April 1 – Last Day to Withdraw Required Minimum Distribution

Last day to withdraw 2018’s required minimum distribution from Traditional or SEP IRAs for taxpayers who turned 70½ in 2018. Failing to make a timely withdrawal may result in a penalty equal to 50% of the amount that should have been withdrawn. Taxpayers who became 70½ before 2018 were required to make their 2018 IRA withdrawal by December 31, 2018.

April 10 – Report Tips to Employer 

If you are an employee who works for tips and received more than $20 in tips during March, you are required to report them to your employer on IRS Form 4070 no later than April 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

April 15 – Taxpayers with Foreign Financial Interests 

A U.S. citizen or resident, or a person doing business in the United States, who has a financial interest in or signature or other authority over any foreign financial accounts (bank, securities or other types of financial accounts), in a foreign country, is required to file Form FinCEN 114. The form must be filed electronically; paper forms are not allowed. The form must be filed with the Treasury Department (not the IRS) no later than April 15, 2019 for 2018. An extension of time to file of up to 6 months is automatically allowed. This filing requirement applies only if the aggregate value of these financial accounts exceeds $10,000 at any time during 2018. Contact our office for additional information and assistance filing the form.  

April 15 – Individual Tax Returns Due 

File a 2018 income tax return (Form 1040) and pay any tax due. If you want an automatic six-month extension of time to file the return, please call this office. NOTE: The due date for individuals living in Maine or Massachusetts is April 17.

Caution: The extension gives you until October 15, 2019 to file your 2018 1040 return without being liable for the late filing penalty. However, it does not avoid the late payment penalty; thus, if you owe money, the late payment penalty can be severe, so you are encouraged to file as soon as possible to minimize that penalty. Also, you will owe interest, figured from the original due date until the tax is paid. If you have a refund, there is no penalty; however, you are giving the government a free loan, since they will only pay interest starting 45 days after the return is filed. Please call this office to discuss your individual situation if you are unable to file by the April 15 due date.

April 15 – Estimated Tax Payment Due (Individuals) 

It’s time to make your first quarter estimated tax installment payment for the 2019 tax year. Our tax system is a “pay-as-you-earn” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-earn” requirement. These include:

• Payroll withholding for employees;
• Pension withholding for retirees; and 
• Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is equal to the federal short-term rate plus 3 percentage points, and the penalty is computed on a quarter-by-quarter basis.

Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than $1,000 (the “de minimis amount”), no penalty is assessed. In addition, the law provides “safe harbor” prepayments. There are two safe harbors:

• The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.
• The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You can’t avoid the penalty under this exception.

However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.

This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. Timely payment of each required estimated tax installment is also a requirement to meet the safe harbor exception to the penalty. If you have questions regarding your safe harbor estimates, please call this office as soon as possible.

CAUTION: Some state de minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call this office for particular state safe harbor rules.

April 15 – Last Day to Make Contributions 

Last day to make contributions to Traditional and Roth IRAs for tax year 2018.

April 2019 Business Due Dates

April 1 – Electronic Filing of Forms 1098, 1099 and W-2G 

If you file Forms 1098, 1099 (other than 1099-MISC with an amount in box 7), or W-2G electronically with the IRS, this is the final due date. This due date applies only if you file electronically (not paper forms). Otherwise, January 31 or February 28 was the due date, depending on the form filed. The due date for giving the recipient these forms was January 31.

April 1 -Applicable Large Employers (ALE) – Form 1095-C

If filing electronically, file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, with the IRS. If filing on paper the due date was February 28, 2019.

April 1 – Large Food and Beverage Establishment Employers 

If you file Forms 8027 for 2018 electronically with the IRS, this is the final due date. This due date applies only if you file electronically. Otherwise, February 28 was the due date.

April 15 – Household Employer Return Due 

If you paid cash wages of $2,100 or more in 2018 to a household employee, you must file Schedule H. If you are required to file a federal income tax return (Form 1040), file Schedule H with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H if you paid total cash wages of $1,000 or more in any calendar quarter of 2017 or 2018 to household employees. Also, report any income tax that was withheld for your household employees. For more information, please call this office.

April 15 – C-Corporations

File a 2018 calendar year income tax return (Form 1120) and pay any tax due. If you need an automatic 6 -month extension of time to file the return, file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns, and deposit what you estimate you owe. Filing this extension protects you from late filing penalties but not late payment penalties, so it is important that you estimate your liability and deposit it using the instructions on Form 7004.

April 15 – Social Security, Medicare and Withheld Income Tax 

If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 – Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 – C-Corporations 

The first installment of 2019 estimated tax of a calendar year corporation is due.

April 15 – Fiduciary Returns

Last day to file a 2018 calendar year fiduciary return (Form 1041, U.S. Income Tax Return of Estates and Trusts) or file an extension.

April 30 – Social Security, Medicare and Withheld Income Tax

File Form 941 for the first quarter of 2019. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until May 10 to file the return.

April 30 – Federal Unemployment Tax

Deposit the tax owed through March if it is more than $500