe, how they can pay in installments and how to avoid future issues. The CPA can also contact the IRS for you, represent you to them and work out a reasonable payment plan if it is needed.
  4. Saving for children: Children may go to college or need a trust. A CPA can help you set up a trust or financial investment.
  5. Inheritance: A large inheritance of cash or property can be both a blessing and a curse. A CPA can figure out how much needs to be paid to the IRS (if any) due to inheritance taxes. They can also advise on how much to pay in the future.
  6. Side-hustle or second job: Many people have side jobs now such as Uber or Lyft or rent out a room as an Airbnb. CPAs can determine how much is owed to the IRS and then advise for future earnings and withholdings.
  7. Save money…lots of money: As we discussed earlier, many people do their own tax returns thinking they can save money from having to pay an accountant. Unfortunately, they may end up losing money by not filing complete returns or listing all their write-offs. So, they end up paying the IRS thousands of more dollars than they should have. CPAs can save them a lot of money by filing correct and accurate tax returns. 

These are just a few of the reasons you may want to hire a CPA to do your 2019 tax return and your tax returns in the future. They have the knowledge, experience, and credibility. And, they do what is best for you. 

A.K. Burton, PC, has experienced certified public accountants (CPA) on staff who can file your tax returns and represent you to the IRS. Call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville and Montgomery County. MD area.   

**For more about common errors on tax returns, visit this page at the IRS website.

March 16 is Coming: Taxes for S Corps and Partnerships

By the time you read this blog, Monday, March 16, 2020, will be even closer! No, this is isn’t “Mr. Obvious” talking here. It’s your business tax advisor sending you a notice to get on it to avoid IRS fees and penalties. 

Why is this date so important? If you own an S Corp or a Partnership, your taxes are due at that time. (Normally it is March 15 but that is a Sunday so it was moved to Monday.)  

Here are the business tax returns and their due dates: 

  1. S corporation returns must be filed on Form 1120S with Schedule K-1 for each member: March 16, 2020. 
  2. Partnership returns file a partnership tax return on Form 1065 with Schedule K-1 for each partner: March 16, 2020.
  3. Multiple-member LLC returns filing as partnerships file on Form 1065 for the partnership and give Schedule K-1 to each member: March 16, 2020.

So, be proactive and take action now. Here are six things you need to send to your tax advisor so they can file it on time for you:

  1. Year-end bank/credit card statements: Compile all of your bank and credit card statements. These should show all of your purchases and monthly statements.  
  2. Payroll tax reports: IRS Form 941 is used to report the federal income tax, Medicare and Social Security amounts you withheld from your employees’ paychecks. Also, report your portion of Medicare and Social Security on this form. Employers are responsible for making federal unemployment tax contributions. You will pay taxes on the first $7,000 earned by each employee. Employees are not allowed to contribute to your unemployment tax liability, so you cannot deduct the tax from their wages. It is filed on Form 940. 
  3. QuickBooks (or other copy of your books) copy if you have one: A copy of all your business bookkeeping. If it is Quickbooks, you send a copy of the bookkeeping records to your small business accountant.  
  4. Last year’s business return (new preparer only): If you have a new accountant, you need to include a copy of last year’s tax return. This will save, and your bookkeeper, a lot of time. You may be spared phone calls and emails from them as they can use it as a template for this year’s return.  
  5. Vehicle mileage (total & business): Submit all of your vehicle business mileage. Include business mileage and total mileage. (You may want to use an app to record all of your business mileage.)***   
  6. Details on large business purchases: Did you purchase a vehicle for your business? (truck, car, motorcycle, etc.) You may have purchased smartphones, copiers, printers, computers, cameras, etc. Any large business purchases need to be reported.   

You have enough time to get these records to your tax advisor for them to complete the forms and file them with the IRS. Please don’t delay. It will save you time, money and a phone call from the IRS, which nobody wants. 

A.K. Burton, PC, has experienced tax advisors who can advise, complete and file all of your business tax returns by March 16. Call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville and Montgomery County. MD area.

***A list of business mileage apps can be found here