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February is here and we are talking taxes! There are good reasons to file your business taxes early by filing in February. That’s because there are some benefits for doing so. You’ll be a head of the game as the IRS anticipates processing more than 150 million tax returns!
Get Money Back
Filing your business taxes in February ensures that you’ll get your tax return faster, receive the extra money you need for your business (if you’re getting a refund) and of course, avoid incurring late penalties. By filing early you can be confident you won’t miss your deadline, potentially incurring monthly charges — up to 5% of the amount owed for every month you are behind.
File an Extension
If you can’t file early, you can opt to file for an extension before March 15 or April 15 (conditional to the tax entity type). Please remember that filing for an extension gives you more leeway when it comes to sending in your returns, but you will still need to pay your taxes owed by the due date. Neglecting to pay at that time makes you subject to interest fees or late-payment penalties.
Avoid Identity Theft
Another benefit to filing your taxes early is lessening your risk of identity theft. Unfortunately for taxpayers, tax season is a prime time for identity theft with the passing of documents back and forth. Fact: Thieves can steal your identity simply by filing a false tax return using your name or your business name. Filing early keeps them from grabbing your tax refund.
Personal Tax Filing Tips
1-Getting a handle on your personal tax filing means getting all your documentation in order and double or triple checking that all your information is accurate. You don’t want your 1040 form being held up while you answer the IRS examiners questions!
2-If you own Bitcoin or other cryptocurrency you’ll want to report any cryptocurrency activity on your tax return as crypto is considered “treated property,” meaning, the general U.S. tax principles which are applicable to property transactions also apply to transactions using virtual currency.
3-If you use personal cash apps to transfer funds, they are not part of new IRS reporting rules. If you are an online business, the IRS will know how much you make this year (if you receive $600 or more being paid by a peer-to-peer app). However, your personal cash app transfers aren’t part of the new 1099-K IRS reporting rule.
4-If you are married, you may want to consider filing separate 1040s for taxes. While most married couples choose to file the single Form 1040 to make filing easier and take advantage of certain tax breaks, there are reasons you might want to file separately.
-One spouse has much more income and high-income taxpayers face surtaxes. In some cases, dividing your wages and investment income by filing separate tax returns may be worth it.
-One spouse has high medical expenses. For people younger than 65, medical expenses on Schedule A need to exceed 10 percent of your income. Splitting tax returns may be beneficial if the other spouse has enough costs to offset their separate earnings.
-One spouse has several miscellaneous work-related deductions for professional dues and fees, job-search costs, travel, etc. which meet a percentage of the adjusted income threshold (2 percent).
-One spouse has a prior marriage/family owing child support, so the IRS will collect any overdue payments out of the federal refund.
-Your spouse owes the IRS or has been previously audited. Filing separately can protect you if your spouse is taking tax-filing liberties they shouldn’t be.
Seeking Professional Assistance
When filing remember that Corporate Capital offers tax consulting and preparation through a Certified CPA and accredited IRS tax accountant, ensuring that your business remains compliant and retains corporate status. Our team is current on all IRS tax laws so you receive the most accurate and beneficial information available to you. If you are seeking assistance in keeping your books and tax records in order, we invite you to call our office at 855-371-0070 for the tax strategies you need!
Article Sources:
Top Reasons To File Your Business Taxes In February.
February 2022 tax tips
6 Signs Married Couples Should Consider Separate Tax Returns