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I have a small business and I'm the only one who works here, business is an LLC. I do not pay myself wages and take out taxes that way I just take draws and transfer them to my personal account as I need to. When it is time to pay my quarterly taxes I take out a certain percentage and then with that divide it 70% Fed and 30% State now the question is should that show as an expense on the company at the end of the year?
2009 I didn't show it as an expense and the Feds sent me that in addition to what I had coming because they seen the error.
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Posted : 17/09/2010 5:06 pm
Re: Tax Payment To State & Fed
It's not an expense. It is a "current liability". I know it sounds the same, but it is different. Expenses are for things like the utility bill, and office paper. Tax payments are considered a liability, and are not added in with your expenses on your schedule C. On your Income taxes, there is a section where you tell the government how much you have already paid in(line 62 of the 1040). If you add the taxes paid in your expenses and then again when you claim taxes paid, you have overstated how much is paid, and it will affect your return. and if you added it in on expenses and not on line 62, then you get a letter like the one that you received in the mail...
Posted : 19/09/2010 3:04 am
Re: Tax Payment To State & Fed
That's right the tax payment to the State & Fed provides you with a certain period of time to pay it off and the time is generally a little long interval and to avoid any further complications it will be better to see to it that it is paid or the arrangements have been made for the payment to be made.
Posted : 30/11/2010 7:23 am
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