• March 2017 Business Due Dates

    27 February 2017
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    At Dagley & Co., we’ve compiled a list of due dates for your business. Contact us at (202) 417-6640 with any questions.

    March 15 –  Partnerships

    File a 2016-calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., or a substitute Schedule K-1. If you want an automatic 6-month extension of time to file the return and provide Schedules K-1 or substitute Schedules K-1 to the partners, file Form 7004. Then, file Form 1065 and provide the K-1s to the partners by September 15.

    March 15 –  S-Corporation Election

    File Form 2553, Election by a Small Business Corporation, to choose to be treated as an S corporation beginning with calendar year 2017. If Form 2553 is filed late, S treatment will begin with calendar year 2018.

    March 15 –  Electing Large Partnerships

    File a 2016-calendar year return (Form 1065-B) and provide each partner with a copy of Schedule K-1 (Form 1065-B), Partner’s Share of Income (Loss) From an Electing Large Partnership, or a substitute Schedule K-1. This due date applies for K-1s even if the partnership requests an extension of time to file the Form 1065-B by filing Form 7004.

    March 15 – Social Security, Medicare and Withheld Income Tax

    If the monthly deposit rule applies, deposit the tax for payments in February.

    March 15 – Non-Payroll Withholding

    If the monthly deposit rule applies, deposit the tax for payments in February.
    March 31 – Electronic Filing of Forms 1098, 1099 and W-2G

    If you file Forms 1098, 1099 (other than 1099-MISC with an amount in box 7), or W-2G electronically with the IRS, this is the final due date. This due date applies only if you file electronically (not paper forms). Otherwise, January 31 or February 28 was the due date, depending on the form filed. The due date for giving the recipient these forms was January 31.

    March 31 – Large Food and Beverage Establishment Employers 

    If you file Forms 8027 for 2016 electronically with the IRS, this is the final due date. This due date applies only if you file electronically. Otherwise, February 28 is the due date.
     

     

     

     

     

     

     

     

     

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  • Important Tax Changes for Small Businesses

    17 January 2017
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    Are you a small business owner, or work within a small business’s accounting department? We have your rundown of some changes that need to be considered when preparing your 2016 and 2017 returns. As of December 2015, legislation passed the “Protecting Americans from Tax Hikes” Act which extended a number of business provisions and made some permanent changes. As you start to file 2016’s taxes, please be aware of these provisions, as they can have a significant impact on you business’s taxes:

    Section 179 Expensing – The Internal Revenue Code, Sec. 179, allows businesses to expense, rather than depreciate, personal tangible property other than buildings or their structural components used in a trade or business in the year the property is placed into business service. The annual limit is inflation-adjusted, and for 2017, that limit is $510,000, which is unchanged from 2016. The limit is reduced by one dollar for each dollar when the total cost of the qualifying property placed in service in any given year exceeds the investment limit, which is $2,030,000 for 2017, a $20,000 increase from the 2016 amount.

    In addition to personal tangible property, the following are included in the definition of qualifying property for the purposes of Sec. 179 expensing:

    • Off-the-Shelf Computer Software
    • Qualified Real Property – The term “qualified real property” means property acquired by purchase for use in the active conduct of a trade or business, which is normally depreciated and is generally not property used for lodging except for hotels or motels. Qualified retail property includes:
    • Qualified leasehold improvement property,
    • Qualified restaurant property, and
    • Qualified retail improvement property.

     

    Bonus Depreciation – Bonus depreciation is extended through 2019 and allows first-year depreciation of 50% of the cost of qualifying business assets placed in service through 2017. After 2017, the bonus depreciation will be phased out, with the bonus rate 40% in 2018 and 30% in 2019. After 2019, the bonus depreciation will no longer apply. Qualifying business assets generally include personal tangible property other than real property with a depreciable life of 20 years or fewer, although there are some special exceptions that include qualified leasehold property. Generally, qualified leasehold improvements include interior improvements to non-residential property made after the building was originally placed in service, but expenditures attributable to the enlargement of the building, any elevator or escalator, and the internal structural framework of the building do not qualify.

