Since there are no significant tax law changes currently passed for 2022, we'll take the opportunity to instead highlight some observations and best practice recommendations that come straight from experiences the last year working with our customers and taxing agencies. Recommendations 1. Receive tax refunds via direct deposit and make tax payments online 2. File returns electronically
Tax Calendar... JANUARY
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3. S end payments / payroll via ACH / and use direct deposit
Why should you consider these recommendations? COVID has shown us that operating using electronic means whenever possible is more efficient. We’ve seen the mail slowed in some instances, but even when the mail has been delivered in a timely manner, we’ve seen delays with processing it. The IRS is a great example. Amended returns mailed in, tax payments mailed in, and notice responses mailed in many times were not acknowledged for quite awhile. Many times additional notices were issued without acknowledgment of the initial mailed materials. This causes stress for the customer – so whenever possible, we recommend doing things electronically. Refunds are returned more quickly, payments are received timely, and it can reduce notices.
Farmers and fishermen pay your estimated tax for 2021 using Form 1040-ES – if you pay your tax in full, you have until April 15 to file your 2021 income tax return. If you don't pay your estimated tax by January 17, you must file your 2021 return and pay any tax due by March 1, 2022, to avoid an estimated tax penalty.
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Eliminate the stress and help set yourself up for success. Stay up to date on the accounting books during the course of the year. Or if you use a tax accountant to complete your books, turn information into them routinely during the year. Being proactive will allow your tax consultant to help make quicker and better tax planning strategies for you, while also allowing more time to research those year end purchases.
Form 1099 due to recipients of certain payments made during 2021 for interest, rent, contract labor, veterinarian services, etc., including the new 1099-NEC Form. Provide employees copy of Form W-2 for 2021. Farm employers file Form 943 to report social security and Medicare wages, and withholdings. Non-farm employers file form 941 for the 4th quarter to report social security and Medicare wages, and withholdings.
4. C omplete your bookkeeping during the course of the year; don't wait to focus on it only at year-end!
Why? Tax accountants are always extremely busy near the end of the year working with customers – doing tax planning, year end forms, March 1 tax deadlines, and April 15 tax deadlines. This all provides a wave of work to get completed within a short time period for these individuals. This year I have noticed the stress to the farm operation for those that waited to compile all the information. Especially in a year like this, when many farmers have had a profitable year with increased commodity prices, doing the work all year makes it much easier at yearend. Not only does it give you up-to-date financial results that you can use to manage your business operation, it also saves you from the year end crunch. Stress gets added for many who are facing supply chain issues surrounding your most frequently used “tax planning” expenditures – i.e. equipment purchases and prepaying inputs. Even for those who have been keeping up on their accounting all year and know what they need to spend, it’s difficult to find available equipment or inputs.
Individuals make a payment of your estimated tax for 2021 if you didn't pay your income tax for the year through withholding (or didn't pay in enough tax that way) via Form 1040-ES.
Employers file form 940 for federal unemployment tax.
MARCH Qualifying farmers file individual tax return (Form 1040) and pay tax due if no safe estimated tax amount paid in and owe over $1,000 in tax.
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S Corporations file a 2021 calendar year income tax return (Form 1120S). Provide each shareholder with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension. Partnerships and LLC’s taxed as a partnership file a 2021 calendar year return (Form 1065). Provide each partner with a copy of Schedule K-1. If not able to file, file Form 7004 to request an automatic six month extension.
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Payers must file Forms 1099 and 1096 (other than 1099NEC, which is due January 31) with the IRS. If these forms are e-filed, the deadline is March 31.
APRIL Individuals file a 2021 income tax return (Form 1040) and pay any tax due. If not able to file, file Form 4868 to request an automatic six month extension. Any tax due must be paid with the extension.
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Make the above recommendations your New Year’s Resolutions in 2022. And if you’re already doing all of the above, take your financial reporting to the next level!
First quarter estimate is due for 2022 for individuals paying estimated taxes.
Our tax accountants at GreenStone are ready to help you with your tax and accounting needs. Please contact your local branch to set up a meeting with your local tax accountant. ■
Partners — Winter 2022
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