Welcome to STA’s most recent blog with the goal of clearing away financial fog!
Now that we’ve laid a foundation of knowledge about filing taxes as an individual and/or a small business owner, we’re going to explain when taxes must be filed and the repercussions for failing to do so!
Income Tax:
Late Payment or Failure-To-Pay penalties apply to any portion of your tax debt that remains outstanding as of the DUE DATE.
The IRS imposes a FAILURE-TO-PAY penalty of 0.5% for each month or “part of a month” that the tax debt goes unpaid, up to a maximum of 25% of the remaining amount due.
The penalty for LATE FILING is 5% of your unpaid taxes as of the filing date. That 5% penalty is applied each month or “part of a month” that your return is late, and it stops at 25% (maximum) of your unpaid tax debt.
The penalty concept is similar for Corporations, however: even if a Corporation has no taxable income to report, the IRS charges a penalty of $100 once a Corporate return is more than 60 days late!
Estimated Tax (on Income Tax) Underpayment:
Once a Quarterly due date for Estimated Tax Payment (1040-ES) has passed, the IRS will apply 0.5% for the entire amount you owe. For each partial or full month that you don’t pay, the penalty increases. It's also capped at a maximum 25%.
Here is a breakdown of specific tax dates you should be aware of…
January 17, 2023
Deadline for Q4 2022 Estimated Tax Payment.
You don’t have to make this payment if you file your 2022 federal tax return and pay any tax due by January 31, 2023. (Otherwise you may receive a penalty for no 2022 Q4 1040-ES)
January 31, 2023
If no Q4 2022 Estimated Tax payment, deadline to FILE 2022 Income Tax Return and Pay All Tax Due
Deadline to SEND W-2s, 1099-MISC, and 1099-NEC to EMPLOYEES, CONTRACTORS and the IRS.
March 15, 2023
Deadline to file Partnership & S Corp tax return (or extend them)
Deadline to provide each partner or shareholder with a copy of their Schedule K-1.
Deadline to file Form 2553 to make an S corp election for the calendar year 2023.
If the election is made after this date, S corp treatment will not begin until the calendar 2024.
April 18, 2023
Tax Day. The deadline to file (or extend) 2022 Form 1040 and pay any tax due.
Individuals, Sole Proprietors, C Corporations, and Disregarded Entities.
If you extend, you must STILL MAKE A PAYMENT if you estimate you owe by April 18 to avoid penalties!
Deadline for Q1 ESTIMATED TAX PAYMENT (Individual or Corporate).
Contributions to traditional and Roth IRAs for the 2022 tax year must be made by April 18, 2023.
April 18 is also the deadline to open and fund a Health Savings Account (HSA).
June 15, 2023
U.S. citizens/resident aliens living and working outside of U.S. or Puerto Rico have until this date to file (or extend) Form 1040 and pay any tax or fees due.
This is also the due date for Q2 2022 ESTIMATED TAX PAYMENTS
We are currently here!
September 15, 2023
Deadline for making Q3 2022 ESTIMATED TAX PAYMENTS.
Deadline to file Partnerships and S Corps EXTENDED 2022 Income Tax Returns
Also, deadline to for Partnerships & S Corps to deliver partner/shareholder Schedule K-1’s
October 16, 2023
Deadline to file all Individuals and C Corps EXTENDED 2022 Income Tax Returns
December 15, 2023
Deadline for CORPORATIONS to make a Q4 2022 ESTIMATED TAX PAYMENT.
“Individuals” have until mid-January to make a 1040-ES payment, or fully file by Jan 31st.