Tag Archives: paying taxes

Are You Worried As You Get Older To Social Security Age?

We might as well talk about the elephant in the room, especially those of you from age 55 and up. Social Security is in danger from certain politicians, but even if it ends up being saved, are you ready to live on it?

It’s not this bad…

The reality is that only 20% of the American citizens who eventually claim Social Security are actually living on it. Almost all of those people invested early or had well paying jobs, enough to put away so they could live on it when they retired.
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5 Financial Issues You Should Plan For

Most of us go on the assumption that we always have time to get things in order, no matter what those things are. Then suddenly we’re surprised by something we weren’t expecting and we start scrambling to recover and address it.


by nattanan23 via Pixabay

Unfortunately, this is a myth; it’s not true. Only the richest of us are ready for a catastrophe that’s going to cost money we hadn’t planned on spending. Well, that’s not quite true. Another group of people, hopefully some of us, are also looking at our financial situation and making plans for everything financial. Not just for emergencies but doing a little bit of long term planning, taking care of short term issues, and everything in between. Think about it this way; we’re either continually progressing, regressing, or stagnating; which one feels the best?
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Why You Should File Your Corporate Taxes

This is a true story of someone we know regarding corporate taxes and why it’s important to file them.

This particular person has some interesting breaks that most people don’t get. He’s retired from the military so he gets tax breaks. He’s also retired from a state job so he gets a few other breaks. He gets his military pension and is only a couple of years away from adding his pension from the state, as well as going on Medicare.

He’s also in business for himself, a S-corp instead of a C-corp, a photographer as well as doing a few other things to make money. He’s not rich by any means, but being incorporated and former military, he qualifies for a lot of tax breaks.

The problem? Because he knew that if he filed his taxes he would qualify for a refund, he didn’t file on time, figuring that any penalty would be taken out of his refund. He was good with that. He was so good with it that he went more than 2 years without filing. He told his accountant to file an extension for him, figuring that would alert the IRS and the state that he wasn’t ignoring them. Yet, he never made a payment and didn’t pull his papers together for his accountant for more than two years.

When he was finally ready and had everything together, his accountant wasn’t ready. It was after tax season, but accountants do more than taxes. So he had to wait another month before his accountant could look at his paperwork.

What happened? My was partially correct. Because of all his tax breaks he basically “pushed”. In other words, he didn’t get a refund because of the lateness but he didn’t owe much either; around $25. That sounds like a pretty lucky deal doesn’t it?

It wasn’t. Turns out there are penalties for not filing one’s corporate taxes. After 60 days, there’s an automatic $100, and it’s added monthly. On top of that are penalties and fees that can eventually reach 47.5% interest, especially if personal taxes weren’t filed either; unfortunately, these things usually go hand in hand.

This guy went from the possibility of a refund to owing the IRS more than $5,000, and the state more than $2,200. His accountant filed the taxes finally, but he wasn’t in a position to pay even a small portion, let alone the full amount.

Luckily, both the state and the IRS allows you to get on a payment plan, which he’s going to do. He’s also planning on making sure to file his taxes next year to take advantage of his tax status, but unless he’s fully paid up he’ll end up with the state and federal government keeping whatever he might have gotten back.

It’s a double edged sword when it comes to paying one’s taxes, even if you know you’re getting a refund. We can’t stress enough how important it is to at least file your taxes on time so you can avoid penalties, whether you owe or not. The penalties are never worth it, as this gentleman realized.
 

The Four States Of Taxpayers

How do you prepare for your taxes? Strange as this may seem, it’s not necessarily true that people who are expecting big refunds are always the people who file their taxes fast and early. It’s also not true that people who feel that they might have to pay something are always waiting until the last minute either.

Dealing with taxes is a much more mental process than that. As it is with business and employees, you find that not everything concerning taxes has to do with money. It has a lot more to do with personality and the perception of it all. Let’s take a quick look at the four states of taxpayers.

1. Energetic. Those people who are energetic are ready to get things out of the way, no matter if they’re getting a refund or not. Those who are getting refunds look forward to their return and how they’re going to spend the money. Those who aren’t sure or know they’re not going to get a refund want to know what their liability is and also want everything to be over so they can get on with life. There’s no hiding with these folks; good for them.

2. Distracted. Distracted people mean well, but they keep putting things off because they have other pressing matters to deal with. Sometimes those pressing matters are as minor as getting something to eat, but who doesn’t think eating is more important than taking care of their taxes?

3. Stressed. Just like the energetic people, it doesn’t matter whether they’re getting a refund or not. They see the entire process of taxes in the first four months of the years as a major challenge. Numbers are confusing to them, or maybe past history has put them on edge. If you’re married, you might have had problems getting refunds so many times that this is an unpleasant time of year, no matter how much in taxes you paid out.

4. Laid back. These folks don’t really care one way or another; they’re just not in the mood to be bothered by any of it. I’ve known people who didn’t file their taxes for a couple of years in a row who, if they had, would have reaped thousands in refunds, and even after they eventually file and learn about the penalties, they’re not bothered by any of it. I know others who haven’t filed taxes, ended up owing money, and set up payment plans and got on with life.

For all of these states, it can help to have an accountant who knows you and is prepared to get you through the process. Accountants obviously prefer to get everything early, and if they know your pattern they’ll work with you for your benefit and theirs as well. Many people need the extra boost, and they like knowing that their accountant cares about their needs. It’s something to think about at tax time when you have to decide between one of those tax agencies or an accountant you’ve worked with before.