 International Revenue Service IRS tax news, National Small Business Week. You know, my business wasn't so small before taxes. Honestly, it's like cutting a dude's legs off and then calling him short. It's wrong on so many levels, obviously at the standard size and short levels, but also on a moral one. The IRS should be called business midget makers. Hey now, that's not politically correct, and I truly apologize for that, but business little person maker did not sound as good if anyone feels the need to send an angry comment. I understand, but still think the alliteration was worth it. Anyways, the IRS could be called small business makers, but that's deceiving, indicating that the IRS helped build up the small business, which is ridiculous. That being the job of the entrepreneur, the IRS does not build businesses up. The IRS cuts businesses down into small businesses. National Small Business Week, making estimated tax payments electronically is fast and easy. Yeah, I bet it is. See, that's exactly what I'm talking about. Anyways, YouTube video available for estimated tax payments. There's a link to that here. It's an ASL as well. IR2022-101 May 4th, 2022 Washington. The internal revenue service reminds all businesses, including self-employed and gig workers. You got to get those gig workers in there. They're quite concerned with those gig workers, making sure that you're on the radar. I hope you know. To make estimated tax payments quarterly and that making them electronically is fast, easy, and safe. During the National Small Business Week, there's a link to that here. You're small. I'd be big too if I was living on everyone else's lunch money. Anyways, during National Small Business Week May 7th through May 1st, 2007, the IRS is highlighting tax benefits and resources tied to the theme for this year's celebration. Quote, building a better America through entrepreneurship and, quote, paying estimated tax payments quarterly throughout the year is important for business owners. Individuals and businesses alike are required to pay taxes as income is earned or received throughout the year, either through withholding or estimated tax payments. So there's been a lot of changes for the last couple years due to the pandemic and the economy and so on and so forth with regards to people's work habits. And so you might be in a situation where you're having different jobs, you might have multiple jobs at this time, or just being changing up jobs, or you might be moving from a W-2 employee situation to go in full-time or part-time with other outside work, such as gig work, and in that situation in particular, you're going to want to make sure that you're doing your estimated tax payments because when people move from having a W-2 job, where the taxes are kind of forced to be taken out of your paycheck through the employer and that you also are dealing with the social security, Medicare payroll taxes, and the federal income taxes, and then you move to being self-employed, it can be a shock that you don't have that withholding process happening. You also don't know how much money you're going to be making and it's fairly difficult to think about how much tax you'll actually owe because there's a progressive tax system, so you can't just take your earnings for a particular timeframe and multiply at times a rate, for example, because there's a progressive tax system and so it's a bit more complicated than that. That's a bit overwhelming oftentimes for first businesses. You also have to deal with the self-employment tax. So you want to make sure that you're picking that stuff up because if you're not and you get behind on the taxes, then on your estimated payments, that could really harm a small business that actually started off doing quite well but just didn't realize the tax implications or got behind on that side of things. So keep that in mind, especially you gig workers. You can see the irises eyeballing those gig workers, making sure that you reported their taxes here, so take a look at that. So that's why those who are self-employed or in the gig economy usually need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. So you might be saying, ah, the income tax, that's not a big deal. I'll just calculate my income tax and whatnot. But self-employment tax, social security and Medicare, if you put that on top of things, then don't forget that. It's a big chunk. It's a big piece. It's something to consider, estimate and be aware of. If a taxpayer doesn't pay enough tax throughout, through withholding and estimated tax payments, they may be charged a penalty. So why do we pay taxes? Because I like getting my money back in the form of a refund during when I file my tax. No, that's not why you do it so you don't get hit with the sticks that the IRS has metaphorically that are penalties and interests. We're trying to avoid the penalties and interests. That's why we overshoot to get a refund, not because we just want a refund to get our own money back on a refund, but because we don't want to undercut the taxes. If we did, then we'd have to not only pay the taxes owed, but penalties and interests. That's why we overshoot the taxes, because it's impossible to get a perfect because of the complexity of the tax code. So you're going to make an estimate, you're going to try to overshoot a bit typically in such a way that you're going to avoid penalties and interests basically for sure. And that's the strategy typically. So they also may be charged a penalty if estimated tax payments are late, even if the taxpayer is due a refund when they file their tax return. So they want it during the year. So if you paid all your taxes at the end of the year, the irises will be like, yeah, but you gave me the money in December, and I wanted some of that money in January. So they're going to charge you money. But you're going to say, I didn't know how much I owed in January because it's a business, and I'm doing gig work now. And I didn't know how much I owed. Tough. Tough. So they'll charge you the penalties and interests. You're going to have to kind of estimate that. So look into the estimates. However, generally paying quarterly estimated taxes will lessen or even eliminate any penalties, which is great. Estimated tax requirements are different for farmers, fishers, and certain high income taxpayers. In addition, special rules apply to some groups of taxpayers, such as casualty and disaster victims. Those who recently became disabled, recent retirees, and those who receive income unevenly during the year, which is a common thing for small businesses, you might say, well, I didn't earn my income evenly over the year. So why do I have to? Iris is kind of making the assumption that I did. And that's why they have to make the quarterly tax payment. So in that case, you might dig a bit deeper into that and see if and check that out. So publication 505 tax withholding and estimates tax. There's