Estimated Taxes for Corporate and Personal Taxpayers
Gwinnett/Johns Creek/Marietta CPA Explains Estimated Taxes for Corporate and Personal Taxpayers
If a taxpayer is not involved in a withholding method then they are most likely subject to pay estimated taxes. Even if your employer does withholding on your W-2 wages you might still need to make estimated payments in the event your withholding is insufficient. As an Atlanta CPA for decades we work with S Corporation and Limited Liability Company business owners to do tax planning at least twice a year. Some of the things that are taxable are income that might also give rise to heightened income and the need to make estimated payments include:
• Self-employment
• Interests
• Dividends
• Alimony
• Rent
• Gains from asset sales and funds
• Stock Sales
• Awards
• Prizes
There is a possibility that you may have to pay these set estimated taxes if the money that is withheld from your income does not meet the requirements of the withholding codes. One of the largest of these I have seen having been as an Atlanta CPA for decades is when the IRS standard withholding on premature distributions can be limited at times to only 20% when in reality this can be double this amount, due to the amounts being subject to a taxpayers marginal tax rate as well as the 10% IRS Tax Penalty on Premature Distributions from Pension Funds such as a SEP/IRS, 401K, Profit Sharing or Simple IRA.
The estimated tax is used to pay off the taxes owed that are reported on your initial return. Penalties on estimated tax come from delaying the tax payments and from not meeting the required amounts of money to be withheld or paid as the monies are earned. The IRS and Georgia both require payments to be made as they are incurred.
Methods of Paying Estimated Taxes
Form 1040-ES, Estimated Tax for Individuals, from the IRS, and Form 600-ES, Estimated Tax for Individuals for the state of Georgia is the form that sole proprietors, partner, S corporation shareholders should use to file and pay their estimated taxes. Publication 505 can be consulted to help understand the rules involving estimated tax for these entities. For all of our S Corporation clients we work with them at least twice annually doing tax planning to be sure to adjust their withholding on their W-2 wages substantially higher so that estimated tax payments are not also required.
When filing as a C Corporation you need to use Form 1120 ES Estimated Tax for Corporations to the IRS and Form 600 ES Estimated Tax for Corporations when paying the state of Georgia to calculate and record your estimated tax. The payments must be properly deposited according to tax regulation and code.
Atlanta CPA: Preparing Corporate Income Taxes for Decades
http://www.youtube.com/watch?v=LCTWMcvho_M
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www.HisCPA.com A Faith Based CPA Firm Serving Duluth, Gwinnett, Atlanta, Alpharetta, Johns Creek, Dunwoody, Roswell, Snellville, Lawrenceville & Beyond.
Related posts:
- Estimated Payments to the IRS and State of Georgia for Personal Income Taxes
- Duluth/Lawrenceville/Snellville CPA: Allocation and Reporting of Estimated Taxes
- Credit for Withholding and Estimated Taxes
- When are Taxpayers Required to Pay Estimated Taxes?
- Gwinnett, Johns Creek, Alpharetta CPA: How Can I Know If I Owe Estimated Taxes?
February 2nd, 2012 at 4:50 pm
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