Author: Leon Clinton

Tax

Tax Due Dates for June 2018

June 11

Employees who work for tips – If you received $20 or more in tips during May, report them to your employer. You can use Form 4070.

June 15

Individuals – If you are a U.S. citizen or resident alien living and working (or on military duty) outside the United States and Puerto Rico, file Form 1040 and pay any tax, interest, and penalties due. U.S. citizens living in the U.S. should have paid their taxes on April 17. If you want additional time to file your return, file Form 4868 to obtain 4 additional months to file. Then file Form 1040 by October 15. However, if you are a participant in a combat zone, you may be able to further extend the filing deadline.

Individuals – Make a payment of your 2018 estimated tax if you are not paying your income tax for the year through withholding (or will not pay enough tax that way). Use Form 1040-ES. This is the second installment date for estimated tax in 2018.

Corporations – Deposit the second installment of estimated income tax for 2018. A worksheet, Form 1120-W, is available to help you estimate your tax for the year.

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in May.

Employers – Social Security, Medicare, and withheld income tax.If the monthly deposit rule applies, deposit the tax for payments in May.

Quickbooks

Getting Ready for Payroll in QuickBooks Online

Payroll is probably the most complex element of small business accounting. Not only are you directly responsible to your employees, but you also need to make sure you are handling everything related to benefits and payroll taxes correctly.

Whether you are switching from a manual system to QuickBooks Online, or you have just hired your first employee, you will soon discover that the site can make your payroll-related tasks much more organized and accurate–speeding up the process tremendously.

But before you start getting ready for your first payroll run, you have a lot of setup work to be done. Be sure to leave yourself time before those first paychecks are expected. This is not meant to be a payroll setup tutorial. While some step-by-step instruction is provided, initially, we just want you to see what information you will need to have available and how QuickBooks Online handles it.

Building a Backbone

There is no particular order set in stone for your payroll preparation tasks, although you will need to provide some background information about your company and its policies before you can start creating employee records.

QuickBooks Online does not walk you through the steps required; however, it does display a page with links to all of the data that you will have to enter. Click the gear icon in the upper right, and then click Payroll Settings. You will see this screen:


Figure 1: QuickBooks Online’s Payroll Settings screen displays links to the pages where you will manage your setup tasks.

You would have entered information about your Contact Informationand Work Locations (under the Business Information heading) when you first signed on to QuickBooks Online. At the same time, you would have been exposed to the Chart of Accounts, which already has accounts designated for payroll. You can see them by clicking Preferences | Accounting, but please do not customize these. If modifications are needed, we will do them for you.

Payroll Policies

How often will you pay your employees? Go up to the Payroll heading in the upper left and click on Pay Schedules. Click Createand open the drop-down list next to Pay Period to select the frequency desired. Then enter the date for the first payroll you will run in QuickBooks Online and the end date for the period that it covers. Click the box below if you want this to be the default setting for all employees. Then click OK to return to the previous page.

Open the Vacation and Sick Leave Policies window. If you do not yet have accrual rules for these paid days off, let us help you here. It is complicated. When you are done, click the back arrow to return to the Pay Policies window and select Deductions/Contributions. Are you offering benefits like health insurance? You will need to have your paperwork and information handy before you start completing this section.


Figure 2: Before you can pay employees, you will need to have entered information about the benefits you offer so you can withhold dollars for them.

Click the plus sign (+) in front of Add a New Deduction/Contribution and complete the fields here, then click OK. You will assign these deductions to employees on their individual records in QuickBooks Online. If there are any Employee Garnishments needed (like child support), click the down arrow next to Add Garnishment for and select the worker from the list. You will provide details for these in the window that opens. This information was most likely provided to you by the agency requesting it. When you are done, click OK.

Taxes and More

If you are new to payroll and have never dealt with payroll taxes before, you are going to need our help getting this complicated element set up correctly. Even if you have, we would recommend that you call and set up a consultation with one of the QuickBooks Online experts in the office. QuickBooks Online does a good job of providing guidance here, but failure to submit payroll taxes (or pay them incorrectly) can lead to penalties and fines–or worse.

In addition, there are other setup tasks you will need to complete, such as:

  • Connecting your payroll bank account to QuickBooks Online.
  • Creating employee records.
  • Setting payroll production preferences.

Setup is by far the most challenging part of processing payroll in QuickBooks Online. Once that is done, you will just be entering hours and making modifications. Please contact the office if you are planning to take this on or have any questions.

Tax

Taxpayer Rights: Audits and the Right to Finality

An IRS audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct. IRS audits are conducted either by mail (e.g., you receive a letter in the mail that you must respond to) or through an in-person interview.

Taxpayers who have been audited or otherwise interacted with the IRS should know that they have the right to know when the IRS has finished the audit. Known as the right to finality, it is one of ten basic taxpayer rights–known collectively as the Taxpayer Bill of Rights. All taxpayers dealing with the IRS are entitled to these rights. If you’ve been audited, here are seven things you should know about the right to finality.

1. Taxpayers have the right to know:

 

  • The maximum amount of time they have to challenge the IRS’s position.
  • The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt.
  • When the IRS has finished an audit.

 

2. The IRS generally has three years from the date taxpayers file their returns to assess any additional tax for that tax year.

3. There are some limited exceptions to the three-year rule, including when taxpayers fail to file returns for specific years or file false or fraudulent returns. In these cases, the IRS has an unlimited amount of time to assess tax for that tax year.

4. The IRS generally has 10 years from the assessment date to collect unpaid taxes. This 10-year period cannot be extended, except for taxpayers who enter into installment agreements or the IRS obtains court judgments.

5. There are circumstances when the 10-year collection period may be suspended. This can happen when the IRS cannot collect money due to the taxpayer’s bankruptcy, or there’s an ongoing collection due process proceeding involving the taxpayer.

6. A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.

7. Generally, a taxpayer will only be subject to one audit per tax year. However, the IRS may reopen an audit for a previous tax year, if the IRS finds it necessary. This could happen, for example, if a taxpayer files a fraudulent return.

If you have any questions about this topic, help is just a phone call away.

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