The IRS doesn’t play around. They want their money and their conviction rate and subsequent penalties are substantial. Take Al Capone for example. Wanted by the FBI, he was allegedly responsible for all sorts of murders, prostitution rings, bootlegging, bribery and more and yet he went to jail for tax evasion. More recently, baseball slugger/gambler Pete Rose, actor Wesley Snipes, “Queen of Mean” business woman Leona Helmsley and Survivor winner Richard Hatch, all spent time in the big house for not paying their taxes. Business penalties can be issued as fines or a sentence in a federal penitentiary, halfway house or home detention according to the IRS.
Tax requirements for small businesses vary depending on the type of ownership structure, so please check with your accountant for specifics or refer to IRS Publication 334, Tax Guide for Small Business. However, there have been some highly publicized changes for business filings this year:
- The self-employment tax increases to 15.3%.
- The mileage rate is 56.5 cents per mile (56 cents per mile in 2014).
- The deduction for business use of your home is simplified.
The hardest thing in the world to understand is the income tax. Albert Einstein
Although Mr. Einstein might have a hard time with some of these, here are a few of the FAQs for small business about tax information, from www.irs.gov:
What are some expenses I can NOT deduct as a business expense?
- Bribes and kickbacks
- Charitable contributions
- Dues to business, social, athletic, luncheon, sporting, airline and hotel clubs
- Lobbying expenses and political contributions
- Personal, living and family expenses
- More – see IRS Publication 535
Do we still have to file taxes if our partnership or corporation had no income for the year?
Partnerships and corporations have different standards for filing an income tax return.
- A domestic partnership must file an income tax form unless it neither receives gross income nor pays or incurs any amount treated as a deduction or credit for federal tax purposes.
- A domestic corporation (including a Subchapter S corporation) must file an income tax form whether it has taxable income or not.
- More here on IRS website.
For business travel, are there limits on the amounts deductible for meals?
Meal expenses are deductible only if your travel requires you to be away from home overnight or if the meal is business-related entertainment. More here on IRS website.
Tax day is fast approaching. Please take this as your official notice to get working on your returns.
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