Filing your tax return early may help eliminate the need to file an extension.

​Extensions of time are often required as a result of disorganization more than financial need. Some people who wait until the last minute to file their returns simply need time to look for additional deductions or gather receipts.

• Push the process too close to the filing deadline, and you increase the likelihood that you will need the help of a tax professional to help you sort your finances and complete your return.
• Even worse, if you file an extension but don't pay what you owe if you have a balance due, the IRS will charge you interest and penalties on the outstanding tax debt until it is paid in full.
• Preparing your tax return early in the year helps you avoid this situation.

When do you owe a penalty to the IRS? If you don't file your taxes when the IRS owes you money, you won't be penalized financially. However, you need to file to obtain any refund. You have until 2021 to file your return and still claim a refund on your 2017 taxes. 
If you owe money to the IRS, you need to file your tax returns and pay what you owe by April 17, 2018 for the 2017 tax year. If you can't file by the deadline, you can request an extension until October 15, 2018.
An extension on your time to file is not an extension on the time you have to pay what you owe. If you get a filing extension but don't pay your tax bill by April 18, you'll still face late-payment penalties in most cases. Penalties for failing to file your taxes and paying your taxes late are both charged in addition to any interest you owe on your unpaid tax balance.
The failure-to-file penalty is much higher. If you don't file your taxes when you owe money, you could be hit with not one, but two penalties imposed by the IRS: failure to file and failure to pay.

• The failure-to-file penalty is equal to 5% of the taxes you owe for each part of a month you're late, up to a maximum of 25% of unpaid taxes. This means if you're two days late with filing and you owe $1,000 in taxes, you could be hit with a $50 penalty. If you're more than 60 days late, the minimum penalty is the lesser of $205 or 100% of the unpaid tax.
• The failure-to-pay penalty is .5% of unpaid taxes for each part of a month you're late, up to 25% of unpaid taxes due. This is the penalty you're charged if you file on time but don't pay what you owe. However, if you request an extension to file and pay at least 90% of taxes owed, you may not be charged any failure-to-pay penalties as long as you pay the remaining 10% by the extended due date.
• The combined penalty for failure to pay and failure to file is 5% of unpaid taxes for any month in which you owe both penalties.

A quick glance at these penalties shows why it's so important that you file your taxes on time, even if you can't pay on time. In most cases, the failure-to-file penalty is 10 times greater than the failure-to-pay penalty. 

When are business taxes due in 2018?
Your business’s tax return deadline is based on its entity type, whether or not you plan on filing an extension, and if there are any weekend or federal holidays in the picture.

2018 Business Tax Deadlines for 2017 Tax Filing
Entity Type Tax Deadline
Due Date

Original deadline for partnerships (Form 1065) and S Corporations (Form 1120S) 
March 15, 2018

Original deadline for C Corporations (Form 1120) and individuals (Form 1040)
April 17, 2018

Original deadline for exempt organizations (Form 990)
May 15, 2018

Final deadline for partnerships and S Corporations (with extension)
September 17, 2018

Final deadline for C Corporations and individuals (with extension)
October 15, 2018

Final deadline for exempt organizations (with extension)
August 15, 2018

The penalty for failure to file a federal S corporation tax return on Form 1120S — or failure to provide complete information on the return — is $195 per shareholder per month. The penalty can be assessed for a maximum of 12 months.

For example, the monthly penalty for failing to file a calendar-year 2015 Form 1120S for an S corporation with three shareholders is $585 ($195 times 3). If the return remains unfiled for 12 months or more, the maximum penalty equals the monthly penalty multiplied by 12. So the maximum failure-to-file penalty for a three-owner S corporation would be $7,020 ($585 times 12).

Important Note: Many federal tax penalties are assessed based on the amount of tax owed. So these penalties cannot be assessed if the taxpayer doesn’t have positive taxable income and a resulting tax bill. However, the S corporation failure-to-file penalty can be assessed whether the S corporation produces positive taxable income or not.

​Therefore, filing S corporation returns can’t simply be ignored because no tax is owed.

