SG Financial Services

Creating financial order out of paperwork chaos

IRS tips: If you can’t pay your taxes on time

It is almost April 15th.   What do you do if you just realized you owe more in taxes than you have in your bank right now?  Ugh!

The IRS just published 4 tips to help you decide what to do:

1.  File on time and pay as much as you can. File on time to avoid a late filing penalty. Pay as much as you can to reduce interest charges and a late payment penalty. You can pay online, by phone, or by check or money order. Visit IRS.gov for electronic payment options.

2.  Get a loan or use a credit card to pay your tax. The interest and fees charged by a bank or credit card company may be less than IRS interest and penalties. For credit card options, see IRS.gov.

3.  Use the Online Payment Agreement tool. You don’t need to wait for IRS to send you a bill before you ask for a payment plan. The best way is to use the Online Payment Agreement tool on IRS.gov. You can also file Form 9465, Installment Agreement Request, with your tax return. You can even set up a direct debit agreement. With this type of payment plan, you won’t have to write a check and mail it on time each month. It also means you won’t miss payments that could lead to more penalties.

4. Don’t ignore a tax bill. If you get a bill, don’t ignore it.  The IRS may take collection action if you ignore the bill. Contact the IRS right away to talk about your options. If you are suffering a financial hardship, the IRS will work with you.

Hope this helps.   I don’t know if the states are as easy to work with as the IRS.   If anyone has experience with it, let me know.

Reconcile payroll

Among the year end tasks is reconciling payroll.   Get the payroll reports from your payroll vendor.   Some payroll vendors generate a report for you that lists everything you need.   You may have to gather the information from others, using the quarterly and annual reports.   Prepare yourself a spreadsheet so that you have the reconciliation documented.   List wages from your accounting reports with breakdown of various wages if you want.  Tie that to the total wages on the W-3 if you can.   You won’t be able to tie it to the W-3 if there were non-taxable deductions such as health insurance.   So you will have to use other reports, such as the quarterly state reports.   Match the employer social security and medicare amounts to the W-3.   Match the FUTA amount to the 940.  Match state unemployment to the state  reports.  Here in NY, we have the NYS-45 and we need to add all 4 quarters to match.   Remember that your accounting reports may include payments that were not made by your payroll vendor, such as state interest assessment.

It is a bit more time consuming if your accounting reports are on the accrual basis.   You will have to adjust for those accruals at the end of the previous year and at the end of the current year.   I like to reconcile before I put in the year end payroll accruals so that I know I am reconciled then add the accrual in and make sure I am still reconciled.

Give thanks

Happy Thanksgiving!  Give thanks!  I am thankful for my loving and supportive family.  I am thankful for all the people I work with-it is because of you and the appreciation that you show me that I enjoy my work so much.  I am thankful for my health and strength.