5 Cautious Tax Tips for Small Businesses

With 2016 quickly coming to an end, it’s quite common for small businesses to review their tax and financial documents around this time of year. Many of you may have to file with the IRS as early as January, so it’s best to get ready at least before the holiday break.

While preparing for the upcoming tax season, there’s unlimited amount of tax advice for small businesses you can find on the Internet - some great, others not so much. To avoid the risk of IRS fines or penalties, here are five “tax tips” you should think twice before using.

1. Maximize Deductions with Business Spending
As the end of the year approaches, you might be enticed to crank up your spending habits to drive deduction claims and decrease your tax bill. Before going all out, think about the long-term effects of these additional expenses. Buying new equipment or an advertising initiative will cut down tax liabilities, but if those costs hinder your company from paying bills the next month, you’re taking more of a financial loss than gain.

2. Claim Car, Meals, and Home Office Expenses
It’s perfectly reasonable for you to claim travel expenses, meal costs, and a home office as a business expense; however, the caution lies within claiming expenses that are unqualified. The IRS states you can only deduct vehicle costs for business use.

You can claim up to 50% of meals and entertainment costs for business purposes and claim costs for maintaining a room in your house dedicated specifically to conduct business. The point here is that personal spending is prohibited - these are costs charged to your company. And be prepared to provide evidence with receipts, the business purpose of each cost, and who might have been with you when making the purchase.

3. File All Employees as Independent Contractors
Rumor is that reporting employees as independent contractors saves money on payroll taxes. While this may or may not be true, facts show that it leads to penalty fees and interest charges as well. The IRS clearly states which of your workers are considered regular employees and which are independent contractors. Once the IRS finds out, you could end up paying a lot more than what you were trying to save.

4. Avoid Claiming Deductions At All
There is such a thing as being overly cautious, and in this case, it could prevent tax claims that you’re entitled to have. Fears of possible audits shouldn’t deter you from claiming legitimate deductions. You can always seek assistance from a tax professional or CPA about which claims you’re eligible to file.

5. Wait Until Tax Season to Worry About Taxes
If you follow this “advice,” you probably wouldn’t be reading this blog at all. We understand that the daily operations of running a business take hard work and lots of time, but federal taxes are also an important aspect of owning a small business. Tax preparation is never a one-time event. Successful, less-stressed business owners know to plan throughout the year to have a smooth tax season. At the very least, consider outsourcing to a tax firm if necessary.

If you need more time to file for your small business, e-file IRS Form 4868 with ExpressExtension.com - you can get approved quickly and easily for a 6-month extension to file income taxes; larger companies are eligible to submit an IRS Form 7004 tax extension. You won’t even need to step away from your operations - download our FREE Express 4868 or 7004 mobile app and conveniently e-file anywhere using your iOS or Android device.

Call our U.S. - based support team for questions or help with your e-filing experience at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST - send us a request via email with support@ExpressExtension.com.

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Adjusting Payroll Withholdings

We’re nearly two weeks away from the end of the year - just two weeks! Honestly, where does the time go? Tax season typically begins again at the start of the new year, but you still have time right now to make changes regarding your tax situation.

If you received either a large tax bill or a substantial tax refund this past year, that means one of two things: you either didn’t have enough taxes taken out of your paycheck, or you had too much come from your pay. The good news is you can adjust these amounts.

Change Your Withholdings
The IRS has no limits on how often you change your withholdings; however, your employer or payroll office may impose restrictions - you should check to be sure. And be well-informed of the long-term effects of the changes you’re willing to make.

While overpaying the IRS isn’t a drastic nuisance, it does allow the government interest-free access to your money which you could probably have used at that time. Conversely, paying the IRS too little can lead to all sorts of trouble like an under-withholding penalty and interest added to your tax bill - consult with a tax professional about your options.

File IRS Form W-4
Whatever you decide to do, it’s as simple as submitting a new W-4 form to your employer or payroll office. The IRS even offers an online withholding calculator which produces proper amounts that should come from your paycheck. If you plan on using it, be sure to have

• Your most recent pay stub available
• Your last income tax return available
• Estimated values, if applicable - results are only as accurate as the information you provide

Married couples with combined income should also coordinate separate withholding amounts to avoid underpaying the IRS - seek your local tax advisor for more details.

More Time to File Income Tax
Whether you decide to change your tax situation now or closer to tax season, you can receive extra time to file your income tax return. With ExpressExtension.com, you can securely transmit IRS Form 4868 in just a few minutes and get approved for an automatic 6-month extension.

Nowhere near a computer - not a problem! Download our FREE Express 4868 mobile app for your favorite iOS or Android device and conveniently e-file from anywhere at any time. After transmitting, you’ll receive an approval email and copy of your submitted return.

Contact our U.S - based customer support team for any questions or assistance with e-filing personal tax extensions with the IRS - call us at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST. You can also reach us via email with support@ExpressExtension.com.

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IRS 8809 Extension for Information Returns

Believe it or not, we’re about two weeks away from the end of 2016. And while most of us are getting excited about the holidays, let’s not forget that tax compliance starts rather quickly after the new year - as soon as January to be exact.

If you’re not quite prepared to file by the end of January, or you’re just overly cautious, we recommend e-filing an IRS 8809 extension form for an automatic 30-day extension to file required information returns. Here are a few tax forms that are eligible for an 8809 extension:

IRS Form 1099 and W-2s
A couple of information returns are due earlier this upcoming year than usual. Those of you who need to e-file Form 1099-MISC with Box 7 completed or W-2 forms with the IRS have until January 31. All other 1099 forms are still due by March 31. You can e-file 1099s and W-2s quickly and easily with ExpressIRSForms.com.

