Business Tax Problems, Filings, and Considerations
Business taxes have many complexities. Failing to understand the various tax laws regarding business can lead to some serious tax problems with the IRS and/or state. Here are some of the most common tax problems and tax considerations to stay in good standing with tax authorities.
The IRS requires employers to withhold taxes from your employee’s paychecks. If you don’t periodically deposit these amounts to the United States Treasury, the IRS will charge a failure-to-deposit penalty (FTD). Use the link above to understand the FTD penalty, as well as when and how the IRS assesses it.
When you have employees, you withhold their Medicare and Social Security contributions from their checks, and in most cases, you also withhold some income tax. The IRS classifies these withholdings as trust fund taxes. Here is how trust fund taxes work, who is responsible, what if the IRS assesses a trust fund recovery penalty and how to resolve issues with trust fund taxes.
- IRS Letter 1153 and Form 2751: There are two key forms related to the Trust Fund Recovery Penalty. They are Letter 1153 and Form 2751. Understand what these mean and what actions you need to take with them.
- Form 4180 Interview for the Trust Fund Recovery Penalty: If you can’t get out of the 4180 interview, you need to prepare for what’s going to happen. Understand the purpose of the meeting and if it is something you should likely avoid.
- How to Avoid the 4180 Trust Fund Recovery Penalty: If the IRS believes you are the responsible one for the trust fund taxes, the agency will request an interview with you. This interview can be very stressful, but there are a few ways to avoid it.
If you have an income-generating hobby, you need to understand a few basics. IRC Section 183 is specific in what the IRS considers a business and a hobby. Understand the difference so you know what you can deduct as expenses and how much depending upon the classification.
The IRS requires some pass-through entities to make estimated quarterly tax payments. This guide will go through the details on who must make estimated tax payments, how to calculate the payment amount, options to pay the amount owed, and due dates for the payments.