tax deadline

Estimated Taxes

estimating taxes for 2016

It’s a new year, and soon it is going to be time to file your tax returns. If you aren’t certain about posting your estimated taxes for 2015, this information could help.
What You Need to Know About Estimated Taxes

It’s not just self-employed individuals who are required by the IRS to pay estimated taxes.

There are numerous advantages to being self-employed. The top benefit that most full-time, must-report-to-the-office employees most envy the most is your ability to establish your own work schedule. You don’t have the commuting expenses, nor the hassle. No endless meetings with co-workers, and no dealing with office politics.

Self-employment has one major disadvantage, though: the self-employment tax. One of the benefits of being a W-2 employee of a company is, well, the W-2, which documents how much you paid into Social Security, as well as the big chunk your employer kicked in.

Others Owe, Too
But estimated taxes are not just for the self-employed. They’re owed by anyone who has at least some income that isn’t subject to withholding by an employer. For example, if you receive interest or dividends, rent, or income from selling an asset, you are required to pay estimated taxes.

Figure 1: The IRS establishes a payment schedule for your estimated tax payments.

In addition, if you’re not deducting enough income tax deducted from your salary, pension, or other income, you’re obligated to send the IRS a payment four times a year.

This is why it’s so important that you enter the correct number of allowances on your W-4 (and even add an additional amount if necessary), and that you track all income.

Failure to submit enough income tax dollars prior to filing your 1040 – and by the IRS’ scheduled deadlines — will result in penalties, even if the IRS owes you a refund.

How to Pay
The form you use to submit your estimated tax payments depends on what type of business entity you are. If you are a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you’ll need to make quarterly estimated payments if you think you will owe $1,000 or more (after you subtract withholding and refundable credits) or more come filing time. You would use the Form 1040-ES (Estimated Tax for Individuals) to calculate and pay. Corporations should use the Form 1120-W (Estimated Tax for Corporations) if they expect to owe $500 or more when they file.

If you are sending a check or money order, you can fill out and print the vouchers included at the end of Form 1040-ES on the IRS site.

Figure 2: If you are sending a check or money order to make estimated payments, you can use these.

There are multiple ways to pay estimated taxes electronically, either by credit or debit card, or by withdrawal from a bank account. They’re listed here, and they include EFTPS (the Electronic Federal Tax Payment System), a free service provided by the U.S. Department of the Treasury.

As Always, Exceptions
There are some individuals and businesses to whom these mandates don’t apply.
Farmers and fishermen, as well as some household employers and higher-income taxpayers have different rules that are explained in the Form 1040-ES instructions.

Also, you’re not required to pay estimated taxes if:

  • You were a U.S. citizen or resident alien for all of the previous year, and
  • You had zero tax liability for the full 12 months of the previous year.

How to Estimate Your Estimated Taxes
That’s the tricky part, especially if you are self-employed or for some other reason don’t know for a fact how much you’ll owe in income tax for the current year. You can use the previous year’s return as a guide, but there have, of course, been tax code changes since then. And your income and deductions may well be different this year.voucher forms found on the 1040-ES page.

This is really an area where you should sit down with us and make a plan. This might involve running monthly or quarterly reports, creating projections, etc. These are good habits, especially if your income is unpredictable. Year-round tax planning will not only help you make those quarterly payments – it will provide a clearer view of your company’s overall financial health.

Pete DiSalvo
CPA Vero Beach, Fl
Melbourne - Titusville - VeroBeach - Certified Public Accountant

 

 

 

 

 

 

 

 

Any Tax Tips  posted here are for informational purposes only. They are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

June 16th Tax Deadline.

June 15th is ordinarily  the date that  second quarterly estimated tax payments are due, if you are self employed.  This year June 15th falls on a Sunday so this year, Monday the 16th takes on added significance.  If you are not sure whether, or how much  you should be posting for quarterly estimated payments, last week would have been a great time to Give Pete DiSalvo a call.