The IRS treats each late filer individually and calculates penalties and interest on a case-by-case basis.  Once they've received or accepted your return, they'll figure your penalties (plus possible interest) and then send you a separate bill.
IRS Penalties

• There is no penalty if you're getting a tax refund, provided you file within 3 years of the April 18, 2016 deadline (or October 17, 2016 deadline if you filed an extension).
  • After 3 years, unclaimed tax refunds are forfeited and become the property of the U.S. Treasury.
• There is no penalty if you filed an extension and paid any additional taxes owed by April 18, 2016, as long as you file your return by the October 17, 2016 deadline.
• A late filing penalty applies if you owe taxes and didn't file your return or extension by April 18, 2016.
  • This penalty also applies if you owe taxes, filed an extension, but didn't file your return by October 17, 2016.
  • The late filing penalty is 5% of the additional taxes owed amount for every month your return is late, up to a maximum of 25%.
  • If you file more than 60 days after the due date, the minimum penalty is $135 or 100% of your unpaid tax, whichever is smaller.
  • Tip: The late filing penalty can be 10 times higher than the late payment penalty. If you can't pay your tax bill and didn't file an extension, at least file your return as soon as possible! You can always amend it later.
• A late payment penalty applies if you didn't pay additional taxes owed by April 18, 2016, whether you filed an extension or not.
  • The late payment penalty is 0.5% (1/2 of 1 percent) of the additional tax owed amount for every month (or fraction thereof) the owed tax remains unpaid, up to a maximum of 25%.
  • For any month(s) in which both the late-payment and late-filing penalties apply, the 0.5% late-payment penalty is waived.

Example: Let's say you didn't file your return or an extension by April 18, 2016, and you still owe the IRS an additional $1,000.
Best-case scenario: You file your return on April 29 (2 weeks late) and submit your payment for $1,000. You would likely owe an additional $50 for the late-filing penalty ($1,000 x .05 = $50).
(Had you filed an extension by April 18, 2016, your late-payment penalty would be only $5 instead of $50. It definitely pays to file an extension!)
Worst-case scenario: You finally file your 2015 return in April of 2021, 5 years late, and submit your payment for $1,000. You would likely owe an additional $250 for filing late ($1,000 x the maximum .25), plus possible interest.

​Tax time is nearly upon us again, and 2016 will bring some tax changes you need to know about. By learning about them before the new year, you'll be better able to take steps that will leave you prepared both this year and next. Let's look at the 10 biggest tax changes you should know about going into 2016.
1. Tax Day is April 18.
The Washington, D.C., holiday of Emancipation Day is on Friday, April 15, 2016. Under federal law, the tax deadline gets extended when it falls on a holiday or weekend, and so the tax deadline for most taxpayers will be the following Monday, April 18. For those states in New England that celebrate Patriot's Day, an even later April 19 deadline will apply.
2. Tax penalties related to Obamacare are going up again.
The Affordable Care Act imposed penalties for those not having qualifying health care coverage. Those penalties started at $95 per adult, or 1% of income above the filing threshold in 2014, but they rose to $285 per adult, or 2% of income above the filing limit in 2015. For 2016, penalties will rise again, hitting $695 per adult, or 2.5% of income. A family maximum will apply to the per-person amount, but the $2,085 amount will be substantially higher than the $975 in 2015, and the $285 in 2014.
3. Tax brackets are rising slightly.
Most of the tax brackets that govern different classes of taxpayers are adjusted for inflation. For 2016, these bracket amounts are rising by roughly 0.4%.
4. Standard deductions are going up for head-of-household filers.
The low inflation rate kept standard deductions for most taxpayers steady in 2016 from 2015 levels, including the single, married filing jointly, and married filing separately statuses. For those who qualify as heads of household, the standard deduction will rise $50 to $9,300 in 2016.
5. Personal exemptions are rising.
The personal exemption that taxpayers are entitled to take on their tax returns will go up by $50 in 2016. That will give everyone an exemption amount of $4,050.
6. Contribution limits on health savings accounts are going up.
Health savings accounts let people with high-deductible health plans set money aside on a pretax basis to cover the costs of their health care. For 2016, the contribution limit for individual policies will remain at $3,350, but the maximum contribution for family policies will rise by $100 to $6,750. A catch-up contribution of $1,000 for those 55 or older will continue to apply.
7. The Earned Income Credit is rising.
The maximum allowable Earned Income Credit will go up modestly in 2016. For those with three or more qualifying children, the maximum credit will rise to $6,269, up $27. Those with two children will get a maximum $5,572, which is up $24 from 2015, while one-child families can get up to $3,373, $14 more than last year. Those without children get just a $3 bump and can claim up to $506 for 2016.
8. The exemption from AMT is higher.
The alternative minimum tax has struck a growing number of taxpayers, making the exemption amount more important than ever. Single taxpayers will see their AMT exemptions go up $300 in 2016 to $53,900, while joint filers will see a $500 boost to $83,800.
9. The estate tax exemption is heading upward.
The lifetime exemption amount for the gift and estate tax is tied to inflation, and it is slated to rise next year as well. The exemption amount will rise to $5.45 million, up $20,000 from 2015. The limit applies to estates of those who pass away in 2016.
10. Other tax provisions could change if not renewed.
Nearly every year, lawmakers wait until the last minute to renew popular tax breaks, such as charitable distribution from IRAs, state sales tax deductions, teachers' write-offs for classroom supplies, and deductions for private mortgage insurance. As of early December, these provisions hadn't yet been renewed for 2015, but typically, lawmakers renew them retroactive to the beginning of the year. The same is likely in 2016 unless an extension provides for two years of relief rather than just one.
 

