Tax season is in full swing; most forms like W-2s and 1099s have arrived. While most early birds are already enjoying their refunds, those anticipating owing the IRS or Colorado are probably dragging their feet a little bit more.There is always the extension, right? Yes, but … while the extension Form 4868 extends the time to file your tax return, it doesnít extend the time to pay the tax due. So even if you extend your return in the wee hours of April 18 sipping on your favorite wine, not a care in the world; when you file your return later (you have until Oct. 17 to do so) and have an amount due, there will be an additional penalty and interest tacked onto the total. Unless you want to pay those penalties and interest, make sure to send the IRS a check by April 18 ñ- you will have to estimate the amount based on the information you have at the time. If you overestimate, youíll have a refund once you finalize your return. If you underestimate, you will have an amount due but with lower penalties and interest.April 18 is also the due date for your first quarterly estimated payment towards 2022 taxes. Owners of small businesses operating as sole proprietorships or passthrough entities like partnerships, LLCs and S Corporations, generating income not in the form of a W-2, do not typically have income tax withholding. As such, the IRS requires that they submit tax payments throughout the year through quarterly estimated payments. For most taxpayers required to pay estimated payments, it is also an issue of controlling cash flow. Submitting their quarterly payments on Form 1040-ES helps people from being blindsided by a large tax bill at tax return preparation time. If you do not submit your estimated payments and underpay your tax by more than 10%, then you will have an additional penalty tacked onto your tax that is due. This applies to your state income tax in a similar fashion as well.We know. Penalty here, penalty there, everywhere you look there is something extra to pay! And why is the refund smaller this year than last year? Well, if you collected advance child tax credit for your little ones, you were getting that money in advance! So donít be mad at your accountant. You are most likely still getting the same credits, even more this year than last year, but you already spent half the amount!TopFlight CPA LLCTel: 720-607-8115https:www.topflightcpa.com
