- January 15 – Due date for the fourth quarterly installment of 2013 estimated taxes for individuals, unless you file your tax return and pay any taxes due by January 31.
- January 31 – Employers must furnish 2013 W-2 statements to employees. Payers must furnish payees with Form 1099s for various payments made. (The deadline for providing Form 1099-B and consolidated statements to customers is February 18.)
- January 31 – Employers must generally file annual federal unemployment tax returns.
- February 28 – Payers must file information returns, such as Form 1099s, with the IRS. This deadline is extended to March 31 for electronic filing.
- February 28 – Employers must send Form W-2 copies to the Social Security Administration. This deadline is extended to March 31 for electronic filing.
- March 3 – Farmers and fishermen who did not make 2013 estimated tax payments must file 2013 tax returns and pay taxes in full.
- March 17 – 2013 calendar-year corporation income tax returns are due.
- April 15 – 2013 partnership returns are due.
- April 15 – Individual income tax returns for 2013 are due.
It’s tax return filing season once again. Among the tax deadlines you may be required to meet in the next few months are the following:
Nearly every company, large or small, has to file Form 1099-MISC with the IRS and send a copy to recipients by January 31, 2014.
You use Form 1099-MISC to report miscellaneous payments to nonemployees. This includes fees for services paid to independent contractors, such as consultants, lawyers, cleaning services, and others. Generally, you don't report fees paid to corporations, but there are exceptions (payments to lawyers, for example).
For details or filing assistance, contact our office.
Check your children's filing requirements
Your children may need to file a 2013 income tax return. A return is needed if wages exceeded $6,100, the child had self-employment income over $400, or investment income exceeded $1,000. If the child had both wages and investment income, other thresholds apply. Contact us for more information or filing assistance.
Poor recordkeeping means lost deductions
Check your records to be sure you have the paperwork you need for charitable contributions you want to deduct on your 2013 tax return. Cash, check, and other monetary donations of any amount can be deducted only if substantiated by a bank record or written documentation from the charity. The rules require you to obtain the necessary records before you file your 2013 return.
Should you adjust your withholding for 2014?
Early this year, review the amount of income tax you're having withheld from your wages to see if it should be adjusted. While you must meet minimum tax payment requirements, don't overwithhold or you'll be giving the IRS interest-free use of your money for a year. Don't underwithhold either, or you face penalty and interest charges on the underpayment.
Flexible spending accounts (FSAs) allow taxpayers to set aside pre-tax dollars to pay for out-of-pocket medical expenses. The drawback has been the fact that unused amounts each year are forfeited. Plans could provide a 2½ month grace period to use up unspent set-asides.
Now a change announced by the IRS adds more flexibility to these accounts. Plans can be modified by employers to allow up to $500 of unused amounts to be carried over into the following year. Health FSAs cannot have both the old 2½ month grace period and the $500 carryover; they can have one or the other (or neither).
There are many worthwhile reasons to lend money to a relative. For example, you may want to help a child or sibling continue their education or start their own business.
But lending money to relatives can have tax consequences. The IRS requires that a minimum rate of interest be charged on loans. If you do not charge at least the minimum rate, the IRS will still require you to pay tax on the difference between the interest you should have charged and what you actually charged. If these excess amounts become large, or if the loan is forgiven, there may also be gift tax implications.
There are some exceptions, though. Loans of up to $10,000 generally can be made at a lower (or zero) rate of interest, as long as the proceeds aren't invested. Loans between $10,001 and $100,000 are exempt from the minimum interest requirement as well, as long as the borrower's investment income is $1,000 or less. If the investment income exceeds $1,000, you'll be taxed on the lesser of this income or the minimum IRS interest.
For the IRS to treat the transaction as a loan and not a gift subject to the gift tax rules, the transaction must look like a loan. The borrower should have the ability to repay the principal and interest. A contract should be prepared which specifies the loan amount, interest rate, the payment dates and amounts, any security or collateral, as well as late fees and steps to be taken if the borrower doesn't pay. Have the document signed and dated by all the parties. For assistance, give us a call.
Start-up businesses and long-established firms share common ground in at least one respect: the need for financing. Managers of fledgling companies often debate the best way to obtain funds for buying inventory, heavy equipment, and buildings for making widgets. In the break rooms and suites of Fortune 500 firms, executives also discuss the best ways to cover cash shortfalls and meet capital needs.
Business financing generally comes in two flavors: equity and debt. For small businesses, equity financing often takes the form of contributions by family members, friends, business associates, and investors. For business owners, the biggest drawback to equity financing is loss of control. If Uncle John pumps his savings into your newly formed company, he may want a substantial voice in its day-to-day operations, whether or not he understands your industry or business model. On the plus side, equity contributions may be easier to procure than bank loans or other forms of financing.
Without an established track record, businesses may struggle to obtain debt financing. To extend a loan, a lender must be willing to risk the institution’s funds on your business. Loan terms generally compensate for this risk by stipulating an interest rate that reflects the lender’s estimate of your credit worthiness. If the lender thinks your firm may struggle making the loan payments, expect a higher rate.
From a business owner’s perspective, the signing of loan agreements also carries risk. That’s why it’s wise to proceed slowly. Take time to develop a formal business plan, cash flow projections, and a realistic picture of the firm’s needs. Determine whether alternate forms of financing may be available. Remember that failure to make timely loan payments may adversely affect your company’s ability to obtain future financing.
In general, a company should use debt financing for capital items such as plant and equipment, computers, and fixtures that will be used for several years. By incurring debt for such items, especially when interest rates are low, a firm can release operating cash flows for day-to-day operations or new opportunities. For short-term needs, consider establishing a line of credit.
Regardless of the form of financing chosen, all businesses must produce a product or service that others want to buy. Debt should be viewed as a tool – one of many – to help your company thrive.
Each year around the holidays, Rager, Lehman & Houck selects one of our non-profit clients and collects various items on their “wish list” from our team members and friends. This year our selected charity was the Frederick County Humane Society. The RLH team collected various pet supplies and other needed items at our three offices throughout the month of December, and then delivered them to the Frederick County Humane Society.
The Frederick County Humane Society provide programs and services to help responsible pet owners keep their pets healthy, happy and in life-long homes. For more information on their mission, here is a link to their website http://www.fchs.org/
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