"Beware the ides of March," Shakespeare wrote. Well, we have no idea what "ides" are, but we do know our tax deadlines.
Are You Prepared for the March Tax Deadline?
It never hurts to have a reminder about changes in tax laws, because each year brings new ones — especially this year.
You might have changed the structure of your business this year, which could in turn alter your filing status. For example, have you switched from an S corporation to a C corporation? If so, not only are you positioned to possibly pay a lower tax rate — a flat rate of 21% instead of the graduated scale from 15% to 39% — but your filing deadline also moves back from March 15 to April 15.
For S corps, partnerships and multiple-member LLCs, the deadline remains March 15. And don't think that the partial shutdown of the federal government will buy you any additional time. It does not affect any filing deadlines.
Also, for those who made estimated quarterly tax payments in 2018, the IRS has lowered the threshold for avoiding a penalty for underpayment to 85% of total tax liability, instead of 90% as in years past. The additional latitude is intended to help taxpayers adjust to the Tax Cuts and Jobs Act (TCJA), which had a significant impact on business owners.
How significant was the TCJA impact? The IRS has compiled a comprehensive list of the many ways in which it affects business owners. Some highlights:
- The ceiling for businesses that are eligible to use the cash method of accounting has been raised from average annual receipts of $5 million or less to average annual receipts of $25 million or less.
- New computers and peripheral equipment (placed in service after Jan. 1, 2018) are no longer considered listed property. As when the IRS removed cell phones from the listed-property classification in 2010, this is an acknowledgement of the increasingly mobile nature of many businesses. You can use your computer at home and still be working.
- Those in real estate may take advantage of tax breaks by investing in opportunity zones in economically distressed areas.
- Employers can receive tax credit for employees on paid family or medical leave. There's a caveat, however. You must have had the program in place by Dec. 31, 2018. And it won't be available after this year. So if you didn't know about it — sorry, you're out of luck. But that can serve as another good reason why you should consider using an outsourced bookkeeping service.
Efficient Tax Preparation
Seriously, the income tax code was complicated enough even before the changes that the TCJA wrought. Make sure you have the right resources to not only prepare for the upcoming tax season, but to help you stay up-to-date with bookkeeping throughout the year. A bookkeeping services professional will work with your tax preparer to ensure a smooth and efficient tax preparation process and help to maximize deductions.
To learn more about preparing for the tax deadline, please read: