Tax Trap #3 -- IRS Penalties, Interest and Love Letters

As a small business owner or self-employed person, one of the easiest ways to keep Uncle Sam off your back and out of your life is to file your forms, payments and other paperwork on time.

Over the next four months there are several key dates that you dare not forget! Here they are -- all in one place, along with links to the IRS website PDF file for that particular form, where appropriate.

NOTE: This article only addresses federal tax deadlines. Be sure to contact your state's tax department for their due dates.

Also, the calendar is adjusted for Saturdays, Sundays and federal holidays, because if a due date falls on a Saturday, Sunday, or federal holiday, then the due date is moved to the next business day.

JANUARY:

Tuesday, Jan. 18

Personal

If you pay quarterly estimated income tax payments, it's time to make the fourth-quarter payment for 2004 via Form 1040-ES. http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Business

If you have employees, you must make the federal payroll tax payment for December 2004 by today (assuming you are on the monthly deposit schedule).

You use Form 8109 (found in the little yellow coupon book) or the IRS Electronic Federal Tax Payment System (EFTPS).

Monday, January 31

Business

4th quarter and year-end payroll tax returns are due by January 31 of the following year.

Here's an overview of the 4 most common federal payroll-related forms due today:

1. Form W-2 (for your employees) http://www.irs.gov/pub/irs-pdf/fw2.pdf

If you mail the W-2's, the postmark must be on or before January 31, 2005.

You may also be a recipient of a W-2 (if you work as an employee for someone else), so don't give your employer a hard time unless the W-2 is postmarked, or delivered in person, later than January 31.

2. Form 941 (for payroll tax) http://www.irs.gov/pub/irs-pdf/f941.pdf

3. Form 940 (for unemployment tax) http://www.irs.gov/pub/irs-pdf/f940.pdf

4. Form 1099-MISC If you paid any independent contractors at least $600 in 2004, you must send each one a 1099 by January 31. http://www.irs.gov/pub/irs-pdf/f1099msc.pdf

Tip: if the independent contractor is a corporation, you usually don't have to issue a 1099. The main purpose of the 1099 is to track payments to Sole Proprietors, i.e. unincorporated self-employed people.

FEBRUARY:

Tuesday, Feb. 15

If you have employees, you must make the federal payroll tax payment for January 2005 by today (assuming you are on the monthly deposit schedule).

Monday, February 28

If you prepared any W-2's or 1099's (mentioned above), today is the deadline for sending a copy of those forms to the IRS.

Form W-3 is sent to the Social Security Administration, along with Copy A of any Forms W-2 you issued. http://www.irs.gov/pub/irs-pdf/fw3.pdf

Form 1096 is sent to the IRS, along with Copy A of any Forms 1099-MISC you issued. http://www.irs.gov/pub/irs-pdf/f1096_04.pdf

MARCH:

Business

Tuesday, March 15

Today is a big day if your business is a corporation.

Form 1120 -- the annual corporate income tax return for regular "C" corporations. http://www.irs.gov/pub/irs-pdf/f1120.pdf

Form 1120S -- the annual corporate income tax return for "S" corporations. http://www.irs.gov/pub/irs-pdf/f1120s.pdf

Form 7004 -- if you can't file Form 1120 or 1120S by today, here's a tip: just file Form 7004 by March 15 and you are granted an automatic, no-questions-asked 6-month extension of time to file the return (i.e. until Sept. 15, 2005) http://www.irs.gov/pub/irs-pdf/f7004.pdf

Form 2553 -- if you want your corporation to be treated like an "S" corporation for the first time, today is the deadline for telling the IRS that you want to be an "S" corp beginning with calendar year 2005. http://www.irs.gov/pub/irs-pdf/f2553.pdf

Also, If you have employees, you must make the federal payroll tax payment for February 2005 by today (assuming you are on the monthly deposit schedule).

APRIL:

Friday, April 15

Ah, yes, the most famous tax deadline of all.

Form 1040

http://www.irs.gov/pub/irs-pdf/f1040.pdf

And if you are a Sole Proprietor, don't forget that you must file several business-related tax forms with your Form 1040.

The most commonly used tax forms for the self-employed person include:

Schedule C (to report your business income and expenses) http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Schedule SE (for self-employment tax) http://www.irs.gov/pub/irs-pdf/f1040sse.pdf

Form 4562 (to deduct equipment and other depreciable property) http://www.irs.gov/pub/irs-pdf/f4562.pdf

Form 8829 (to deduct a home office) http://www.irs.gov/pub/irs-pdf/f8829.pdf

Need more time to prepare your personal tax return? Go no further than Form 4868, which grants an automatic no-questions-asked 4-month extension to file the return. http://www.irs.gov/pub/irs-pdf/f4868.pdf

NOTE: this is only an extension of time to file the return, not an extension to pay any tax due. So if you think you might owe, it may be wise to estimate what you owe and send in a payment with Form 4868; otherwise you may have to pay extra in late payment penalties and interest.

Form 1065

If your business is a Partnership or Limited Liability Company (LLC), today is also your lucky day to file the annual business income tax return -- via Form 1065. http://www.irs.gov/pub/irs-pdf/f1065.pdf

Form 8736

To get an automatic 3-month extension of time to file Form 1065, file Form 8736 on or before April 15. http://www.irs.gov/pub/irs-pdf/f8736.pdf

As if April 15 wasn't already painful enough, it's also the deadline for the first quarter estimated tax payment for Year 2005:

Personal -- Form 1040-ES.

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Corporate -- Form 1120-W

http://www.irs.gov/pub/irs-pdf/f1120w.pdf

And if you're an employer, yup, it's time for yet another monthly federal payroll tax deposit -- for March 2005.

MAY:

Monday, May 2

Form 941 is due for the 1st quarter 2005. http://www.irs.gov/pub/irs-pdf/f941.pdf

Form 940 federal unemployment tax deposit is due today, if your first quarter liability exceeds $100.

Had enough? OK, OK. I'll stop here.

That should get you through the first four months of the year.

For more tax resources, here's a few more links:

Looking for a federal tax form? http://www.irs.gov/formspubs/index.html

Looking for a state tax form? http://taxes.yahoo.com/stateforms.html http://www.taxadmin.org/fta/link/forms.html

IRS Website for Small Business & the Self-Employed http://www.irs.gov/smallbiz

Wayne M. Davies is author of 3 tax-slashing eBooks for the self-employed, available separately or as a 3-volume set, "The Ultimate Small Business Tax Reduction Guide". http://www.YouSaveOnTaxes.com/ultimate-guide

To get your free copy of Wayne's 25-page report, "How To Instantly Double Your Deductions" visit: http://www.YouSaveOnTaxes.com