Yes, the tax season is upon with the first filing date for some ... being March 15, 2005. If you can’t imagine getting your tax returns together by that date, you need not worry. The IRS automa
Yes, the tax season is upon with the first filing date for
some businesses being March 15, 2005. If you can’t imagine
getting your tax returns together by that date, you need not
worry. The IRS automatically gives you an extension if your
file the appropriate form. As you might expect, there are
different forms for different businesses.
An Important Note
It is vitally important that you understand that an
extension to file taxes is not an extension to PAY taxes.
The IRS will give you a break on the filing date, but it
wants the money now! If you anticipate that you will owe
taxes, you need to send in the appropriate payment. Failure
to do so could result in interest charges when you
eventually get around to filing your returns.
Corporations
If you conduct business as a corporation with a fiscal
year-end of December 31st, you are required to file your
2004 tax returns on or before March 15, 2005. You can get an
automatic extension, however, by filing form 7004 before the
March 15 deadline. Form 7004 applies both to “C” and “S”
corporations and grants you an automatic 6-month extension
to September 15, 2005.
While this automatic extension applies to “S” corporations,
you should be aware of a quirk in the tax code. Since “S”
corporations “pass through” taxes to your personal returns,
the six-month extension is really only a five-month
extension. To file your personal tax returns, you must
report information from the K-1 issued from the “S”
corporation. Unfortunately, the IRS only grants automatic
extensions for filing personal tax returns to August 15,
2005.
Limited Liability Company
The IRS has never really figured out to how to handle
limited liability companies. It has settled on a policy of
avoiding the issue and simply treating the entity as a
corporation or partnership.
Limited liability companies with more than one owner
typically elect to be treated as partnerships for tax
purposes. If this describes your situation, the LLC is
required to file tax returns by April 15, 2005. You can
obtain a 3-month extension by filing form 8736. Although
form 8736 contains language regarding partnerships, you will
still use this form since the IRS classifies you as a
partnership for tax purposes.
If you are the sole owner of an LLC, you may be in for a
surprise. The IRS doesn’t recognize LLCs owned by one
person. Instead, it simply considers you a sole proprietor
and the rules for sole proprietorships apply. These are
discussed below.
Partnership
If your business is a partnership, you are required to file
tax returns by April 15, 2005. You can use form 8736 to
obtain a 3-month extension.
Self-Employed/Sole-Proprietor
If you are not using a business entity, your business tax
information should be reported on your personal tax return.
The due date for filing your personal tax returns is April
15, 2005. You can obtain a four-month extension by filing
form 4868.
Summary
Regardless of how your business is organized, the IRS will
automatically grant you an extension to file your tax
returns. By sending in the appropriate form, you can avoid a
mad rush that will inevitably result in missing deductions
and overpaying your taxes. Just make sure you pay any taxes
you anticipate owing by the appropriate date.
New Law Alters Highway Use Tax Regulations: Installment Payment Option Removed
The IRS has announced significant changes to the federal highway use tax regulations, impacting truckers and owners of heavy highway vehicles. As part of the American Jobs Creation Act of 2004, the option to pay the highway use tax in installments has been eliminated. This change affects filers of Form 2290, Heavy Highway Vehicle Use Tax Return, starting from the tax year beginning July 1, 2005, and ending June 30, 2006.
IRS Approves 2006 Toyota Highlander Hybrid for Clean Fuel Deduction
The IRS has officially recognized the 2006 Toyota Highlander Hybrid as eligible for the clean-burning fuel deduction. This means that taxpayers who purchase this hybrid vehicle new in 2005 can claim a tax deduction of up to $2,000 on their Form 1040.
Gambling Income and Expenses - Taxes
Gambling income encompasses a wide range of winnings, including lotteries, raffles, horse and dog races, and casinos. This income also includes the fair market value of non-cash prizes such as cars, houses, and trips. Understanding the tax implications of gambling winnings and losses is crucial for accurate reporting and compliance with IRS regulations.
