April 17 is the Due Date for Individual and LLC Tax Returns

It doesn’t matter who you are or what you do; you probably need some tax return help if you’re going to resolve all your IRS issues by the deadline to avoid penalties, fees, audits and other negative consequences. Whether you are an individual, the sole proprietor of a business or involved in an LLC partnership, you will be affected by the April 17 tax deadline this year.

Individuals and Independent Business Owners

While some individuals can get away with filing their own simple tax returns, most of us are not so lucky. As our lives get more complicated, so do our taxes. Matters get particularly tricky for sole proprietor business owners. If you are the sole proprietor running a business and have no other partners helping you, the business is technically considered an extension of you as an individual. Whether you are an individual or a sole proprietor, the tax deadline will be the same this year – April 17. You’ll probably need to get some help if you want to avoid any egregious errors, and if you’re not a financial expert, you’ll also want to avoid pulling your hair out over the stress of preparing your tax return on your own.      

Partnerships

Just about the only thing that partnerships and individuals have in common as far as taxes go is the filing deadline – just like individuals and sole proprietors, partnerships are also required to file their tax returns and pay any money owed to the IRS by April 17 this year. Partnership returns are filed on Form 1065, which is an information return, and the tax payments are determined through individual K-1 partner returns, which are typically due on April 15. This year, the deadline is April 17. Multiple-member Limited Liability Companies, or LLCs, are taxed the same as partnerships. Single-members LLCs, on the other hand, are taxed the same as individuals and sole proprietorships. In either case, the filing deadline is the same.  

Many San Diego businesses have failed to get their taxes in order and have faced consequences as severe as being forced to close their businesses, either temporarily or permanently. Individuals have also faced tough consequences, ranging from stressful audits to seizures of property and money straight from their bank accounts. This is why it’s so important to get San Diego tax help from a firm like Allen Barron before things get out of hand. Qualified professionals are ready to offer the kind of specialized San Diego tax help that individuals, partnerships and corporations need.  Please give us a call at (866) 493-5400 for a complimentary, initial consultation to review your tax needs with one of our tax professionals.

The deadline for corporations that are on a regular calendar year-end to file their corporate tax returns is TODAY (March 15^th, 2012). 

The estimated tax payment for corporations is due on April 16^th, 2012.

If you need additional time to file your return, you can request an automatic 6-month filing extension on the IRS website through Free File at www.irs.gov/freefile.

PLEASE NOTE:  This extension gives you additional time to file your tax return.  If you owe any money to the IRS, you should make an payment of the estimated amount due to avoid additional penalties and interest.

The IRS is also encouraging small business owners who provide health insurance coverage to their employees to check out The Small Business Health Care Tax Credit at www.irs.gov and to claim it if they qualify.

For assistance with your tax preparation needs, please contact us at (866) 493-5400 for a complimentary, initial consultation with one of our seasoned tax professionals.

As a business grows, it becomes more important to get tax help from a skilled professional to avoid careless mistakes that could cost a lot of money. This is something that most successful San Diego businesses have long since learned, and that up-and-coming businesses are quickly learning as they expand. Tax returns vary greatly depending on what type of business you are involved in, such as a sole proprietorship, LLC partnership or corporation. If you and your business are responsible for filing corporate tax returns, it would be wise to get some help, especially if you are affected by but haven’t yet prepared for the next big deadline that’s coming up on March 15. 

S-Corporations

If your corporation has filed a Subchapter S election, then you should definitely be concerned about the upcoming tax deadline. Organizations like yours are taxed through individual tax returns based on the traditional end of the calendar year, although there are a few rare exceptions where S-corporations may choose a different end-of-year date. Since your tax returns and payments are due on the 15^th day of the third month of your business year, the March 15 deadline certainly applies to your business in this case. If you haven’t contacted a San Diego tax consultant yet, it’s about time you do so. 

Traditional Corporations

If your business is considered a corporation but has not filed a Subchapter S election, then you have the option of choosing any convenient date for your end-of-year. Many businesses still opt for the traditional December 31 date, though, and if you fall into this category, then you will still be required to file your tax returns and make any applicable payments by March 15. If you chose another date, then you will need to figure out what the 15^th day of the third month from your end-of-year date is to determine when your taxes are due.  

Other Types of Business Taxes

If you are the sole proprietor of a business, then you will be responsible for filing and paying your taxes by April 17 like everyone else, since your business is considered an extension of you. Most partnerships, including single- and multiple-member LLCs, are also responsible for filing tax returns and making tax payments by the traditional April deadline. All of these business types have their own unique and complex tax requirements, though, so you’ll be better off if you get help from a San Diego tax consultant like Allen Barron.  Please give us a call at(866) 493-5400 for a complimentary initial consultation and help with your tax filing needs.

Janathan L. Allen, Esq., tax attorney and partner at Allen Barron, Inc. and Janathan L. Allen, APC, was recently on KFMB AM 760 on the “It’s Your Money, Not Theirs” radio show with host Joe Vecchio and Richard Muscio, CPA. Ms. Allen and Mr. Muscio reviewed Mitt Romney’s 2010 tax returns (203 pages!) and discussed why he did not pay that much income tax as a function of his total income.  The show aired on 2/5/2012 at 7:00 PM.  To listen to this interesting and informative show, please click here.

In 2010, Mr. Romney had an adjusted gross income of $21,646,507, interest income of $3,295,727 and income from dividends of $4,923,348. About 70% or $3.4 million are qualified dividends taxed at 15% rate. His biggest income element was $12, 573,000+ which was primarily long-term capital gains. About 75% of his income was subject to 15% tax rate per Income Tax Code. Criticism in the press has been that Mr. Romney has over $20 million in income but pays less than $3 million of income tax every year. 13.9% of his adjusted gross income was amount of income tax paid. As President Obama mentioned in his recent State of the Union address, Warren Buffett’s secretary pays more income tax than Mr. Buffett does. Is that fair? It really comes down to perception of what type of income being taxed. Most of Mr. Romney’s income is coming from taxable interest or dividends. Essentially that’s income that’s been taxed twice. Dividends were taxed once at corporate level, then distributed out to shareholders who then pay tax on it again. The interest income is the interest is earned on whatever particular investments he has. It’s consistent with the income tax code, which says what the rate on this type of income is going to be taxed at.

The reason Mitt Romney did not pay that much income tax as a function of his total income were due to the income tax provisions that were only extended for 2 years at the end of 2010, which are due to expire on December 31st, 2012. This includes a 15% maximum tax rate on long-term capital gains and the 15% qualified dividends rate . The income tax provisions affect anybody with long-term capital gains and qualified dividends. Many smaller income earners have both those things, but in smaller amounts than Mr. Romney’s income tax returns.

Also, the other thing that may yet change dramatically is the estate and gift tax exemption, which has grown to $5 million dollars. So this year in 2012, you can give away or die with $5 million dollars and pay no estate tax or gift tax; however, if that provision is allowed to sunset, that exemption amount will only be $1 million dollars and further, the gift tax and estate tax rate will go from 35% to 55%. So there is huge uncertainty in the income tax as well as the estate and gift tax code right now. Certainly, the estate and gift tax exemption only applies to very wealthy people; however, bear in mind that if that gets reduced to $1 million dollars, for husband and wife, that is only $2 million dollars of assets.

Please take a moment to listen to the show and send us your thoughts.  You can reach us through the contact box on our web page at www.allenbarron.com or you can call us at (866) 493-5400 for assistance with your tax returns.