Congress closed out 2010 with an unprecedented amount of attention on taxes. Legislators ended the session by continuing, until the end of 2012, the tax rates enacted under Pres. George W. Bush. But in the shorter term, small business owners are gearing up to file and pay their 2010 taxes.
The good news is that there will be few changes this tax year that will impact tax filing for small business, according to Pamela F. Olson, former
assistant secretary for tax policy at the U.S. Department of Treasury, head of the Washington, D.C., Tax Group at the law firm Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates, and a member of the Small Business Legal Center’s advisory board.
Most important, taxpayers have three extra days to file this year. The deadline is April 18. Also, call your accountant if you are a small business owner with one or more employees and missed the Jan. 31 deadline to implement the payroll tax holiday. And make sure you report all your income for 2010—that includes cash, checks, credit cards, PayPal, and partnership and LLC distributions.
Olson does not expect any new enforcement initiatives from the Internal Revenue Service this tax year, and she notes that the IRS is “trying to do things that are faster, smarter and less burdensome for small business.” She expects the IRS will continue to look at issues related to properly completing W-2 forms for employees and 1099 forms for independent contractors.
Not surprisingly, she notes that keeping your paperwork in order is key when preparing forms or in the event of an audit.
Looking ahead, Olson thinks significant changes to the tax system are likely, including some efforts to simplify it. “There’s a lot of junk that’s been added to the code,” Olson says. “Cleaning some of it out would help simplify it.”
Here are your key upcoming 2011 tax deadlines:
April 18: Deadline to file individual tax returns and the last day to make a retroactive contribution to many retirement accounts, including a traditional IRA, Roth IRA, Health Savings Account, SEP-IRA or solo 401(k) for the 2010 tax year.
Sept. 15: Deadline for third-quarter estimated tax payments for 2011 tax year.
Oct. 3: Final deadline for self-employed persons or employers to establish a simple IRA for 2011.
Oct. 17: Final deadline to file individual tax returns for the 2010 tax year, if you filed for an extension.