The federal income tax deadline was extended to Wednesday, July 15, 2020 in the wake of the coronavirus pandemic. July 15 is also the deadline for filing state income taxes in Pennsylvania.
Are you filing your business taxes late? If you’re a small business owner and haven’t filed your federal income taxes yet, the extended deadline is now here. What are your options as a late filer or someone who wants to better prepare for the next fiscal quarter? Here’s what you need to know.
Ready to File? How to File Your Business Taxes Electronically
The IRS is currently facing a major backlog in paper tax returns. Those who have recently filed or are filing at the last minute can expect significant delays. To avoid delays, consider filing your state and federal tax returns electronically.
The Pennsylvania Department of Revenue recommends electronic filing for residents and business owners who haven’t already filed. There are paperless e-filing options available in Pennsylvania (some may require fees). By filing online, you’ll be able to check the status of your return and receive it sooner than filing by paper.
Owners can file their federal business taxes electronically using the IRS’s electronic federal tax payment system (EFTPS). The IRS also provides tax forms online for different business entities looking to print out and file by paper.
Not Ready to File? File for an Extension
Your business may be looking and performing very differently than previous tax years. If your taxes deserve more attention this year, an extension can buy you more time to gather your financial records and documents.
Filing for an extension will also help you avoid penalties and interest rates. Extension requests are still due by July 15. You are required to provide an estimate of your tax liability. You are also required to pay any money that is still owed.
If your request is accepted, you will need to file your taxes by October 15. You are then required to make payments (if owed) by this deadline. This amount should include your estimated tax payments for 2019 and the first, second, and third fiscal quarters of 2020.
Know Your Net Operating Loss (NOL)
If your business expenses and deductions exceed what you earn in revenue each year, you have what is known as a net operating loss (NOL). Before the coronavirus pandemic, companies with net operating losses were required by law to apply these losses as taxable income in future profitable tax years. These provisions existed under the Tax Cuts and Jobs Act (TCJA).
However, under the CARES Act, these provisions have changed. Now, businesses can carry-back their net operating losses and apply them to previous tax years. This helps businesses reduce their tax liabilities, and many businesses have been able receive refunds from previous years where they may have overpaid.
If you had a net operating loss in 2019, you can still benefit by carrying back the amount to a previous tax year where your business was profitable.
Reduce Your Property Tax Obligations
It’s hard to know when business will return to normal amidst the coronavirus pandemic. After filing your business taxes this year, you may be wondering how you can save more money annually and better prepare your business for economic downturns in the future.
There are several ways to decrease your tax obligations. You can review your tax elections, your business insurance payments, and you could also start offering fringe benefits to your employees.
Do you own commercial property? It’s not uncommon for business owners to overpay in property taxes every year. If your property is overvalued, you may be suffering a greater loss in annual profits because you’re having to pay a high mortgage. By appealing your property tax bill, you can potentially reduce your tax obligations as a business owner.
Filing Your Business Taxes in 2020
The July 15 tax deadline has arrived. If you haven’t yet paid your taxes, or are facing difficulties this tax season, the attorneys at Hoegen & Associates, P.C. can help. Contact us to speak to an attorney.