Answers for Colorado Small Business Owners & Zarlengo Accounting LLC Clients

Upon proposal acceptance, you will receive an email with a link to access your client portal via Intuit Link.

Intuit Link is a cloud-based platform that allows accountants and clients to securely share and request financial documents, exchange messages, and monitor the status of work in progress.

You will receive an email with an e-signature request. You will be prompted to answer a short series of questions about yourself based on publicly available data to verify your identity, then electronically sign the requested documents  to authorize the electronic filing of your tax return. Upon receipt, we will file your return with the IRS and applicable state(s).

The short answer is: NO. Applying for a tax extension will not make you a target for IRS auditing. That said, although the extension grants you extra time to prepare and file your income tax return, your tax balance is still due by the original filing deadline.

Safe harbor estimates are used to avoid underpayment penalties. The safe harbor rule states that no underpayment penalty will apply if you pay at least 90% of the tax you owe for the current year, or 100% of the tax shown on your prior year tax return (110% for high-income taxpayers), or if you owe less than $1,000 in tax after subtracting withholdings and credits. Safe harbor estimates protect against tax penalties, but do not necessarily cover your actual tax liability for the current year, so you may owe a balance with your tax return filing.

Actual estimates are based on your anticipated current year income, rather than on prior year tax. Using actual income for the current tax year allows for a more accurate estimate of your anticipated tax liability and increases the likelihood of covering your entire tax liability before tax filing.

• Credit an overpayment on your prior year tax return towards your current year estimated tax
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• Pay online using one of the IRS’ various methods https://www.irs.gov/payments
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• Mail payment with payment voucher Form 1040-ES

A tax projection is essentially an educated guess about how much you will owe in taxes for the current year. The more information you have regarding your current year tax scenario (anticipated income, deductions, credits, etc.), the closer the projection will be to your actual tax liability.

The IRS expects the tax owed on income earned ratably throughout the year (25% by Q1, 50% by Q2, 75% by Q3, 100% by Q4) The rule is that you must pay your taxes as you go throughout the year through withholding or making estimated tax payments.

If at filing time, you have not ratably paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.

The IRS typically issues refunds within 21 days of receiving e-filed federal tax returns, assuming there are no errors or issues that require further review.

• You can check the status of your federal refund here: https://www.irs.gov/wheres-my-refund
• You can check the status of your Colorado refund here: https://tax.colorado.gov/where-is-my-refund

‍If you file in other states, check their Department of Revenue website for options to check the status of your refund.

A pass-through entity is the most common business structure in the United States. The entity’s net income is passed through to the individual tax returns of the business owner(s) where it is taxed at the respective individual income tax rates.

Conversely, C Corporations report and pay tax at the entity level.

There are four types of pass-through entities: S corporations, limited liability companies (LLCs), partnerships, and sole proprietorships.

S corporations and partnerships require the filing of separate business income tax returns; whereas, sole proprietorships report the business income on Sch C of the individual’s return.

C Corp Distributions: These are typically dividends paid to shareholders out of the corporation's after-tax profits. These distributions are subject to double taxation: once at the corporate level when the profits are earned, and again at the shareholder level when dividends are received.

Pass-Through Entity Distributions: These are distributions of profits that have already been passed through and taxed at the individual owner’s level from entities like partnerships, S corporations, and LLCs. Unlike C Corporations, these profits are not subject to double taxation when distributed.

Common reasons to amend a return include, if there's a change in your:
Filing status
Income
Deductions
Credits
Dependents
Tax liability

You don't need to amend your return if:
• The IRS let you know it corrected errors on your return
• The IRS accepted your return without certain forms or schedules or asked you to send them

Generally, you must file an amended return within 3 years after the date you filed your original return or 2 years after the date you paid the tax, whichever is later. If you filed early, count from the April tax deadline.