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2012 Year-End Tax Planning

On behalf of Janathan L. Allen, APC posted in Management Advisory Services on Tuesday, December 11, 2012.

As 2012 comes to an end, we would like to remind you of the importance of year-end tax planning. If you would like Allen Barron to assist with your tax planning or calculating your estimated tax payments, please contact our office ASAP. Some year-end issues to consider are listed below:

W-2 forms, 1099s and W-9 forms. Please be aware that all W-2 forms and 1099 forms are due January 31st, 2013. Please be sure to have your W-9 forms completed by vendors and contractors by year-end.1

Tax Planning. We can provide tax planning to minimize your 2012 tax liability and potential tax hikes in 2013. As you may know, deductions and tax credits often have a limited life-span and Congress typically includes a sunset provision or expiration date for certain tax breaks. There are several tax breaks, which will expire at the end of 2012 and will not be available for 2013, unless Congress passes a new law to extend these breaks.

California LLC/CORPs. California LLCs and Corporations (with a 12/31 year-end) have an annual minimum payment of $800.00 which is due by April 15th of the current tax year (unlike individuals who pay taxes on April 15th for the previous tax year). For example, if you have a CA LLC, there was a minimum $800 payment due 4/15/2012 for the 2012 tax year. If you haven’t already, please make sure that you have paid your $800 for 2012 as soon as possible, to avoid additional penalties and interest.

Estimated Tax Payments for Individuals or Entities. In most cases, an individual or entity is required to make federal estimated quarterly tax payments if a tax liability is expected of at least $1,000 or more for the 2011 tax year (after subtracting your withholdings and credits). Therefore, if in 2011 you owed the IRS more than $1,000 (or the CA FTB more than $500) and your economic circumstances (income, expenses, withholdings, employment, sale of property, etc.) have not changed substantial, you would most likely be required to make estimated tax payments. To avoid penalties and interest, you must have paid all of your estimated tax payments according to the schedule below:

  • 1st payment April 17, 2012
  • 2nd payment June 15, 2012
  • 3rd payment September 17, 2012
  • 4th payment January 15, 2013

Although as an individual, your final 2012 estimated tax payment is not due until January 15, 2013, any payments made to a state agency in 2012 may be deducted on your federal tax return and thus reduce your federal tax liability. Therefore, we advise you to make your final 2012 estimated tax payment to the state prior to midnight on December 31, 2012.

Please contact our office at 866-631-3470 to schedule a complimentary initial consultation for assistance with any of the aforementioned year-end issues.