    In addition, the bonus depreciation will apply to certain trees, vines and plants bearing fruits and nuts that are planted or grafted before January 1, 2020.

     

    Vehicle Depreciation – The first-year depreciation for cars and light trucks used in business is limited by the so-called luxury-auto rules that apply to highway vehicles with an unloaded gross weight of 6,000 pounds or less. The first-year depreciation amounts for cars and small trucks change slightly from time to time; they are currently set at $3,160 for cars and $3,560 for light trucks. However, a taxpayer can elect to apply the bonus depreciation amounts to these amounts. The bonus-depreciation addition to the luxury-auto limits is $8,000 through 2017, after which it will be phased out by dropping it to $6,400 in 2018 and $4,800 in 2019. After 2019, the bonus depreciation will no longer apply.

    New Filing Due Dates – There are some big changes with regard to filing due dates for a variety of returns. Many of these changes have been made to combat tax-filing fraud. The new due dates are effective for tax years beginning after December 31, 2015. That means the returns coming due in 2017.

    Partnerships

    • Calendar Year: The due date for 1065 returns for the 2016 calendar year will be March 15, 2017 (the previous due date was April 15).
    • Fiscal Year: Due the 15th day of the 3rd month after the close of the year.
    • Extension: 6 months (September 15 for calendar-year partnerships).

    S Corporations

    • Calendar Year: 2016 calendar year 1120-S returns will be due March 15, 2017 (unchanged).
    • Fiscal Year: Due the 15th day of the 3rd month after the close of the year.
    • Extension: 6 months (September 15 for calendar-year S Corps).

    C Corporations

    • Calendar Year: The due date for Form 1120 returns for the 2016 calendar year will be April 18, 2017 (the previous due date was March 15). Normally, calendar-year returns will be due on April 15, but because of the Emancipation Day holiday that is observed in Washington, D.C., the 2017 due date is the 18th.
    • Fiscal Year: Due the 15th day of the 4th month after the close of the year, a month later than in the past (exception: if fiscal year-end is June 30, the change in due date does not apply until returns for tax years beginning after December 31, 2025).
    • Extension: 6 months. (Exceptions: [1] 5 months for any calendar-year C corporation beginning before January 1, 2026, and [2] 7 months for June 30 year-end C corps through 2025.) Thus, the extended due date for a 2016 Form 1120 for a calendar-year C Corp will be September 15, 2017.

    W-2s, W-3s and 1099-MISC reporting non-employee compensation

    • Due Date: For 2016 W-2s, W-3s, and Forms 1099-MISC reporting non-employee compensation, the due date for filing the government’s copy is January 31, 2017 (the previous due date was February 28 or March 31 if filed electronically). The due date for providing a copy to the employee or independent contractor remains January 31.
    • Extension – The 30-day automatic extension to file W-2s is no longer automatic. The IRS anticipates that it will grant the non-automatic extension of time to file only in limited cases in which the filer or transmitter’s explanation demonstrates that an extension of time to file is needed as a result of extraordinary circumstances

     

    Work Opportunity Tax Credit (WOTC) – Employers may elect to claim a WOTC for a percentage of first-year wages, generally up to $6,000 of wages per employee, for hiring workers from a targeted group. First-year wages are wages paid during the tax year for work performed during the one-year period beginning on the date the target-group member begins work for the employer.

    This credit originally sunset in 2014, but the PATH Act retroactively extended the credit for five years through 2019.

    • Generally, the credit is 40% of first-year wages (not exceeding $6,000), for a maximum credit of $2,400 (0.4 x $6,000).
    • The credit is reduced to 25% for employees who have completed at least 120 hours but fewer than 400 hours of service for the employer. No credit is allowed for an employee who has worked fewer than 120 hours.
    • The legislation also added qualified long-term unemployment recipients to the list of targeted groups, effective for employees beginning work after December 31, 2015.