a link to that here provides more information about these special estimated tax rules. Who must pay estimated tax? Individuals, including sole proprietors, partners, and S corporation shareholders generally must make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. Corporations generally must make estimated tax payments if they expect to owe tax of $500 or more when their return is filed. But how do I know how much I'm going to make, like when my return is filed, because I don't know, I'm just trying to make as much money as I can during the year here in 2022. And I'm not going to file the return till April 15th to 2023. And I don't know what the return looks like at all until I actually make the money, which I don't know how much I'm going to make. That's the problem. That's why you got to make the estimated tax. It's quite a big estimate for many businesses, especially small startup businesses that have no idea how much they're going to make. And so that's what, and so that you got to kind of figure that out. You kind of look at the last year, you could use some safe harbor rules in order to avoid the penalties. But that's the general, that's the general thing you got to do. So taxpayers may have to pay estimated tax for the current year. If the tax was more than zero in the prior year, see the worksheet in form 1040ES, Estimated Taxes for Individuals, or form 1120W Estimated Tax for Corporations for more details on who must pay estimated tax. Who does not have to pay estimated tax? Self-employed people and gig workers who also receive salaries and wages from an employer can generally avoid having to pay estimated tax by asking their employer to withhold more tax from their paycheck. So if you have like gig work, which is like a schedule C possibly, but you're also working at a job, getting the W-2 wages, then you might say, well I'm not, even though I've got some self-employment income, I'm going to try to cover that by having my employer withhold more of the money on their side of things instead of me making estimated tax payments. That's one way that you might kind of handle this, or you make estimated tax payments and withholdings or something like that, whatever you feel comfortable with doing, but you got to make sure that you're paying enough taxes to avoid the sticks, penalties and interest sticks that hit you with, the sticks, they make you dizzy. So this usually requires the filing of a new form W-4 Employees Withholding Certificate so you could figure out the new W-4 stuff with the employer. Remember that the employer is not going to help you out with that typically because they're required to do the withholdings, but they're trying to avoid any kind of, any lawsuits or something by giving tax advice. So you got to usually do your own research on the W-4, figure it out, then give it to the HR department on your business and so on. A special line on the form W-4 allows taxpayers to enter an additional amount to be withheld. So you got to figure that out. Taxpayers receiving a paycheck can check the withholding tax estimator, which is basically a, and there's a link to that here, it's basically going to be a, like a tax software to help you to figure out what these estimators are, which you need kind of like tax software to do because the code is confusing and getting more so and it changes a lot and it's doing that more too. And so you got to use like a tool and if you don't have tax software, this tax withholding estimator is getting better and better as an estimating tool. So it's on irs.gov, irs.gov, irs.gov, v for victory over tax questions to determine if the right amount of tax is being withheld from your paycheck. Also, individuals don't have to pay estimated tax for the current year if they meet all three of the following conditions. No tax liability for the prior year. U.S. citizen or resident for the whole year and prior tax year received a 12 month period. So you might have some like safe harbor calculations within your estimated taxes that you want to check out. An individual has no tax liability for prior year if their total tax was zero or they didn't have to file an income tax return. So in other words, in order to kind of figure this question of well I have no idea how much I'm going to make in 2022, the irs could say well we're going to look at last year and basically give you and say well you know if you follow some rules based on the prior year income then you might have, that's what I'm talking about with these safe harbor type of rules to avoid the penalties and interest so that even if you owed some taxes possibly you can avoid the penalties and interest if you basically based it on a prior year estimate or something like that. So you can take a look at that in more depth. So additional information on how to figure estimated tax is available in publication 505 tax withholding and estimated tax. There's a link to that here. How to figure estimated tax. Individuals including sole proprietors, partners and S corporation shareholders generally use form 1040 ES estimated tax for individuals. There's a link to that here to figure estimated tax. To figure estimated tax individuals must figure their expected adjusted gross income, the AGI taxable income taxes, deductions and credits for the year. So you basically have to do a full tax return you know without the actual information like the W-2s and stuff to do it. You got to do a whole estimate here. So when figure an estimated tax for the current year taxpayers will often find it helpful to use income deductions and credits from the prior year as a starting point. So note estimated taxes are a lot easier if your income is stable throughout the time frame and the tax code is stable throughout the time frame and the economy is stable throughout the time frame and there's not a lot of inflation throughout the time frame and so if those four things like were stable then it would be a lot easier and if the tax code was easy like if all those stuff was stable but like I'm pretty sure like one to five of those five are unstable right now making it a little bit more difficult to make estimated taxes possibly in the current conditions then in prior periods also making estimated taxes more important to keep on top of giving the dancing landscape the changing circumstances the evolving situation. Corporations generally use form 1120W estimate tax for corporations to figure estimated tax when and how to pay estimated tax you might ask. For estimated tax purposes the year is divided into four payment periods. So you got the four quarters four payment periods that you got to pay the estimated taxes and you might say well I pay more when I have my W2 income because I get paid every week on that and they take my money out every week well yeah they take more out because you get paid whatever the pay period is when your W2 employee but if you have to actually write them a check then