Don’t Be Fooled by These 5 Business Tax Myths
Tax codes are not always cut and dry. Tax code language tends to be rather confusing and leads to many misunderstandings. These misunderstandings lead to mistakes when filing business taxes.
Cash Paychecks
If you pay yourself in “company cash” rather than recording a check, you still have to pay taxes on that income. The IRS will issue an audit if it notices that you didn’t have income reported but have a large savings account balance or luxurious assets.
Extensions
Extensions are for the filing of your tax return only. Extensions on estimated tax payments are not given. This is often misinterpreted and leads to business owners having to pay fees and penalties.
Deadlines
Typically, the deadline for filing your business tax return is April 15th. Given the observation of Emancipation Day in 2016, the deadline for all taxpayers is April 18th. Hand deliver the return to the post office and have it postmarked in front of you to ensure it is not postmarked late if you plan to paper file.
Filing Statuses
Business owners that are married, and individuals as well, often file a joint return. This is not always the best idea. Have your tax preparer complete returns for joint filing status and married filing separately. Determine which has the best income for your situation and file that way.
Deductions
Deductions for meals and entertainment expenses are limited to 50-percent off the amount actually spent. A detailed ledger of expenses and the receipts for them must be kept. The location of the meal, the cost and reason for the meal must be listed.
Much confusion exists about tax laws. Clear, concise explanations keep taxpayers “in-the-loop” and prevent mistakes when filing.
Image credit: Accu-Tax Financial Services
