Tax problem solver

Tips for Reviewing your Tax Return Looking through a tax return can be a daunting process. Here is a simple process to help you confirm the information and identify areas of possible error or need of clarification.

If you own an unincorporated small business, you know your self-employment (SE) tax bills are high. In 2023, SE tax is imposed at a rate of 15.3% on the first $160,200 of net SE income. This includes 12.4% for Social Security tax and 2.9% for Medicare tax. Above $160,200, Medicare tax continues at a 2.9% rate on all income before increasing to 3.8% at higher income levels due to the 0.9% additional Medicare tax. In some circumstances, you may want to become an S corp. to save on employment taxes You can then pay modest, but justifiable, salaries to shareholder-employees and pay out most or all remaining corporate cash flow in federal-employment-tax-free shareholder distributions.

The IRS recently released audit statistics for fiscal year 2022 and few taxpayers had their returns examined. Overall, just 0.49% of individual returns were audited. Historically, this is very low. However, even though a small percentage of returns are being audited these days, that will be little consolation if yours is one of them. Plus, the Biden administration has made it a priority to go after high-income taxpayers who don’t pay what they owe. The best way to survive an IRS audit is to prepare. On an ongoing basis, maintain documentation (invoices, bills, canceled checks, receipts, etc.) for items reported on your returns. Contact us if you receive an IRS audit letter.

Here are a few key tax-related deadlines for businesses and other employers during the third quarter of 2023. JULY 31: Report income tax withholding and F**A taxes for Quarter 2 of 2023 (unless eligible for an Aug. 10 deadline). File a 2022 calendar-year retirement plan report or request an extension. SEPT. 15: If you operate a calendar-year partnership or S corp. that filed an extension, file a 2022 income tax return and pay any tax, interest and penalties due. SEPT. 15: If a calendar-year C corp., pay third installment of 2023 estimated income taxes. Contact us for more about the filing requirements and to ensure you meet all applicable deadlines.