SDC Tax and Business Services

January 1 – 31 – Employee W-2s

Give your employees their copies of Form W-2 for 2008 by February 2, 2009. If an employee agreed to receive Form W-2 electronically, post it on a website accessible to the employee and notify the employee of the posting by February 2.

January 1 – Earned Income Credit

If you are an employer and have employees receiving advanced Earned Income Credit payments, stop making those payments unless they provide you with a new Form W-5 for 2009.

January 5 - Time to Call For Your Tax Appointment

January is the beginning of tax season. If you have not made an appointment to have your taxes prepared, we encourage you do so before the calendar becomes too crowded.

Do not be concerned about having all your information available before making the appointment. If you do not have all your information, we will simply make a list of the missing items. When you receive those items, just forward it to us.

Many of our clients find this far more convenient than waiting and getting caught up in the February crunch.

We look forward to hearing from you.

January 15 – Farmers & Fishermen Estimated Tax Payment Due

If you are a farmer or fisherman, it is time to pay your estimated tax for 2008 using Form 1040-ES. You have until April 15, 2009 to file your 2008 income tax return (Form 1040). If you do not pay your estimated tax by January 15, you must file your 2008 return and pay any tax due by March 2, 2009   to avoid an estimated tax penalty. Generally, this due date is March 1, but when the due date falls on a Saturday, Sunday or Holiday, it is not due until the next business day.  

January 15 – Employer’s Monthly Deposit Due

If you are an employer and the monthly deposit rules apply, January 15 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for December 2008. This is also the due date for the nonpayroll withholding deposit for December 2008 if the monthly deposit rule applies.

February 2 – 1099s Due To Service Providers

If you are a business or rental property owner and paid $600 or more for the services of individuals (other than employees) during a tax year, you are required to provide Form 1099 to those workers by February 2. "Services" can mean everything from labor, professional fees and materials, to rents on property. In order to avoid a penalty, copies of the 1099s need to be sent to the IRS by the last day of February. They must be submitted on magnetic media or on optically scannable (OCR) forms. This firm prepares 1099s in OCR format for submission to the IRS with the 1098 submittal form. This service provides both recipient and file copies for your records. Please call this office for preparation assistance. Generally, this due date is January 31, but when the due date falls on a Saturday, Sunday or Holiday, it is not due until the next business day.  

February 2 – Employer’s Reporting Requirements
Generally, this due date is January 31, but when the due date falls on a Saturday, Sunday or Holiday, it is not due until the next business day.  

W-2 Due to All Employees - All employers need to give their employees copies of the W-2 form for 2008. If an employee agreed to receive their W-2 form electronically, post it on a website and notify the employee of the posting.

File Form 941 and Deposit Any Undeposited Tax - File Form 941 for the fourth quarter of 2008. Deposit any undeposited Social Security, Medicare and withheld income tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return.

Certain small employers - File Form 944 to report social security and Medicare taxes and withheld income tax for 2008. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more for 2008 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return.

File Form 943 – All farm employers should file Form 943 to report Social Security, Medicare taxes and withheld income tax for 2008. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

W-2G Due from Payers of Gambling Winnings - If you paid either reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of the W-2G form for 2008.

File Form 945 - File Form 945 to report income tax withheld for 2008 on all non-payroll items, including back-up withholding and withholding on pensions, annuities, IRAs, gambling winnings, and payments of Indian gaming profits to tribal members. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

File Form 940 -Federal Unemployment Tax - File Form 940 (or 940-EZ) for  2008. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.

Annual Information Statements – Give annual information statements to recipients of certain payments you made during 2008. You can use the appropriate version of Form 1099 or other information return. Payments that may be covered include the following:

• Cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish
• Compensation for workers who are not considered employees (including fishing boat proceeds to crew members)
• Dividends and other corporate distributions
• Interest
• Amounts paid in real estate transactions
• Rent
• Royalties
• Amounts paid in broker and barter exchange transactions
• Payments to attorneys
• Payments of Indian gaming profits to tribal members
• Profit-sharing distributions
• Retirement plan distributions
• Original issue discount
• Prizes and awards
• Medical and health care payments
• Debt cancellation (treated as payment to debtor)

December 1 - Time for Year-End Tax Planning

December is the month to take final actions that can affect your tax result for 2008. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status and those who sold property during 2008 should call for a tax planning consultation appointment. 

December 10 - Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

December 31 - Last Day to Pay Deductible Expenses for 2008

Last day to pay deductible expenses for the 2008 return (doesn’t apply to IRA, SEP or Keogh contributions, all of which can be made after December 31, 2008). Taxpayers who are making state estimated payments may find it advantageous to prepay the January state estimated tax payment in December (please call the office for more information).  
 
