Today TaxMama wants to talk to you about filing deadlines and the consequences of ignoring them.
Today is another of those tiresome deadlines. I’ve just come to realize that not everyone who is affected, understands the implications. So… If you opened up an LLC, partnership, corporation, etc. in 2010 and have not finalized your accounting – you still need to file a tax return. Even if you’re just not ready.
Not filing means paying penalties. Non-filing penalties are usually based on a percentage of the taxes due – 5% a month. If you don’t file by September 15th, your penalty will be imposed on September 16th, effective MARCH 15th (corps) or APRIL 15th (partnerships and LLCs filing as partnerships)!
To avoid that penalty, all you have to do is file a tax return. It doesn’t have to be perfect. It doesn’t even need to be totally correct. If you just simply can’t get it done it on time – ESTIMATE. Come up with your best, and most reasonable estimate of the correct income and expense amounts. Include a statement with the tax return saying that’s what you’re doing. And that you’ll be filing an amended return very soon, as soon as you finish gathering your data.
Non-filing penalties for partnerships and S-Corps are much higher. Penalties are not based on the balance due, since these entities don’t pay taxes. They are $195 per month, per partner, up to 12 months. So, if you don’t file by September 15th, on September 16th your penalty will be $1,170 per shareholder (6 months from March 15th for S Corps) and $975 per partner for partnerships and LLCs filing as partnerships.
Incidentally, if you were running a partnership or S Corp and aren’t really using it anymore, you still need to file a final tax return. Even if you just enter a bunch of zeroes on it. You need to tell IRS you’re done. If you don’t, you’ll be facing those nasty late filing penalties. Don’t forget to tell your state as well. They have penalties, too.
And, if possible, remember to dissolve your corporation or entity. If you don’t know how, you can always ask your attorney, or the folks at Incorp.com (800.2.INCORP) to do it for you. Tell them TaxMama sent you and you can even get a discount.
And remember, you can find answers to all kinds of questions about deadlines, procrastination and confusion. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
Please post all Comments and Replies in the new TaxQuips Forum .