Important: The IRS no longer allows automatic extensions for W-2 forms. To receive extra filing time, you must submit a paper Form 8809 to the IRS before the January 31 deadline.

Affordable Care Act (ACA Forms)
While there may be confusion about the future of ACA reporting, one thing is for certain - the IRS still requires applicable large employers and third-party administrators to file 1094 and 1095 forms for the 2016 tax year.

If you plan on submitting them electronically, the deadline is March 31. E-file your ACA forms with ease through the complete service of our sister site, ACAWise.com - exclusive features include API integration, various data format import, ACA code and TIN verification, corrections and re-filing, and postal mailing to recipients.

Form 1042-S and 5498
IRS Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is due by March 15 and Form 5498, IRA Contribution Information, is due by May 31. Your 8809 must be submitted by these deadlines to receive an extension.

IRS Penalties
Failing to file IRS Form 8809, or any of the information returns, on time leads to the following penalties:

• $30 per information return that is less than 30 days late with a maximum fee of $250,000 annually or $75,000 for small businesses
• $60 per information return that is within 30 to 120 days late with a maximum fee of $ 500,000 annually or $200,000 for small businesses
• $120 per information return that is over 120 days late with a maximum fee of $1,500,000 annually or $500,000 for small businesses

The holidays are just around the corner with a new tax season following close behind. Get your tax extension automatically approved for applicable returns with ExpressExtension.com. Our U.S. - based support team in Rock Hill, South Carolina is standing by - contact us with any questions at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m EST or send an email to support@ExpressExtension.com.

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Schedule A Tax Deductions

When it comes to claiming tax deductions, most taxpayers go for the standard method with their income tax return - it’s usually easier than itemizing, there are no receipts to backtrack, and amounts typically increase each year for inflation.

But, in most cases, itemized deductions can get you a bigger tax break and possibly a larger refund. Completing a Schedule A for deductions may require more effort than the standard method, but you only need to fill out the sections that apply to you.

Here are a few deductions from Schedule A that might be worth your time around tax season:

Gifts to Charity
You can report just about every charitable contribution on Schedule A. They can be cash donations including credit charges and checks, or other donations like household items and clothing. Whatever gift you gave, be sure to have a receipt from the charitable organization as proof.

Medical Expenses and Dental
Even with insurance, you still have out-of-pocket costs to pay each time you visit your doctor or dentist. It’s no secret you can total these amounts and claim a deduction. The only catch is that the value must be at least 10% of your gross income if you’re under 65 years of age.

State and Local Income/Sales Tax
If you’re paying state and local income taxes, you can get a deduction from those payments. But if your state income rate is low, and you made a huge purchase this year for a vehicle or something, you may just want to report the sales tax. The reason is you can only deduct one or the other - income tax or sales tax.

Property Tax
Homeowners can deduct the amount from their annual property tax bill as well as real estate taxes on any vacation homes or land you have for personal use. Those who pay taxes on various vehicles can deduct those amounts as well.

Losses from Casualty or Theft
Earlier this year, Hurricane Matthew pounded the east coast of the United States. Any recovery costs spent from a major disaster is tax deductible - the same goes for expenses from an unexpected accident or being the victim of a crime.

These are small glimpses of deductions that are available for taxpayers each year with a Schedule A. There are much more options like interest or insurance premiums, unreimbursed job expenses - you can even deduct costs from tax preparation fees. Check with your local tax professional for more details.

And if you need more time to get your itemized deductions together, e-file IRS Form 4868 with ExpressExtension.com. In minutes, you can transmit a personal tax extension and get approved for six extra months to file your income tax return. Download our FREE Express 4868 app and e-file from anywhere using your iOS or Android device.

Contact our U.S. - based support team in Rock Hill, South Carolina for any questions or assistance with e-filing tax extensions - we’re available at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST or email us day or night with support@ExpressExtension.com.

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Filing Joint 4868 Tax Extensions

Extension Form 4868 is a tax extension that extends the IRS deadline for personal income tax returns. The 4868 form is typically due before April 15 and increases your time to file by six months to October 15.

The IRS doesn’t require any explanation why you’re requesting an extension; however, you do need to accurately estimate any tax liabilities you may owe for the filing year, if applicable. Individual or joint taxpayers can submit IRS Form 4868.

Extension for Joint Filers
To file a joint tax extension, you’ll only need one 4868 form. You’ll also need basic information such as full name, address, and social security number - not just for yourself, but for your spouse as well. If you want to confirm personal tax details for you or your partner, you can contact the IRS at 800.829.1040.

Joint Tax Liabilities
If you and your spouse filed separate 4868 forms but decided to file your income tax return jointly, you can report the total amount of estimated taxes paid from both extensions on the correct line of your joint return.

Conversely, if you all file an extension jointly, but ended up filing separate income tax returns, you can report the total amount of taxes paid on one of your tax returns - or you and your spouse can divide the value on both.

E-file Form 4868 with ExpressExtension
Our cloud-based system and step-by-step instructions quickly guide you through the simple e-filing process - we even double-check to ensure your information is correct. After completing Form 4868, you can transmit it through our IRS-authorized, secure network.

We’ll keep you updated about your filing status with real-time email notifications, but approvals typically happen within minutes. If the IRS rejects your request because of errors, we’ll identify them so you can make changes and re-transmit at no extra charge.

Mobile E-filing
File a joint extension from anywhere at any time with our FREE downloadable Express 4868 app for your favorite iOS or Android tablet and smartphone devices. Utilize the same streamlined features to conveniently e-file directly to the IRS, and get approval, without a desktop computer.

For any questions or assistance about e-filing a joint personal tax extension, call our U.S. - based customer support team at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST. You can also email us 24/7 with support@ExpressExtension.com.

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