The 2021 Tax Season is rolling along. One of the nicer problems that we’re seeing is a substantial increase in revenues for many of our clients.
If we were able to qualify you for the Employee Retention Credit and claim it, then 2021 was probably a profitable year. That being said, we now have to pay the income tax.
Since income taxes are a percentage of income, we’re still substantially revenue positive.
The nice problem comes with the estimated tax deposits for 2022. Since last year’s profits were higher than normal, the estimated tax deposits for this year will probably put you in a position where you are substantially over-deposited for 2022.
This can be rather tricky. We certainly don’t want you to pay in more money than you need to, effectively giving the government an interest free loan. On the other hand, we don’t want you to be substantially under-deposited, leading to an estimated deposit penalty.
Further complications can come because of future tax law changes. What if we deposit based on current income tax rates, and they’re increased at the end of the year, causing a short fall in deposits?
The potential permutations of the problem can be endless.
If you find yourself in this position, please call me after the season. We’ll look at your current financial statements and come up with something reasonable for the deposits.
Let me leave you with this.
If you haven’t sent your work in yet, please do so today. There’s always a bit of a lull before April 1st in the tax season when it’s easier to get work completed.
Once we get into April, the clients who know they’re going to owe substantial amounts of tax wait until the last minute to send in their work. We get extremely busy at that point, dealing with those issues.
If you send in your work past April 1st, we cannot guarantee that it will be completed before the tax deadline. We’ll do everything we can, but can’t guarantee it.
So please take a moment and respond to the emails that my wife Julie has been sending.
If your work isn’t in by the beginning of next month, we will automatically extend your returns. Once again, if you would like to make a deposit with the extension, please let us know.
Also, if you are looking for an accounting firm that knows what it’s doing and actually cares about its clients, please contact us today.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.