The start of a new year means another tax filing deadline is around the corner. With a multitude of various filings due from January through April, we have highlighted the main deadlines and associated filings so you don’t have to think twice about them.
March 17th Deadline
Partnerships and S-corporations must file their annual tax returns by March 17th this year. If all necessary information to prepare a complete and accurate return is not yet available, an extension may be applied for. In these circumstances, the entity still has other considerations outside of just the extension or return. Also due are state withholding or tax payments, K-1 estimates to investors, state pass-through entity tax elections, and any applicable informational returns due to the IRS.
State Withholding Requirements
Many states require partnerships and S-corporations to withhold and remit state income tax on behalf of nonresident investors, either by filing a composite return or by having each investor file their own nonresident return for their share of income earned within the state. It is essential to verify the specific requirements for each state where the entity conducts business, as each state has its own rules regarding withholding for nonresident investors. Doing so helps avoid underpayment and late filing penalties.
Pass-Through Entity Tax (PTET) Election
The Pass-Through Entity Tax (PTET) election allows pass-through entities to pay tax at the entity level, effectively bypassing federal limitations on the deduction of state and local taxes, which are capped at $10,000 for tax years 2018 through 2025. Certain states may still permit this election. It is crucial for pass-through entities, along with their owners and tax advisors, to thoroughly review each state's regulations regarding the PTET election and the associated tax calculations.
K-1 Estimates
While not a mandated requirement outright by the IRS, the investors will require their share of estimated taxable income for the year to help refine their own personal extensions due in April. Oftentimes, a letter to the investors highlighting their amount of income and deductions by category will suffice.
April 15th Deadline
Arguably the most familiar for most taxpayers, this date marks the deadline for individual, corporate, and trust tax returns. Even if an extension is being applied for, all income tax must be paid by this date to avoid late filing and late payment penalties. Outside of the familiar filing requirements, certain taxpayers should also be aware first quarter estimated tax payments are also due on this day.
For individual taxpayers, it is key that you have received all tax forms needed for a complete and accurate return. If any forms have yet to be provided (W-2s, 1099s, 1098s, etc.) reach out to your employer or institution responsible for distributing the forms and request the forms directly.
For corporate taxpayers, relying on a strong set of financial statements, whether filing the return outright or applying for an extension, will act as the best safeguard when ensuring all income is accounted for. If the corporation is invested in a partnership or S-corp, ensure that copies of the K-1s or K-1 estimates have been provided.
Takeaways
While the number of filings and different deadlines can seem daunting, a valuable tax professional will ensure all of your filing obligations are timely submitted. Our team at Evolved can help you get through this tax season. Contact us to schedule a consultation today.