December 31 - Last Day to Make Mandatory IRA Withdrawals

Last day to withdraw funds from a Traditional IRA Account and avoid a penalty if you turned age 70½ before 2008. 

December 31 - Last Day to Set Up a Keogh Account for 2008

If you are self-employed, December 31 is the last day to set up a Keogh Retirement Account if you plan to make a 2008 contribution. Note: There are other options such as SEP plans that can be set up after the close of the year. Please call the office to discuss your options.

December 31 - Caution - Last Day of the Year

If the actions you wish to take cannot be completed on the 31st or a single day, you should consider taking these actions earlier than December 31st.

December 15 - Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in November.

December 15 -  Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in November.

December 31 - Last Day to Pay Deductible Expenses for 2008

If you are a business owner, December 31 is the last day to pay deductible expenses for the 2008 return (doesn’t apply to IRA, SEP or Keogh contributions, all of which can be made after December 31, 2008).

November 10 - Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during October, you are required to report them to your employer on IRS Form 4070 no later than November 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

November 17  - Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in October.
 
November 17 -  Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in October.

October - 15  Partnerships

File a 2007 calendar year return (Form 1065). This due date applies only if you were given an additional 6-month extension. Provide each partner with a copy of K-1 (Form 1065) or a substitute Schedule K-1. 
 
October 15 - Electing Large Partnerships

File a 2007 calendar year return (Form 1065-B). This due date applies only if you were given an additional 6-month extension. See March 17 for the due date for furnishing Schedule K-1s or with a copy of Schedule K-1 (Form 1120S) or a substitute Schedule K-1 to the partners.

October 10 -  Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during September, you are required to report them to your employer on IRS Form 4070 no later than October 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
 
October 15 - Individuals

If you have an automatic 6-month extension to file your income tax return for 2007, file Form 1040, 1040A or 1040EZ and pay any tax, interest and penalties due.

September 15 - Corporations

File a 2007 calendar year income tax return (Form 1120 or 1120-A) and pay any tax, interest and penalties due. This due date applies only if you timely requested an automatic 6-month extension. 
 
September 15 - S Corporations

File a 2007 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension. 
 
September 15 - Corporations

Deposit the third installment of estimated income tax for 2008. 
 
September 15 -  Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in August.
 
September 15 - Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in August.

September 10 - Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during August, you are required to report them to your employer on IRS Form 4070 no later than September 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
 
September 15 -  Estimated Tax Payment Due

It’s time to make your third quarter estimated tax installment payment for the 2008 tax year. Our tax system is a “pay-as-you-go” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. These include:

• Payroll withholding for employers;
• Pension withholding for retirees; and
• Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is 2% higher than the prime rate and the penalty is computed on a quarter-by-quarter basis.

Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than the $1,000 de-minimis amount, no penalty is assessed. In addition, the law provides "safe harbor" prepayments. There are two safe harbors:

• The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.

• The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for higher-income taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You can't avoid the penalty under this exception.

However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than the 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.

This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. If you have questions regarding your safe harbor estimates, please call this office as soon as possible.

CAUTION: Some state de-minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call this office for particular state safe harbor rules.

August 11 - Social Security, Medicare and Withheld Income Tax

File Form 941 for the second quarter of 2008. This due date applies only if you deposited the tax for the quarter in full and on time.

August 15 - Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in July.

August 15 - Nonpayroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in July.

August 11– Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during July, you are required to report them to your employer on IRS Form 4070 no later than August 11. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

July 15 - Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in June.

July 15 - Nonpayroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in June.

July 31 - Social Security, Medicare and Withheld Income Tax

File Form 941 for the second quarter of 2008. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than 2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until August 11 to file the return.

July 31 - Certain Small Employers

Deposit any undeposited tax if your tax liability is $2,500 or more for 2008 but less than $2,500 for the second quarter.

July 31 - Federal Unemployment Tax

Deposit the tax owed through June if more than $500.

July 31 - All Employers

If you maintain an employee benefit plan, such as a pension, profit-sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar year 2007. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.

July 1 - Time to Review Your 2008 Year-to-Date Income and Expenses

Time to review your 2008 year-to-date income and expenses to ensure estimated tax payments and withholding are adequate to avoid underpayment penalties.

July 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during June, you are required to report them to your employer on IRS Form 4070 no later than July 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

July 31 – Self-Employed Individuals with Pension Plans

If you have a pension or profit-sharing plan, you need to file a Form 5500 or 5500-EZ for calendar year 2007.