they'll break it down into the four payment periods four payment periods why because it sounds good for payment period. So however some taxpayers may find it easier to pay estimated taxes weekly bi-weekly or monthly alternative payment periods are allowed if enough tax is paid in by the end of the quarter. Using an electronic payment option available on IRS.gov forward slash payment there's a link to that here is the easiest and fastest way individuals small businesses self-employed individuals and those gig workers can pay federal taxes is fast easy and secure taxpayers can use the EFTPS for all their federal tax payments including the federal tax deposits installment agreement payments and estimated tax payments in addition by using the EFTPS taxpayers can access a history of their payments so they know how much and when the payments were made individual taxpayers can create an IRS online account so you can take a look at that they stopped doing the facial recognition thing so they're not trying to rule the world yet I mean they might and at some point in the future put a microchip a microchip right in your forehead or something but right now they backed off a little bit on that kind of stuff so you could get on to your account there and you get some information so to make that you can help you make your estimated tax payments there using their account taxpayers can see their payment history which is nice you would think you know that would be nice you would think they can get the online account up and running I've got a bank account they can do it without my facial recognition or shipping my forehead or anything so you would think the IRS can get that thing up and running and they're getting better at it but they're a little slow it's a little slow I mean obviously so any pending payments and other useful tax information can be found their individual taxpayers can also make an estimated tax payment by IRS direct pay there's a link to that here individual and business taxpayers can also make an estimated tax payment by using debit credit card or digital wallet there's links to that here the 2022 form 1040 ES estimated tax individuals there's a link to that can help taxpayers estimate their first quarter tax payment while electronic filing is strongly encouraged taxpayers may also send estimated tax payments with form 1040 ES by mail not really recommended obviously the iris doesn't like it but what are you trying to do you're trying to avoid penalties and interest if I get that check mailed out in the mail before the due date and I follow all the rules then you might say hey I'll just send them a check in the mail and hope that they can't open it because of all the COVID restrictions and nobody actually in the office and everybody working digitally and they don't cash to check for like five years or something like that but you know I still so you and then in other words if the iris has given you money in a refund the electronic payment is probably better or something you would like more because you want to get paid faster you want the money sooner if you're paying them and you're going to send them a check in the mail and they can't open it because they're short on staff and elder staff can't go into the office without a gas mask on or something like that then they might not be able to get to the check for a while and that might not be a bad thing for you but I still like to pay electronically because I like to see that it cleared it didn't get lost in the mail and all that kind of stuff so I still pay electronically but just something that I thought I'd talk about because I feel like rambling a bit corporations must deposit payments using the EFTPS additional information is available in publication 542 corporations 247 help at irs.gov and we know what the secret code when they say that really what they're saying is please don't call us we really don't want to talk to you nor do we have the capacity to talk to you if you have any questions visit the website irs.gov irs.gov for victory over tax questions hopefully small business owners self-employed individuals and gig workers will find valuable resources that irs.gov so not on the phone that's not where you're going to find valuable resources it's on the website but the website is available 247 amazingly enough they're able to keep that thing all the people that are working together to make keep that page from crashing they do that 247 the resources include publications forms tax products and tips to help small business owners avoid tax troubles and succeed the irs is also reaching out to taxpayers in other languages throughout online resources for small businesses and individuals the irs has posted translated tax resources in 20 languages on irs.gov irs.gov v for victory over tax for information you could see we speak your language which they really don't because even if you're an English speaker they're speaking irsees legalese that's not how normal that's not normal person's speech resources small business tax workshop there's a link to that here eight interactive lessons designed to help new small business owners learn their tax rights and responsibilities the workshop is available in English, Spanish, Chinese simplified Chinese traditional Korean Russian, Vietnamese and Hayton Crayoli more information about the workshop is available on the irs YouTube channel there's a link to that here we got the self employed individual tax center a resource for sole proprietors and others who are in business for themselves this site has many useful tips and references to tax rules a self employed person may need to know the center is available in English, Spanish, Vietnamese Chinese traditional Chinese simplified Korean Russian Hayton Crayoli small business and self employed tax center features links to a variety of useful tools a downloadable tax calendar tax calendars which all the tax dates on that that's important I'm going to I'm getting one of those and a common forms with the instructions so the center is available in multiple languages once again much of which look to be the same language as we've repeated twice already so e-news for small businesses a free electronic mail service that offers tax information for small business owners and self employed individuals including reminders tips and special announcements gig economy center they're focusing in on you gig economy people aren't you special aren't you lucky the irises got their spotlight on you you spent you lucky people helps people quickly find answers to tax questions as well as helpful tips and tax forms for business taxpayers that's also available in multiple languages social media channels information for small businesses is also available through various irs social media channels including tax tips and other resources there's links to all this stuff for small business for the small businesses here and there'll be a link to this in the description