    Research Credit – After 21 consecutive years of extending the research credit year by year, the PATH Act made it permanent and made the following modifications to the research credit:

    • For years after December 31, 2015, small businesses (average of $50 million or less in gross receipts in the prior three years) can claim the credit against the alternative minimum tax.
    • For years after December 31, 2015, small businesses (less than $5 million in gross receipts for the year the credit is being claimed and no gross receipts in the prior five years) can claim up to $250,000 per year of the credit against their employer FICA tax liability. Effectively, this provision is for start-ups.

    What is in the future?

    With the election of a Republican president and with a Republican majority in both the House and Senate, we can expect to see significant tax changes in the near future. President-elect Trump has indicated that he would like to see the Sec. 179 limit significantly increased and the top corporate rate dropped to 15%. Watch for future legislation once President-elect Trump takes office this Friday.

    Contact us at Dagley & Co. if you have any questions or concerns regarding your 2016’s tax returns.

     

     

     

     

     

     

     

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  • New Form 1099 Filing Date

    9 January 2017
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    Did your business utilize an independent contractor in 2016? Did you pay him/her $600 or more during the calendar year? If so, you are required to issue him/her a Form 1099-MISC. The purpose of this form is to avoid penalties and the possibility of losing the deduction for his/her labor and expenses in an audit. Different from last year, the IRS moved up the filing due date to January 31, 2017.

    In addition to being used to report payments to independent contractors, Form 1099-MISC is also used to report payments made by a business for rents and royalties and to attorneys for legal services, among others. If there are no independent contractor payments to report, the 2016 1099-MISC issued for other payments continues to be due to the IRS by the normal due date of February 28, 2017. However, where both independent contractor and other payments are being reported, the January 31 due date should be observed so that late filing penalties are avoided regarding the independent contractor payments.

    It is not uncommon to have a repairman out early in the year, pay him less than $600, then use his services again later in the year and have the total for the year exceed the $599 limit. As a result, you may have overlooked getting the information from the individual that you need to file the 1099-MISCs for the year. Therefore, it is good practice to always have individuals who are not incorporated complete and sign an IRS Form W-9 the first time you engage them and before you pay them. Having a properly completed and signed Form W-9 for all independent contractors and service providers eliminates any oversights and protects you against IRS penalties and conflicts. If you have been negligent in the past about having the W-9s completed, it would be a good idea to establish a procedure for getting each non-corporate independent contractor and service provider to fill out a W-9 and return it to you going forward.

    IRS Form W-9, Request for Taxpayer Identification Number and Certification, is provided by the government as a means for you to obtain the data required to file 1099s for your vendors. It also provides you with verification that you have complied with the law in case the vendor gives you incorrect information. We highly recommend that you have potential vendors complete a Form W-9 before you engage in business with them. The W-9 is for your use only and is not submitted to the IRS.

    The penalty for failure to file the required informational returns is substantial and is $260 per informational return. The penalty is reduced to $50 if a correct but late information return is filed not later than the 30th day after the January 31, 2017, required filing date, or it is reduced to $100 for returns filed after the 30th day but no later than August 1, 2017. If you are required to file 250 or more information returns, you must file them electronically.

    Please note: To avoid penalties, all forms must be sent to the IRS by January 31, 2017.

    Dagley & Co. is here to prepare your 1099 for submission. We recommend using this 1099 worksheet  to provide us with the information needed to prepare your 1099.

     

     

     

     

     

     

     

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  • January 2017 Business Due Dates

    5 January 2017
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    Are you a business owner, or is it your job to take control of your company’s accounting department? Don’t be overwhelmed by the new year! We’ve compiled a list of important due dates for you to remember. We advise you to write these down or add them to your phone/computer calendar! The due dates are as follows:

    January 17 – Employer’s Monthly Deposit Due –

    If you are an employer and the monthly deposit rules apply, January 17 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for December 2016. This is also the due date for the non-payroll withholding deposit for December 2016 if the monthly deposit rule applies. Employment tax deposits must be made electronically (no paper coupons), except employers with a deposit liability under $2,500 for a return period may remit payments quarterly or annually with the return.

