Today TaxMama® hears from Chan in the TaxQuips Forum, with this question “If my business had an unexpected loss of $102k at end of year last year but I made my quarterly payments anyway – will I have a large refund or credit if so? Where did my tax dollars go? Why has my accountant made me pay in more money all year?”
Your accountant made you pay those estimated taxes all year for two reasons:
1) You had substantial profits last year – and those ES payments are based on last year’s taxes. Or in the last year for which your accountant has numbers (2011). When did you give him the profit and loss statement for 2012? (If you are like some of my clients, I didn’t see those numbers until last week – and got some major surprises.)
2) You didn’t have the good sense to meet with your accountant during the year to re-evaluate your required estimated taxes – and to discuss your losses, as they were incurred. If you had done that, two good things would have happened to you:
i) Your accountant would have told you to stop making those quarterly payments.
ii) Your accountant might have been able to give you some guidance on how to avoid more losses, or to increase your profits – or even suggested that this might be a good time to cut your losses and get out of the business.
(Note: If you WERE seeing your accountant and s/he didn’t do those two things noted above? Then you definitely need a better accountant. NOW!)
You will get a tax refund for all those excess estimated tax payments. So, the sooner you get your bookkeeping together, the sooner you can file your tax return and get your money back.
And remember, you can find answers to all kinds of questions about re-balancing your income taxes and other tax and business issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of 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 .