As we bid farewell to 2023, it’s crucial for small business owners, self-employed individuals, and rental property owners to address their 1099 filing obligations. If your business/rental property made payments of $600 or more for services to non-employee individuals, you must file a 1099 form. Information relating specifically to Form 1099-NEC (Nonemployee Compensation) and 1099-MISC (Miscellaneous Income) can be found at https://www.irs.gov/instructions/i1099mec.

Form 1099-NEC must be mailed to the recipient and IRS by January 31st, regardless of if you electronically or paper file. Form 1099-MISC is also due to the recipient by January 31st, and to the IRS by February 28th, if you file via paper or March 31st, if you file electronically.

Why Checking Your Withholding at Tax Time is Crucial: Avoiding Surprises and Penalties

When reviewing your tax return, if you find that you owe more than expected, it may be time to update your withholding. Checking your withholding at tax time is crucial to ensure you pay the correct amount of taxes throughout the year. Withholding is the amount of money deducted from your paycheck / or retirement income. If your withholding is too low, you may owe more taxes when you file your return, resulting in a surprise tax bill. By reviewing your withholding based on your tax return results, you can make any necessary adjustments to avoid underpaying or overpaying your taxes, which can help you avoid penalties or unexpected tax bills in the future.

In addition to updating your withholding, making estimated tax payments can help you avoid underpayment penalties and ensure you’re paying enough taxes throughout the year. Estimated tax payments are quarterly payments to the IRS and/or state tax authority based on the income you earn for the year. If you’re self-employed or have other types of income that are not subject to withholding, making estimated tax payments is especially important. By estimating your tax liability and making quarterly payments, you can avoid having to pay a large tax bill at once.

According to the IRS, one of the first decisions taxpayers must make when completing a tax return is whether to take the standard deduction or itemize their deductions.

When starting the tax process, there are several factors to consider before making a choice, including changes to your tax situation, changes to the standard deduction amount, and recent tax law changes.

Want to learn more on Tax deductions, visit the IRS Tax Basics.

1099 Tax Reminders

Once again, it is the time of year for small business owners, self-employed individuals, and rental property owners to consider your filing requirements. When you operate your business for a profit, the IRS considers you engaged in a trade or business, and therefore you are required to file certain informational returns. Information relating specifically to Form 1099-MISC, Miscellaneous Income, and Form 1099-NEC, Nonemployee Compensation, can be found at https://www.irs.gov/instructions/i1099mec.

Form 1099-NEC is due to the recipient and IRS by January 31, using either paper or electronic filing procedures. Form 1099-MISC is due to the recipient by January 31, and to the IRS by February 28 if you file on paper, or March 31, if you file electronically. 

Fourth quarter estimated tax payments are due January 16, 2023. 

Depending on your situation, these estimates may include federal, state, and/or local vouchers. If quarterly estimates were recommended when we prepared your 2021 return, they would be included with your tax return. If you requested a paper copy of your return, the instructions, vouchers, and envelopes were included in your tax folder. If you requested an electronic copy, the instructions and vouchers were included in your action-needed copy posted to your client portal. 

Please follow the applicable instructions previously provided to mail your payment and voucher by January 16, 2023. There may be situations where the estimates were generated, but an overpayment was applied in full or partially. If your income or withholdings have significantly changed since last year and you still need to discuss these changes with your advisor, please get in touch with your tax preparer to review. If you change or do not make the estimate, please inform your tax preparer at tax filing time.

Q3 estimated payment reminder
Third quarter estimated tax payments are due September 15, 2022. These estimates may include federal, state and/or local vouchers depending on your situation.
 
There may be situations where the estimates were generated, but an overpayment was applied in full or in part. If your income or withholdings have significantly changed since last year, please contact your tax preparer to review. If you change or do not make the estimates, let your tax preparer know at tax filing time.

FINAL TAX FILING REMINDER
Don’t forget to return your signed e-file authorization forms (Form 8879 for Federal Returns). Your preparation team cannot file your tax return without that official authorization from you (and your spouse if filing jointly).

Our Tax Department has begun filing tax return extensions. If we did not receive all of your information and supporting documents by April 1, we are likely going to file an extension on your return. Please refer to the following guidance about preparation of an extension:

• Still give us whatever information you have as soon as possible or as soon as it becomes available.
• Expect to pay an anticipated taxes owed by the original filing date in April. We will determine if you will have a balance due or if you ca expect a refund based on the available tax information you submit.
• If you are required to make quarterly estimated tax payments, individual first quarter estimated tax payments are due April 15.
• If you are anticipating a large refund, we will try to get your extended return completed as soon as possible once all tax information is available.

Contact our team at tax@valleynatinalgroup.com or 610-868-9000 if you need more information.

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