“The Final Countdown” to Tax Day is on, and with just over a month left to go until that most notorious day of the year—Tax Day—it’s time to get serious about what you need to do to meet your obligations as a taxpayer and freelance business owner.
The good news is, there’s only one date to remember—April 18, 2017. This is when you need to file the following:
Your personal and single member LLC income tax returns. Most people need to file a personal tax return on Form 1040. Additionally, if you are a freelancer or a single member LLC treated as a disregarded entity you’ll need to include all of the tax information related to your business using Schedule C on Form 1040.
If you haven’t already compiled you tax information for your personal return or your LLC filing, there’s no time to waste—especially if you’re planning on having a CPA or other tax professional prepare it for you. You’ll need to get all of your tax records together and send them to your tax preparer right away to give them enough time to process your return. If you’re still in a DIY tax mode, make sure you block off enough time on your calendar in the next week or two to get your taxes done. If you can’t get your returns done on time you can file for an extension but make sure you do your best to pay any estimated liability prior to the filing deadline to avoid penalties. Interest still accrues on any open balance after April 18, so it’s best to be conservative on extension payments and overpay when in doubt (which will result in a refund once you file your return).
C-corporation tax return to meet the new deadline. This type of return (Form 1120) only applies to freelancers who have their businesses set up as C-corporations (C-corp). This year, the filing due date moved from March 15 to April 18, giving you more time to file. However, it’s important to get your filing done now to avoid any delays. If you’re not going to have all the information you need or if you have extenuating circumstances that will impact your ability to get your C-corp taxes done, then focus on filing for an extension which will give you an additional six months to file your taxes and pay them (plus interest, of course).
First quarter estimated tax payments. Amid all of the excitement of filing your annual tax return, it would be easy to forget to pay your estimated taxes for the first quarter of 2017. Please don’t. That will just set off bad tax karma for the rest of the year. Plus, if you get behind now, it will be that much harder to catch up later, which might lead to having to pay interest and penalties. Plan on paying at least 33% of your profits in estimated taxes and make sure to pay estimated taxes to your state and any local taxes that apply to your business, too.
Report of Foreign Bank and Financial Accounts (FBAR). This filing only applies to or U.S. citizens or green card holders (and other persons filing as US tax persons) with assets of more than $10,000 outside the United States.
This year there is a major change in the due date for FBAR filings. The deadline is April 18, 2017. In addition, the deadline for U.S. citizens living abroad to file their individual tax return is June 15, 2017, which takes into account a two month-filing extension from the standard April 18, 2017 deadline.
Don’t let Tax Day sneak up on you…act now!
Yes, the checks made payable to the IRS and your state finance department may be flying out of your checkbook come this time of year. Unfortunately, taxes are a big part of the freelance equation and for many of us they represent our largest financial outlay. If you’re lucky enough to be receiving a refund check this year, before you make a plan to spend it, make sure you’ve taken care of your estimated tax payments and any other tax obligations so you can avoid paying any more taxes than you have to in 2017 and beyond.
Jonathan Medows is a certified public accountant licensed in New York, New Jersey, Maryland, and Pennsylvania. He is also a recognized expert in taxation for freelancers and the self-employed—often tapped for his expert knowledge and perspective on self-employment taxation by national and regional publications such as The New York Post, BusinessWeek, Forbes taxation blog, WebCPA, CPA Practice Advisor, and others. You can read some of Jonathan’s press coverage here.
©2021 MEDOWS CPA, PLLC