    January 31 – 1099-MISCs Due to Service Providers & the IRS –

    If you are a business or rental property owner and paid $600 or more to individuals (other than employees) as non-employee compensation during 2016, you are required to provide Form 1099 to those workers by January 31. “Non-employee compensation” can mean payments for services performed for your business or rental by an individual who is not your employee, commissions, professional fees and materials, prizes and awards for services provided, fish purchases for cash, and payments for an oil and gas working interest. In order to avoid a penalty, copies of the 1099s also need to be sent to the IRS by January 31, 2017*. The 1099s must be submitted on optically scan-able (OCR) forms. This firm prepares 1099s in OCR format for submission to the IRS with the 1096 submittal form. This service provides both recipient and file copies for your records. Please call this office for preparation assistance.

    *This due date for the IRS’ copy is one or two months earlier than in prior years and applies when you have paid non-employee compensation that is being reported in box 7 of the 1099-MISC.

    January 31 – Form 1098 and Other 1099s Due to Recipients – 

    Form 1098 (Mortgage Interest Statement) and Forms 1099, other than 1099-MISC, are also due to recipients by January 31. The IRS’ copy is not due until February 28, 2017, or March 31, 2017 if electronically filed. These 1099s may be reporting the following types of income:

    • Dividends and other corporate distributions
    • Interest
    • Amounts paid in real estate transactions
    • Rent
    • Royalties
    • Amounts paid in broker and barter exchange transactions
    • Payments to attorneys
    • Payments of Indian gaming profits to tribal members
    • Profit-sharing distributions
    • Retirement plan distributions
    • Original issue discount
    • Prizes and awards
    • Medical and health care payments
    • Debt cancellation (treated as payment to debtor)

     

    January 31 – Employers – W-2s Due to All Employees & the Government –

    All employers need to give copies of the W-2 form for 2016 to their employees. If an employee agreed to receive their W-2 form electronically, post it on a website and notify the employee of the posting. NEW DATE: W-2 Copy A and Transmittal Form W-3, whether filed electronically or by paper, are due January 31 to the Social Security Administration. This is a month earlier than in the past.

    January 31 –  File Form 941 and Deposit Any Un-Deposited Tax –

    File Form 941 for the fourth quarter of 2016. Deposit any un-deposited Social Security, Medicare and withheld income tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return.

    January 31 – File Form 943 – 

    All farm employers should file Form 943 to report Social Security, Medicare taxes and withheld income tax for 2016. Deposit any un-deposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

    January 31 – W-2G Due from Payers of Gambling Winnings –

    If you paid either reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of the W-2G form for 2016.

    January 31 – File 2016 Return to Avoid Penalty for Not Making 4th Quarter Estimated Payment –

    If you file your prior year’s return and pay any tax due by this date, you need not make the 4th Quarter Estimated Tax Payment that was otherwise due earlier in January.

    January 31 – File Form 940 – Federal Unemployment Tax – 

    File Form 940 (or 940-EZ) for 2016. If your un-deposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.

    January 31 – File Form 945 –

    File Form 945 to report income tax withheld for 20152016 on all non-payroll items, including back-up withholding and withholding on pensions, annuities, IRAs, gambling winnings, and payments of Indian gaming profits to tribal members. Deposit any un-deposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

     

    As always, if you have any questions about the due dates above, please give Dagley & Co. a call at (202) 417-6640.

     

     

     

     

     

     

     

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  • January 2017 Individual Due Dates

    3 January 2017
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    JANUARY 2017 INDIVIDUAL DUE DATES

    January 3 – Call for Your Tax Appointment –

    It’s the beginning of tax season. If you have not made an appointment to have your taxes prepared, we encourage you do so ASAP.

    January 10 – Report Tips to Employer –

    If you are an employee who works for tips and received more than $20 in tips during December, you are required to report them to your employer on IRS Form 4070 no later than January 10.

