The summer is quickly drawing to an end and we’ll soon have to start thinking about taking our sweaters and boots out of storage. Although September 2020 may be different from every other September we’ve ever experienced, some things won’t change much. Leaves will soon begin changing color, students will go back to school (albeit most of them virtually), and the fall tax deadlines for businesses and individuals will be upon us.
Making sure you have the right tools and information isn’t the most exciting thing. But it will help you prepare for the uncertainty surrounding this year’s taxes and regulations.
So, are you ready for the next deadline?
September 15, 2020
Quarterly estimated tax payments for the period from June 1 to August 31, 2020. Your expected gross income, taxable income, deductions, and credits for the current year all factor into calculating your total estimated taxes. Hence, est. tax payments usually end up being four equal installments paid throughout the year. Altogether, these contribute to your required annual total.
“You may be able to make smaller payments under special circumstances, like if you have a seasonal business for example,” notes Randy Newton, Lodestar CFO and tax expert. “You should always speak with an experienced tax advisor to help you determine the correct amount to pay and how to avoid common pitfalls.”
Payments are typically scheduled for April 15th, June 15th, September 15th, and January 15th of the current year. Ideally, sufficient federal income tax payments should be made long before the annual April 15th filing deadline. (In 2020 this deadline was extended to July 15th.) This can be done through withholding, estimated tax payments, or a combination of the two.
Note: If a business or individual fails to make the required payments, they may be subject to an underpayment penalty, as well as interest.
Self-employed individuals and those who don’t apply enough withholding directly from paychecks. You generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.
Tip: Partnerships and S corporations that requested an extension must submit their final 2019 returns by the September 15th deadline.
As a general rule:
- If you expect to owe at least $1,000 in tax after subtracting tax withholding and credits and
- That withholding and credits will be less than 90% of your tax for the previous year,
This applies to you. Even if you do have some withholding from your paychecks or payments received, you may still need to make estimated payments if you earn other types of income like rent and dividends.
The easiest way to pay estimated taxes is electronically through the Electronic Federal Tax Payment System. You can also pay by credit/debit card, or by check or money order using the Estimated Tax Payment Voucher.
Why are tax planning services essential now more than ever?
2020 brought higher levels of uncertainty for individuals and businesses alike. While nothing can truly prepare you for a recession or a global pandemic, knowing the important tax dates and deadlines can help. This, in addition to seeking the advice of a qualified tax expert, will help you mitigate negative effects on your finances.
Randy has some advice for small business owners in particular. “I recommend putting all the tax deadlines for the following year in your calendar now. Start your plan for those payments before the end of the year. Careful planning іѕ crucial if you want to kеер the tax оblіgаtіоnѕ for your buѕіnеѕs low, no matter what your product or service is.”
This year more than ever, the limited tаx planning ѕеrvісеs of most tax accountants just won’t cut it. Choose Lodestar’s strategic tаx-ѕаvіng ѕtrаtеgіеѕ and holistic perspective to help you get ahead in 2021 (and beyond).
Carefully planning and preparing for tax deadlines is critical to help you avoid the last-minute rush. Or worse, the penalties that can come your way if you miss them. But complying with deadlines is only the beginning. At Lodestar Taxes, our unique philosophy helps our clients manage risks, improve performance, and ensure the growth and longevity of their wealth.
Call us at +1 704-981-4602 or drop us a line to hear back from us within 24 hours.