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Jun 24

May 2024

Finally, April is over. First, it has been reported on googlemaps.com that our company has been closed permanently. Our company has changed its name from Higginbotham Companies Inc. to Higginbotham – Baldeon Enrolled Agents, Inc. and neither closed. We have continued offering the same services to our clients for the last 35 years. Now, in the past month, there have been many people affected by their lower W-2 withholdings and resulted in them paying the IRS. To avoid paying taxes at the end of the year, you will need to have extra withholding from your paychecks. People with business filing as sole proprietors, should estimate their tax liability and pay an estimate tax to the IRS on the four payments due dates: April 15th, June 15th, September 15th, and the fourth by January 15th next year. It is essential to reconcile your monthly income and expenses to establish your net income or loss. You will then be able to project your tax liability and evaluate how your expenses are related to your income to determine if your business needs to increase prices or lower your costs to maximize your profit. This evaluation should be done by July and October. This information will be crucial to give you a better understanding of your business. It is essential to mention it is not always a good practice to buy expensive equipment or a vehicle, especially if you don’t need it; another option would be to invest the money in a retirement account, which may have been overlooked. Now, let’s turn to non-profit organizations. Every organization must file an extension or tax return by May 15th, 2024. Here is a guidance for the requirements, use Form 990 for organizations if they have gross receipts of $200,000 or more, or total assets of $500,000 or more; Form 990-EZ, called the short Form for organizations, if their annual gross receipts are less than $200,000, and total assets, at the end of their tax year, are less than $500,000; Form 990-N for organizations with annual gross receipts normally $50,000 or less, which most school non-profit organizations are and created for involved parents to promote sports. It is crucial to remember the tax-exempt status of an organization does not file a required return or notice for three consecutive years will be automatically revoked, as of the due date of the third unfiled return. Once it is revoked, organizations must file Form 1120, U.S. Corporation Income Tax Return, or a Form 1041, U.S. Income Tax Return for Estates and Trusts, and may need to pay income taxes. An automatically revoked organization may apply to reinstate its exempt status using the procedures explained in Revenue Procedures and reinstate its exempt status retroactively. Last, the amount of the penalty depends on the size of the organization. The penalty for late filing is $20 a day, not to exceed the lesser of $12,000, or 5% of the gross receipts of the organization, for the year, unless the organization can show the late filing was due to reasonable cause. For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor. Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.