    January 17 – Individual Estimated Tax Payment Due –

    It’s time to make your fourth quarter estimated tax installment payment for the 2016 tax year.

    January 17 – Farmers & Fishermen Estimated Tax Payment Due – If you are a farmer or fisherman whose gross income for 2015 or 2016 is two-thirds from farming or fishing, it is time to pay your estimated tax for 2016 using Form 1040-ES. You have until April 18, 2017 to file your 2016 income tax return (Form 1040). If you do not pay your estimated tax by January 17, you must file your 2016 return and pay any tax due by March 1, 2017 to avoid an estimated tax penalty.

     

    Contact Dagley & Co. with any questions, or concerns about January’s due dates.

     

     

     

     

     

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  • Don’t Be Left Holding the Tax Bag

    5 October 2016
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    Have you used an independent contractor this year in your business? If yes, and you paid them $600 or more, you are required to issue them a 1099-MISC after the close of the year. If you fail to do so, and your business’s income tax return is subsequently audited, you could lose the deduction for those payments and end up paying taxes on that income yourself, not to mention potential penalties.

    A big tax trap for businesses is the $600 reporting threshold. Say your business uses the services of an independent contractor early in the year at a cost below the $600 threshold, and you don’t bother to obtain the necessary reporting information from the contractor. If you use the contractor’s services again later in the year and the combined total you’ve paid him or her exceeds the reporting threshold, you won’t have the required reporting information.

    Sorry to say, you may find it difficult to obtain that information after the fact, as not all self-employed individuals report all their income, and contractors may not be willing to give you their tax ID information once they’ve completed the work and gotten your payment for their services. So, it is good practice to collect that information upfront before engaging the contractor regardless of the amount.

    The IRS provides Form W-9 – Request for Taxpayer Identification Number and Certification – as a means for you to obtain the data required from your vendors in order to file the required 1099-MISC forms after the close of the year. A completed W-9 also provides you with verification that you complied with the law should the vendor provide you with incorrect information.

    In addition, there are substantial penalties if you fail to file a correct 1099-MISC by the due date and you cannot show reasonable cause for not filing. Generally, for 1099 forms due in 2017, the penalty is $50 per 1099-MISC for not filing by the due date. The penalty increases to $100 if the form is not filed within 30 days of the due date and $260 after August 1, 2017. The maximum penalty for small businesses is $532,000, so you can see this is not a reporting requirement to be taken lightly.

    Oh, and by the way, the due date for filing 2016 Forms 1099-MISC with the IRS is January 31, 2017, when you are reporting nonemployee compensation (box 7 of the form), which includes the income paid to independent contractors. This due date is a month (two months if you’ve been filing your 1099s electronically) earlier than it has been in the past. So now both the government’s copy and the one you provide the contractor are due by the same date.

    If you have questions related to your 1099-MISC reporting requirements or need assistance filing the required forms after the end of the year, please give Dagley & Co., CPA a call.

     

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  • Looking for Ways to Maximize Your Retirement Contributions?

    16 September 2016
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    Are you a sole proprietor with no full-time employees other than yourself and/or your spouse? Also, are you are seeking to maximize your retirement plan contributions? If so, a Solo 401(k) may be right for you. The key benefits of a Solo 401(k) plan are as follows:

    • Manage your own account directly without any brokers, banks, or trust companies as middlemen.
    • Generally contribute larger amounts, approximately equal to the 401(k) and profit-sharing amounts combined.
    • Legally avoid the unrelated business income tax (UBIT) that would apply to certain self-directed IRA transactions.
    • Make Roth contributions to the 401(k) element (not the profit-sharing part) of the plan, regardless of the AGI limitations that apply to regular Roth contributions.
    • Transfer existing retirement funds into the Solo 401(k).
    • Direct your investments with absolutely no restrictions on investment choices (including real estate, private companies, foreign assets, precious metals, etc.).

