Weekends & Holidays:
If a due date falls on a Saturday, Sunday or holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.
January
|
1
|
Earned Income Credit Form W-5
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.
|
|
6
|
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.
|
|
12
|
Employees Who Work For Tips
If you received $20 or more in tips during December, report them to your employer. You can use Form 4070, “Employee's Report of Tips to Employer”.
|
|
15
|
Estimated Tax Payment Due
It’s time to make your fourth 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:
1. 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.
2. 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.
|
|
15
|
Farmers and Fishermen
Pay your estimated tax for 2008 using Form 1040-ES. You have until April 15 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.
|
|
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 non-payroll withholding deposit for December 2008 if the monthly deposit rule applies.
|
|
|
<
|
January 2009
|
>
|
| S | M |
T | W |
T | F |
S |
| | | |
1
|
2
|
3
|
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
|
11
|
12
|
13
|
14
|
15
|
16
|
17
|
|
18
|
19
|
20
|
21
|
22
|
23
|
24
|
|
25
|
26
|
27
|
28
|
29
|
30
|
31
|
|