Get Ready To File Your Business Taxes Soon: The July 15 Tax Deadline Is Coming Up Fast
In March 2020, the Treasury Department and Internal Revenue Service put into place a three-month tax deferral as a result of the economic impact of the Coronavirus pandemic. The extension provided individuals and small businesses extra time to get their finances in order without interest or penalties.
But that deferral is almost over, and the new tax deadline of July 15 is rapidly approaching. The IRS is encouraging small businesses to file as soon as possible.
Tax Day Extended to July 15 — Another Extension Unlikely
Small business owners who took advantage of the opportunity to hold on to some capital during the 90-day deferral will now need to reconcile their taxes on July 15 (this does not include Partnerships or S-Corporations, both of which should have already filed on March 16, prior to the IRS extension).
Initially, close to 21 million individuals and businesses took advantage of the deferral. The most recent statistics from the IRS show that compared to the 2019 tax season, 5.3% (approximately 7 million) fewer returns have been filed. Some small businesses and individuals might be holding out hope that the tax deadline will be extended again, particularly after Treasury Secretary Steven Mnuchin hinted at another 90-day reprieve from filing. However, the IRS commissioner Charles Rettig says not to count on it even as pandemic-related uncertainty grows.
As part of the economic relief from the Coronavirus pandemic, payroll taxes from the first quarter of the year were also delayed until the July 15 deadline. That means Q1 & Q2 payroll taxes are both due on July 15.
Need an extension? File with the IRS for an extension and give your business until Oct. 15 to file a return.
Businesses need to take the new tax credits into considerations when filing and can consult the IRS Coronavirus Tax Relief hub for information on how the IRS is offering tax help for small businesses impacted by COVID-19. This includes a link to frequently asked questions regarding the new tax credits and further COVID relief.
The IRS also has a free taxpayer advocacy program for individuals and businesses who aren’t served by the one-size-fits-most forms and whose situations might differ from the norm.
Learn More About Filing Your Business Taxes
Small businesses that need to file by July 15 can read Merchant Maverick’s Complete Guide to Businesses Taxes for tips and assistance for navigating the new summer tax season. Some of Merchant Maverick’s tips include:
- Use Accounting Software: According to Merchant Maverick’s Small Business Tax Tips, using accounting software is the number one best practice for small businesses. Find an accounting program that helps you track all your business finances, including sales, inventory, or even payroll. Accounting software even helps with deductions and keeps your files in one place in the event of an audit.
- Learn Which Tax Forms You Need To File: There are many different types of tax forms small business owners need to know:
- Form 1040 (used to submit individual tax returns)
- Schedule C (used to report profit or loss)
- Schedule SE (used to calculate social security and Medicaid taxes on self-employment income)
- W-2 (reports employee wages and taxes)
- W-3 (form sent to the Social Security Administration along with W-2 reports)
- 1040-ES (used to calculate and pay quarterly taxes)
- 1099-MISC (sent to the IRS and independent contractors that were paid at least $600 by your business).
With many businesses pivoting and struggling amid the global pandemic, there might be unique small business deductions or write-offs available to claim this year. If the process is daunting and overwhelming, contact your local IRS department for assistance. Some local departments are open for in-person appointments; you will be asked to wear a mask, maintain social distancing, and cancel your appointment if you are ill.
When in doubt, direct your questions to a tax professional or go to the IRS website for specific tax-related questions.