Yes. It’s that time of year again.
As your business prepares for tax filing and payment plans during the new year, we’ve highlighted the key dates to make sure you don’t miss the deadline. Obviously, April 15th is the most recognizable tax date, but there many others that small and medium-sized businesses should be prepared for. Mark your calendars to assure you’re compliant with all filing requirements.
There are several categories that businesses must pay taxes into. The IRS at the federal level collects income and payroll taxes. Most states also collect business income tax or taxes on gross receipts. Be aware of the requirements in your state; for example, the District of Columbia and 44 states levy corporate taxes. Washington, Texas, Nevada and Ohio base their business taxes on gross receipts. South Dakota and Wyoming are the only two states that have no corporate tax or gross receipts tax for 2020. Most states follow the federal guidelines for tax due dates – so on April 15th annual federal taxes are due. Make sure you know what the filing date is for your state.
Key Quarterly Tax dates for 2021
Quarterly tax due dates for sole proprietorships and the self-employed are due 15 days after the quarter ends.
Key Annual Tax dates for 2021
Annual due dates for returns vary depending on the type of business. The structure of your organization must be decided before you file tax returns. Partnerships, LLCs and Corporations generally work through state agencies to create their status. The Secretary of State website in each state outlines how to register your business entity. Typically, these businesses file their taxes annually.
Need Some More Time?
You may request a 6-month extension from the IRS. If you’re a sole proprietor or an LLC with only a single member (owner) the use Form 4868 to request an extension. For other companies fill out Form 7004. Keep in mind that an extension request does not guarantee approval. Your request for an extension should include any estimated tax payment you anticipate being due. Use the Electronic Federal Tax Payment System (EFTPS) to pay taxes online and to request an extension.
If your extension request is approved, final completed returns and taxes must be submitted by:
NOTE: There are penalties for late payment. Even with an extension, you could be assessed an additional 0.5% of the tax due monthly until the original tax due is paid in full. There is a maximum of 25% of your total tax bill penalty allowed under the law.
Federal Insurance Contributions Act (FICA) and Federal Unemployment Taxes (FUTA) are paid more frequently. FICA contributions, which are withheld from each employee, fund Medicare and Social Security. FUTA taxes are used to fund unemployment compensation for out of work employees.
FICA taxes withheld from employee salaries are paid by employers through the EFTPS system. Small companies, with $50,000 or less in employment taxes, may make deposits monthly – larger companies make semi-weekly payments.
Federal Unemployment (FUTA) due dates are based on the amount of tax owed. FUTA tax rates are currently 6.0% of the first $7,000 in wages paid to each employee in 2020.
Employers that pay state unemployment tax receive a credit against federal FUTA taxes. Depending on the state rate paid, a credit of up to 5.4% can be applied. For most employers, the FUTA rate, after credit, is 0.6%
Employers whose FUTA tax due will be more than $500 annually make quarterly payments on or before the last day of the month after the end of the quarter. Deposit deadlines made to EFTPS.
If a business’ FUTA will be less than $500 for the year, they make a deposit annually by January 31 for the previous year. To report and pay your annual federal contribution file Form 940. Deadlines for individual state FUTA taxes may vary but tend to align with federal due dates. Be sure to check and confirm the deadlines in your area.
You can mail payments or submit them online up to 8:00 pm on the due date. Using the IRS Direct Pay gives businesses up to midnight on the due date to file and make payments. IRS Direct Pay accepts debit and credit cards. Check your local Department of Revenue to find out where to make state payments.
Of course, it’s imperative to make all state and federal tax payments on time. Why? Because if you don’t, you may be subject to fines and penalties. If you’re using a third-party provider (like us at Inside Out Taxes & Accounting) you can ask for verification that payments have been submitted.
Important Non-Payment Filing Dates
You must still file Federal and State quarterly and annual reports even if all payments were made or if no payments are due.
Federal FICA reporting Deadlines are April 30, July 31, October 31 and January 31. Federal FUTA Reporting Deadline is January 31.
And Last but not Least: W-2 & 1099 Forms
If you have employees, you must report and verify their past years’ earning to the IRS. Submit one copy of their W-2 form by January 31. You’re also required to provide another copy to the employee on or before that date. Again, if you’re using a third-party, it never hurts to verify that this step was completed on time.
If your business has used any independent contractors in the past year the IRS has a new 1099-NEC Form to submit. The new Non-Employee Compensation form is similar to the W-2 forms with some minor exceptions. This is also due on January 31.
These two forms can be filed electronically through the IRS Filing Information Return Electronically (FIRE) system.
It’s Complex – We’re Here to Help
As you know, paying taxes and submitting the required forms accurately and on-time can be overwhelming and time consuming. Many small, medium and large businesses outsource their payroll and tax requirements to us to save time and money. It’s our job to stay on top of and comply with all the state and federal tax laws. We’re a 100% accountable, trusted partner that you can depend on. At Inside Out Taxes & Accounting we focus on all the government tax and accounting requirements leaving you better able to focus on your business’ success.