Corporate Tax Extension Filing

Depending on where you live, the manner in which you can file a corporate tax extension normally varies from one place to another depending, among other things, on the size of the enterprise. Each country or region has a different set of tax laws and procedures governing its citizens. But more often than not, the basics of filing a corporate tax extension includes filling out forms, offering a reason for the extension and forwarding the form to the tax agency. In some cases, you might have to include payment for your estimated taxes.

Tax Agency

As you file a corporate tax extension, it is automatic that you will have to contact the tax agency. This way you can ask for more information and further details of filing, not to mention the specific deadlines that must be met.  Knowing the cut-off date is extremely important. Failing to meet it will result to late fees and penalties.

In other places, the tax agency where you have to file will directly give you a form or group of forms for filing the extension. You may mail the completed forms back to the agency, or you may just file them online (that is, if they allow such arrangement).

Estimated Taxes

When filing a corporate tax extension, you will most probably have to calculate the estimated taxes you owe. Although it is sometimes impossible to know exactly the figures, still doing so is in your company’s best interest. So, before the regular tax payment due date, make sure that you thoroughly calculated an estimate and send the approximation to your tax agency. Here, you can avoid fines and other charges that you would typically face when paying your tax bills behind schedule or sending in a payment that is smaller than required.

Other agencies

Finally, it is also important to point out that you may need to file corporate taxes with more than one tax agency. Here, you will likely have to get in touch with each agency to find out its exclusive conditions and prerequisites for filing a corporate tax extension. Also, don’t be surprised if you may have to pass a separate extension form to each agency, though several authorities may authorize you to send a national and regional extension request all together.

Tax Foundation Study: Corporate Exemptions “Generally Available” to All Industries

A new report by Washington D.C.-based think tank Tax Foundation suggests that most corporate tax exemptions in the US apply to all businesses, dispelling the prevailing thought that they target specific industries.

The study found that only about 8% of corporate tax expenditure benefits are targeted to specific business areas, such as renewable energy, insurance, oil and gas, and coal. Contrary to popular opinion, the vast majority of exemptions can be availed by nearly all corporations as part of their cost-cutting arsenal.

Tax Foundation President Scott A. Hodge says the report compares the various corporate income tax expenditures with popular exemptions for individuals and state and local governments. Most of the corporate tax exemptions were enacted for the benefit of specific policy goals defined by lawmakers, rather than favoring a particular industry.

The report further found that benefits for state and local governments were nearly twice the amount for specific industries. For instance, state and local governments enjoy up to $640 billion in tax benefits, through the combination of the deductions for state and local income and property taxes, as well as exemptions for state and local bonds.

However, the benefits for individuals far outweigh corporate tax expenditures, such as the exclusion for employer-provided health insurance and the mortgage interest deduction for homeowners.

There are roughly 80 different corporate tax expenditures, amounting to nearly $660 billion over fiscal years 2012 to 2016. In addition, the five-year budgetary cost of the exclusion for employer-provided health insurance for individuals exceeds $1 trillion, while the mortgage interest deduction amounts to over $609 billion for the housing industry.

“With the mounting federal deficits, corporate tax expenditures have come under increased scrutiny as a potential source of new tax revenues,” Hodge said. “However, considering the fact the US has one of the highest corporate tax rates in the world, lawmakers would be far wiser to consider reducing or eliminating them within the broader context of corporate tax reform and lowering the federal corporate tax rate.”

Corporate Tax Return

What is a corporate tax return? (See also Tax Software Envelopes) hhhhh. In simple words, it is a form filled by a company stating earnings or losses of income by a business throughout a fiscal year. In the US, corporations generally file tax returns not only to the state wherein the business operates, but to the federal government’s Internal Revenue Service (IRS) as well.

The rules and regulations for states and other countries may differ; however, it is usually the case that  the IRS obliges a firm to complete Form 1120 (or 1120S for an S corporation), together with supporting schedules.

As a rule, tax returns include all income and deductions, pretty much the same to a simple tax return filed by a citizen. The first section contains all income, while the second section shows all expenses, losses and deductions. Schedule A or Schedule C, along with other parts of the form, should also be completed similar to the main form.

[h2]Deadline[/h2]

It is always the case that the state or federal governments established the deadline for filing a corporate tax return. More often than not, the IRS deadline is 15 March, not unless a form to extend the deadline is applied by this date. A extension is given until six months; however, interests on any amounts owed my accumulate during this time.

It is a must is to pay the tax on time, otherwise severe penalties may be enforced. This entails that a corporation has to pay the proper amount, as well as any other fees or interest allowed by the government. Because of this, many companies just opt to self-audit their books to keep any IRS or other auditor from discovering incident(s) of improper bookkeeping.

[h2]Estimated Dues[/h2]

There are times when the state or federal government require quarterly payments of estimated taxes dues. In the event of an underpayment, the company must pay the amount and interest. Similarly, if there is an overpayment, the extra amount paid is reimbursed or considered to the following quarter.

[h2]Fiscal Year[/h2]

A fiscal year is the 12-month period that a company reports upon in a corporate tax return. In most cases, the fiscal year is just analogous to the calendar year, which covers  January to December. In other instances, a fiscal year may run from July to June, or some other cycle.

Capital Gains Rules for Real Estate

Anytime a person acquires a real estate property asset and then later sells it for any sort of profit, it becomes a capital gain. In the U.S. capital gains are taxed by the IRS. As such, it is to your benefit to fully understand capital gains tax laws with regards to real estate property. This may help you reduce your tax liability on such transactions.

Short-term vs. Long-term

Real estate can be taxed as a short-term capital gain, but it can also be considered long-term or ordinary gain. It depends on how the property will be used by the owner or taxpayer.

For short-term capital gains, the rate can vary, but usually remains within the 10 to 35% range. For long-term gains, things are different. Assets owned for more than one year will generally be taxed under a different rate, while other long-term assets will have a rate applied that is dependent upon which ordinary income tax bracket the taxpayer falls under.

It is possible to qualify for a zero percent rate if one’s income, including the capital gains, falls in the 10 or 15% brackets. Properties will be charged at a 15% rate for those who have a total income that falls under the 25% or higher brackets.

Capital Gains for Rental Properties

A property that is being rented will be taxed as a combination capital gain, but will also fall under depreciation recapture tax rates. This means that the government is considering that the property is a profitable venture, but is also factoring in the fact that buildings tend to depreciate in value over time when calculating taxes.

Determining the actual gain or loss someone incurs from the sale of such a property requires several details. The selling price, the adjusted basis, subsequent improvements made to the property, and the depreciation are all factors in the computation. Note that depreciation recapture rates are applied to the full amount, while capital gains tax rates are usually applied to what is left after depreciation is factored in.

Capital Gains Tax on the Sale of a Home

Profits made off real estate used as someone’s primary residence can qualify for some forms of special capital gains exclusions. Single owners can exclude up to $250,000 from the profits of the sale, while married couples can exclude up to $500,000.

To qualify as “primary residence”, however, the property must follow these rules:

– In the five years prior to the sale of the property, however, the owner must have lived in the house for a minimum of 24 months

– The 24 months out of the five-year period need not be consecutive

– Property mortgage rates have no bearing on qualification

Possible exclusions may apply for those who have lived on the property for less than 24 months. Exceptions can be considered if the house was sold because the taxpayer had to move because of work, or some similar unforeseen circumstance.

If the property is a second home or is otherwise not acting as the primary residence, it will be treated either as a short- or long-term capital gain, based on how long the house has been the property of the current owner.