 November 15, 2015

• Open enrollment for tax year 2016 begins at the Health Insurance Marketplace.
• The open enrollment period for tax year 2015 ended on March 15, 2015.

January 4, 2016

• The Intuit Electronic Filing Center begins accepting and holding ("stockpiling") 2015 tax returns that are final and able to be e-filed.
• The IRS starts processing stockpiled returns on January 19 (a few are processed up to a week earlier for testing purposes).

January 15, 2016

• Due date for fourth installment of 2015 estimated tax payments.

January 19, 2016

• The IRS starts processing previously stockpiled returns on a first-in, first-out basis.
• The IRS will run a small number of stockpiled returns through their systems up to a week before this date for testing purposes.
  • If yours is one of them, please note that your tax refund (if any) will not be processed until after January 19.

February 15, 2016

• Open enrollment for tax year 2016 ends at the Health Insurance Marketplace.

March 15, 2016

• Deadline for filing a 2015 corporation or S corporation return or extension.

April 18, 2016

• Deadline for filing a 2015 personal, partnership, or calendar year estates/trusts tax returns or extension.
  • The return or extension must be postmarked or transmitted for e-filing by Monday, April 18, 2016.
  • To avoid late payment penalties and interest, any additional taxes you owe must be paid by this date even if you filed an extension. 
• Due date for first installment of 2016 estimated tax payments.

April 25, 2016

• Deadline for resubmitting or paper-filing a rejected federal return that was originally e-filed by the April 18 deadline if you did not file an extension.
  • Note: Although the last day to resubmit a rejected return is October 20, the April 25 deadline applies to taxpayers who owe taxes and want to avoid the late-filing penalty.
• Deadline for resubmitting or paper-filing a rejected extension that was originally e-filed by the April 18 deadline.

June 15, 2016

• Deadline for filing a 2015 personal return for U.S. citizens or residents living and working abroad, including military duty.
• Due date for second installment of 2016 estimated tax payments.

September 15, 2016

• Final deadline to file your 2015 corporation, S corporation, or partnership tax return if you filed an extension.
• Due date for third installment of 2016 estimated tax payments.

September 30, 2016

• Final deadline to file your 2015 calendar-year estate/trust tax return if you filed an extension.

October 17, 2016

• Final deadline to file your 2015 personal or C corporation tax return if you filed an extension.

October 20, 2016

• Final deadline to resubmit a rejected return that was originally e-filed on or before October 17.
  • If you're expecting a refund and miss the October 20 e-file cutoff date, you have until April 15, 2019 (October 15, 2019 if you filed an extension) to file a paper return and claim your 2015 refund.

I have had numerous business clients over the recent years consult with me on how they can make the best use of Quickbooks even though they are using an industry specific software product to record their income.

For example, as many of you may know, there is a software that is widely used called Mind Body. It is software that is tailored for businesses like Massage Therapists, Yoga Studios, Pilates Studios, etc. . They use the software to schedule their classes, collect income for classes/sessions their customers took, prepare sales tax reports, and many other functions that are similar to Quickbooks. It will not, however, generate an accurate profit and loss statement to give to your CPA during tax time.  

My clients have spent hours on the phone with technical support on both sides of the coin (Intuit and their other software company) and no one could help them sync the two platforms together.

Well I have found a solution!  I know how to generate reports from the different software companies out there, and integrate the reports into Quickbooks!

The reason why this is important is because if you were to be audited by any of the taxing authorities, they will want the to see that the two sources of data agree with each other.  It is a huge red flag if they don't!

If you are interested in seeing how I can help your business integrate your propriety software with Quickbooks, please schedule an appointment with to see how I can help your company.

Sincerely,
​Heather McTavish