Weekly Update–September 8th 2023: Tax Deadlines Loom
This morning I was feeling a bit frustrated as I worked on my weekly take away so I “popped” it into ChatGPT. I wasn’t asking for advice and didn’t give it any parameters, but it totally picked up on my mood. “It sounds like you and your team are facing a challenging situation as you approach the tax filing deadline, and I can understand how stressful it must be to chase after clients for required information and contributions. Here are some suggestions to help you navigate this situation more effectively and reduce the stress … remember that proactive communication and careful planning can help alleviate some of the stress associated with tax deadlines. While it can be challenging, maintaining a professional approach and focusing on solutions will ultimately benefit both your company and your clients.”
My answer(s): take a walk on the beach…
even if it’s foggy out
pop over to a friend’s house to help her pick her figs…
or head out to the garden to pick your lunch…
I’m heading out to the airport soon for an out-of-town wedding so time to post, pack and leave. I hope you all have great plans for this weekend as well.
Weekly Take Away
Our office is approaching a major tax filing deadline next Friday. To meet our goal we have been working with clients to obtain a final document or piece of information or have them make the required pension contribution payment. It is very stressful for me and my staff as we spend hours requesting this information over and over again. We all know that ignoring something doesn’t make it go away and your actions may and usually do affect others. Just this week I spent over 2 hours contacting the pension company, the client and my assistants working to get the required pension contribution amount and having the client make the payment so the pension plan would not be put in jeopardy and the company would not be subject to a sizable non-deductible excise tax (late payment penalty).
TAX ISSUES/TAX PLANNING
Failure to File Penalty May be the Right Tactic
Next Friday is a major deadline day for many taxpayers, as extended: Partnership, S-Corporation, and Trust tax returns are due as well as the 2023 third estimated payment for : some individuals and corporations. Getting all of your information in to your accountant may seem like a daunting task, but we ask that you take care when doing so. Just this week I consulted with a fellow CPA who was wrestling with finalizing a Florida partnership tax return (5 partners). This entity sustained severe financial damages from hurricane Ida. As we discussed the details of the case it seemed that there were alternative ways to report the losses. He would still need to make sure that he obtained proper and sufficient documentation to support the expenses on the tax return and would not be able to do so by the September 15th filing deadline. We agreed the approximate late filing fee of $2,200 was well worth making sure the tax return was accurate and enabled the entity to take full advantage of the tax laws. The IRS penalties are based on a monthly fee per partner or shareholder (if the late return is a S-Corporation) and you may also have state and local penalties assessed as well. In our office we find that the risk of error outweighs the cost of filing an accurate tax return a bit late, but PLEASE try not to make it a habit to wait to the last minute.
IRS Interest Rates Increasing in the Forth Quarter
The Internal Revenue Service announced that interest rates will increase for the calendar quarter beginning Oct.1, 2023.
For individuals, the rate for overpayments and underpayments will be 8% per year, compounded daily. Here is a complete list of the new rates:
- 8% for overpayments (payments made in excess of the amount owed), 7% for corporations.
- 5.5% for the portion of a corporate overpayment exceeding $10,000.
- 8% for underpayments (taxes owed but not fully paid).
- 10% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate determined during July 2023. See the revenue ruling 2023-17 for details.
Deadline for your Third Estimate Tax Payments: September 15th
Self-employed individuals, retirees, investors, businesses, corporations and others who make estimated tax payments should be reminded that the payment for the third quarter of 2023 is due Friday, September 15. The 2022 Form 1040-ES, Estimated Tax for Individuals, can help you estimate your quarterly tax payments.
The Automatic 6-Month Extension Deadline is Approaching
If you were unable to file your tax return by the March 15th or April 18th deadlines, you should have filed your 2022 extension with any balance due and possibly the first estimate for 2023. We are coming up to the filing deadlines which if are not met may cause additional penalties and interest.
Time is Running Out to Make Annual Deferred Compensation Plan Contributions
The upcoming filing deadlines are also deadlines for funding company pension plans: September 15th for corporations, October 15th for sole proprietorships. This is a great tax minimization planning technique, take the funds from the tax liability pocket and put them into the pension plan pocket where they can grow tax free until retirement or required distribution dates.
Surprisingly Durable US Economy Poses Key Question: Are We Facing Higher-For-Longer Interest Rates?
One after another, economists have postponed or reversed their earlier forecasts for a U.S. recession. Optimism that the Fed will pull off a difficult “soft landing” — in which it would manage to reduce inflation to its 2% target without causing a steep recession — has risen. Nearly seven in 10 economists polled by the National Association for Business Economics say they’re at least somewhat confident that the Fed will achieve a soft landing, according to the NABE’s latest survey.
What China’s Economic Woes May Mean for the U.S.
The news about China’s economy over the past few weeks has been daunting, to put it mildly. Per the recent article in the New York Times : The fallout is probably limited — and there may be some upside for American interests.”
How High Tensions Between China and the U.S. Are Impacting American companies
Tensions between China and the U.S. are running high — and that’s leaving American companies having to carefully navigate their approach to a key player in the global economy. The uncertainty U.S. businesses are facing is getting increased attention as Commerce Secretary Gina Raimondo is set to become the latest senior official to visit Asia’s largest economy.
Consumer Advisory: Take Action When Home Insurance is Cancelled or Costs Surge
A notice from your insurer dropping your home insurance policy can feel like your largest investment is at risk. Unexpected jumps in the cost of your coverage can put a strain on your budget. And, problems with getting the right amount and type of insurance can make your home more difficult to sell. Changes in the insurance business across the country are making these problems more common for homeowners, and the Consumer Financial Protection Bureau offers this advice.
Long-Run Business Projections – Easier Than They Seem
Economist Bill Conerly outlines three fundamental principles of forecasting can help any business analyst produce valuable long-term projections.
DoorDash’s Voice Ordering Service Could Have AI Take Your Carryout Order
DoorDash is launching a new answering service for restaurants that could put you on the phone with AI when ordering takeout or delivery. With the new service, restaurants can have AI field phone calls and take orders from customers, with live agents available “to support customers at any time.”
- IRS resources for stimulus payments:
- IRS information about the Advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our prior blog posts, videos and prior weekly newsletters
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started
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