See ya 2020 and welcome to 2021. Happy New Year Everyone!
Although we are onto another year, 2020 is technically not over, we have tax returns to file yet!
In this blog post we are going to go through some things you can do early here in 2021 to make this tax season a breeze. Before beginning, the number one thing I can say is be proactive. Get your documents and financials in order right away. That doesn’t mean you need to file immediately, it just means you can gather everything and be prepared so that you are not scrambling down the road.
Action Steps For Your Business Tax Return
Many of us are setup as a Partnership or S Corp and they are pass through entities which means we prepare those prior to tackling the personal return.
If you have a sole proprietorship or single member LLC then you will file your business tax return on your personal return via a Schedule C.
- Complete Your Bookkeeping ASAP and Wrap Up 2020
- The last thing you want to be doing is thinking about 2020 deep into 2021. Bite the bullet and get your bookkeeping completed now so you can start preparing your tax return. If you are a client of ours, make sure you complete all transaction questions in Google Drive.
- Gather Documents
- Receipts – Gather all of your receipts for 2020 and put them on file should you need them down the road as backup support.
- Bank Statements – These will be good to have on file should you need to go back or submit them to the IRS down the road.
- Loan Documents/Balances – You will want to ensure any loans on your balance sheet match the balance your bank shows. Make sure you have interest separated from principal. If you had a PPP loan that was forgiven, be sure to alert your accountant.
- Asset Purchases or Sales – If you made any asset purchases (not already on the books) or sold any of your assets throughout the year, be sure to alert your accountant.
- Complete Accountable Plan – Complete the accountable plan for your business and add that activity to your books. Learn more about accountable plans.
Action Steps For Your Personal Tax Return
Make this the easiest tax season yet.
- Gather Documents – If you are a client of ours, you will receive an invite to Intuit Link here at the beginning of January where you can create (or use your current) Intuit account to answer a questionnaire and upload tax related documents. Here are the documents to gather:
- Last years tax return (for first time JETRO filers)
- Payroll Documents
- Various Forms Tax Forms:
- W2 (Wages)
- 1099s – Many different types: Non-Employee Compensation (1099-NEC), Interest (1099-INT), Dividends (1099-DIV), Stocks (1099-B or 1099-COMP), State Refunds or Unemployment Compensation (1099-G), Pension or Retirement (1099-R), Social Security Administation (SSA-1099), HSA Activity (1099-SA)
- 1098 (Mortgage Interest)
- K1s from Partnerships, S Corporations, Trusts, or Estates
- 1095-A, B, or C for Health Insurance
- Student Activity – 1098-E (Student Loan Interest) or 1098-T (Tuition Paid)
- Real Estate Taxes Paid
- Medical Expenses
- Charitable Contributions
- Child Care Expenses
- Estimated Taxes Paid
- It’s important to gather this information as it comes in and be on top of it. If you are able to provide your accountant with all these necessary documents it will make tax filing a breeze this year.
What Are The 2020 Tax Due Dates?
Keep note of these important due dates.
- January 15, 2021
- 4th Quarter 2020 Estimated Tax Payments Due
- February 1, 2021
- 1099-NEC/MISC Forms Due
- March 15, 2021
- S-Corporation Tax Returns (or extensions) Due
- Partnership Tax Returns (or extensions) Due
- Multi-Member LLC Tax Returns (or extensions) Due
- April 15, 2021
- Personal and Single Member LLC Tax Returns (or extensions) Due
- C-Corporation Tax Returns (or extensions) Due
What Is The JETRO Tax Process?
If you are a client of ours, we created a page on our site specifically for you so you know what to expect this tax season!
- Check it out here: JETRO Tax Season Process
Tax season is often a stressful time of the year for business owners and things are often completed as the last minute. It does not have to be that way. Make 2020 the year that your taxes are easy and you can focus on your business!
If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.