If you tax preparation-VeroBeach-Melbourne-Titusville-FLare still not sure at this point,  we invite you to call Pete right now! The sooner you answer this question the more Pete can do to help you minimize your taxes along with any penalty for underpayment.

Pete DiSalvo specializes in working with small businesses to help maximize profits and minimize taxes.

For those of you who like to plan ahead, September 15th is the 3rd tax deadline… Is your business ready?

Usually during the rush of tax season you have to decide upon what to base your 2014 estimates. You would have considered the safe harbors and chosen the one that best fits your circumstances at the time.

Click & let us answer all your tax questions!

Self employed taxpayers pay estimated taxes to avoid a penalty for underpayment of  tax liability. The Internal Revenue Service requires taxpayers to pay the lesser of 110% of the prior year tax or 90% of the current year tax. Generally it is easier to calculate 110% of your 2013 than to estimate 2014 income.

Now that five months of the year have passed you may have a clearer picture of your income for the year. If there has been a significant change from what you used for the first quarter estimate a re-calculation now could either save you cash flow (if you will owe less) or give you an opportunity to start paying that April 15, 2015 liability now if income is higher.

If you think there is a change in your income and would like to explore with us the possibility of a change in your estimates, please click to take advantage of our Free Consultation.  Don’t forget, Pete DiSalvo is the Dave Ramsey endorsed tax expert for small business.

Melbourne - Titusville - VeroBeach - Certified Public Accountant, forensic accounting

Have Peace of Mind During Tax Season

As we near our annual “tax season” it is a good time to pause for a moment and examine your plan. A certain percentage of American citizens are selected for a tax audit by the IRS each year no matter what. What if it happens to you? Are you comfortable that the person you are planning to have prepare your tax return is the right person to face off against the IRS with you?

Tax Season: 2014

tax preparation-VeroBeach-Melbourne-Titusville-FLAre you planning to do your own taxes, maybe with the help of some do it yourself software from a big box store? I don’t think you want “the Geek Squad” helping you navigate a tax audit, do you? Imagine then for a second, staring down the IRS auditor all by yourself.

Here is some words from  folks who are glad they did not to do it themselves when they sat across from the IRS not long ago.

“We eventually got the IRS issue settled but it was through Pete’s calm, collected attitude and pragmatism working with the agent that got me through this life event. Pete’s an honest and knowledgeable man with years of experience and with a high degree of integrity. He worked with me to compile all the paperwork and details for justification and explanation of the errors. Pete was a life saver for me and I place my faith and trust in him. I highly recommend Pete for your tax needs!”
- Frank S., Melbourne, FL

I’ll bet Mr. S from Melbourne Florida was glad he was not stuck on hold for someone in customer service over at TaxByte.com

Now is the time to examine your plan for taking care of this unavoidable chore that comes with being an American citizen in 2014. Now is the time to give the tax experts at Peter DiSalvo & Company,CPA a call to see if there is a better plan. Many of Peter’s clients find that for not much more than the cost of the do it yourself software, they can have the security, and peace of mind that comes when DiSalvo & Company takes care of this chore for you.

Call Peter DiSalvo & Company now at 772 770 6008 and arrange a better plan for 2014.

DiSalvo And Company, P.A. is a CPA firm with offices in Vero BeachMelbourne and Titusville. DiSalvo and Company is committed to meeting the accounting and tax planning needs of small business and individuals throughout the Space Coast and Treasure Coast, with clients in Brevard CountyIndian River County, St. Lucie County, and Martin County.

Melbourne - Titusville - VeroBeach - CPA-Icon

 

DiSalvo & Co. CPA Wishes You a Happy, and Prosperous 2014.

CPA in Vero Beach, Titusville,and Melbourne

from

DiSalvo & Company, CPA

Melbourne – Titusville – Vero Beach

Melbourne - Titusville - VeroBeach - CPA-Icon