    Solo 401(k) Contributions – The maximum annual contribution to a Solo 401(k) for 2016 is $53,000 but not exceeding 100% of compensation. The Solo 401(k) contribution consists of two parts: (1) a profit-sharing contribution of up to 20% of net self-employment income for unincorporated businesses or 25% of W-2 income for incorporated businesses and (2) a salary-deferral contribution (same as the 401(k)) of as much as 100% of the first $18,000 ($24,000 if age 50 or over) of the remaining compensation after the profit-sharing contribution, as a tax-deductible contribution.

    Given sufficient income, a self-employed individual and spouse (assuming the spouse is employed in the same business) may contribute, for 2016, up to $106,000 combined. Because of the way the contribution is calculated, a larger contribution can usually be made into a Solo 401(k) than to a Keogh or SEP IRA at the same income level.

    Discretionary Funding –The funding of the Solo 401(k) plan is completely discretionary and flexible every year. Funding can be increased, decreased, or skipped entirely, if necessary.

    Where Deducted – If your business is organized as a Subchapter S or C corporation, or LLC electing to be taxed as a corporation, then you are an employee of the business, so the salary-deferral contribution reduces your personal W-2 earnings and the profit-sharing contribution is deducted as a business expense.

    For a sole proprietorship, a partnership, or an LLC taxed as a sole proprietorship, the owner’s salary-deferral and profit-sharing contributions are deductible only from personal income (i.e., on page 1 of Form 1040, as an adjustment to gross income), and not as an expense of the business.

    Deadlines – The deadline for establishing a Solo 401(k) is December 31st for an individual or the fiscal year end for corporations. For unincorporated businesses, the deadline for making the contributions is the regular April income tax filing due date plus extensions. For incorporated businesses, the deadline is 15 days after the close of the fiscal year.

    Roth Option – The 401(k) portion of the contribution can be designated as a non-deductible qualified Roth contribution, provided the plan document permits Roth contributions.

    If you think a Solo 401(k) might be right for you, please call Dagley & Co. at (202) 417-6640 for further details. We will help you to determine if your particular circumstances permit you have, and whether you will benefit from a Solo 401(k).

     

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  • September 2016 Business Due Dates

    6 September 2016
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    September 15 –  Corporations

    File a 2015 calendar year income tax return (Form 1120 or 1120-A) and pay any tax, interest and penalties due (due date applies only if you timely requested an automatic 6-month extension).

    September 15 – S Corporations

    File a 2015 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension.

    September 15 – Corporations

    Deposit the third installment of estimated income tax for 2016 for calendar year corporations.

    September 15 –  Social Security, Medicare and withheld income tax

    If the monthly deposit rule applies, deposit the tax for payments in August.

    September 15 – Nonpayroll Withholding

    If the monthly deposit rule applies, deposit the tax for payments in August.

    September 15 – Partnerships 

    File a 2015 calendar year return (Form 1065). This due date applies only if you were given an additional 5-month extension. Provide each partner with a copy of K-1 (Form 1065) or a substitute Schedule K-1.

    September 15 – Fiduciaries of Estates and Trusts

    File a 2015 calendar year return (Form 1041). This due date applies only if you were given an additional 5-month extension (If applicable, provide each beneficiary with a copy of K-1 (Form 1041) or a substitute Schedule K-1).

    Give Dagley & Co. a call for more details on taxes and your businesses September due dates.

     

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  • February 2016 Individual Due Dates

    5 February 2016
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    If you are uncertain of your tax due dates, here is a little help for you.

    February 1 – Tax Appointment

    If you don’t already have an appointment scheduled with Dagley & Co., you should call to make an appointment that is convenient for you.

    February 1 – File 2015 Return to Avoid Penalty for Not Making 4th Quarter Estimated Payment

    If you file your prior year’s return and pay any tax due by this date, you need not make the 4th Quarter Estimated Tax Payment (January calendar).

    February 10 – Report Tips to Employer

    If you are an employee who works for tips and received more than $20 in tips during January, you are required to report them to your employer on IRS Form 4070 no later than February 10.

    Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

    February 16 – Last Date to Claim Exemption from Withholding

    If you claimed an exemption from income tax withholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.

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