This is a friendly tax prep public service announcement. To all of those procrastinators and do-it-yourself-ers: February is almost over, which means you are down to just over a month to ensure you have everything together to file your 2019 taxes. Lucky for you, we are here to help and we have compiled some things to think about to help kick you into tax gear.
Personal and Business Are Intertwined
Personal filing is very much married to business filing, so there are a number of things to keep in mind when filing your taxes. Comb through personal expenditures to spot items that will apply to your business filing. There are items that may not have been reimbursed by the business (and/or your employer). If you did any side gigs or started additional businesses, this will also affect your filing. You will need business info, 1099s for side gigs, W2’s from employers and any associated expenses and revenue to report for each.
On the personal side, changes to personal scenarios will have an effect on your taxes. Items like a new baby/dependent, mortgage payments or income from selling a house, health insurance, childcare costs, property tax payments and more. You will need the associated forms and information for these as well.
Timing is Everything
If the first thing you are thinking is, “uh oh, this is coming up too quickly, I haven’t prepared anything”, that’s not great, but you have some options. If you really need to, you can file an extension. Keep in mind, this doesn't get you out of paying. When you file your extension, you will still need to pay an estimate of what you owe, so you still need to invest some time into getting your tax items organized. To read more info and file an extension you can go to the IRS page here .
(Extra) Last Call: 1099s
As a small business owner, your 1099 ship has essentially sailed. The deadline for getting 1099s to your contractors has passed. For the classic 1099 MISC with box 7 filled out under “non-employee compensation”, your due date was Jan 31, 2020. Depending on which type of 1099 you are needing to file, you may have a smidge of time left before penalties happen. For some less common 1099s, like DIV (Dividends & Distributions), INT (Interest Income) , and R (Distributions from Retirement funds, Annuities, etc), you have until February 28th, if filing by mail, and March 31st if filing electronically.
As with any important project with a due date, it’s best not to wait until the very last minute. Penalties can add up for late filing. It starts at $50 for more than 30 days and adds up to $550 for neglecting to file altogether. You're better off getting them filed and paying the penalty than thinking you can sweep it under the rug.
Having your bookkeeping up to date is key to understanding who needs a 1099 from you. Accountfully can help on that end. We even offer services to handle the 1099 challenge for you. To further demystify the 1099, read our recent article on here.
Revisiting the 2019 Checklist
Back in late December, we reminded our readers that there are still some items to take advantage of for 2019 taxes. Here is a quick rundown. Did you do any of these things, or did any apply to you? You can read the full rundown on each item in our 2019 Tax Tips Checklist:
- Increase your 401k contribution
- Increase your IRA contribution
- Set up a Health Savings Account
- Contribute to a 529 plan
- Opportunity Zones
- Charitable Contributions
- Estimated tax payments
- Sell Investments That Are at a Loss
- Open a Donor-Advised Fund
- New Alimony rules
Depending on how these items apply to you, you may be able to decrease your tax liability for 2019’s filing. Make sure to have any forms or documents handy relating to them.
It’s All OK, Accountfully Can Help
If this all just sounds too overwhelming and you need some tax questions answered by a pro, we are here to help. Accountfully has tax planning packages that simplify and enhance the tax filing process. In addition to preparing and filing your taxes, we offer quarterly tax packages that will maximize deductions, expedite tax returns and provide year-round tax support.
Don’t hesitate to reach out to see how we can help you navigate the tax return process and be better prepared for next year's filing. Tell us about your business and we will see how we can get you on track for taxes.