Filing Your 2011 Business Taxes: What You Need to Know
Whether you file your business taxes on a Schedule C for your sole proprietorship, partnership, or LLC, or on a corporate tax form (Form 1120 for a corporation or 1120S for an S Corporation), you need to be aware of these changes that may affect the information you provide to your tax preparer and the amount of tax you may expect to pay.
2011 Tax Deadlines
The deadline for personal taxes, including businesses filing with Schedule C, is April 17, 2012, for 2011 tax returns. The deadline is extended two days because April 15 is a Sunday and April 16 is a holiday in Washington, D.C.
Capital Gains Changes
How you report capital gains is different for 2011 taxes. A new Form 8949 must be completed for each type of capital gains. All 8949 totals are then included in Schedule D, which is filed along with your personal tax return on Form 1040. Read more about changes to capital gains reporting for 2011 taxes.
The bonus depreciation amount for business assets purchased in 2011 has increased to 100%. This means you can fully depreciate (take as an expense) the cost of any business asset purchased next year. Section 179 depreciation provisions have been extended through 2011. These provisions, which were set to expire at the end of 2010, increase the Section 179 depreciation limit to $500,000 (with limits on the amount purchased).
Mileage Expense Amounts
The standard mileage rate for business driving in 2011 is different for the period January through June and July through December. Here are the details:
2011 IRS Standard Mileage Rate - January 1 through June 30:
- 51 cents per mile for business miles
- 19 cents per mile for medical or moving purposes
- 14 cents per mile in service of charitable organizations
2011 IRS Standard Mileage Rate - July 1 through December 31:
- 55.5 cents per mile for business miles
- 23.5 cents per mile for medical or moving purposes
- 14 cents per mile in service of charitable organizations.
Self Employed Tax Insurance Deduction
Self-employed individuals, including partners in partnerships and employees of S corporations who own more than 2% of company stock, can take a deduction for health insurance for themselves, spouses and dependents. For 2011, the deduction can no longer be taken against self-employment taxes, but only against income taxes. William Perez, Guide to Taxes, provides further explanation of the self-employed health care tax credit.
How Business Types File Federal Taxes:
- If you are self-employed (sole proprietor), file business taxes using Schedule C. Your net Schedule C income is added to your other income on your personal tax return.
- If your business is a partnership, the partnership files an information return on Form 1065, and each partner receives a Schedule K-1 showing his or her share of partnership profits or losses. Read more about how a partnership pays federal income taxes.
- If you are an owner of an LLC, how you file depends on how many members are in the LLC. A single-member LLC files using Schedule C, the same as a sole proprietor. A multiple member LLC files in the same way as a partnership. Read more about how an LLC pays income taxes.
- If your business is a corporation, the corporation files Form 1120. The corporate profts or losses do not pass through to individual shareholder tax returns. If the corporation is an S corporation, the corporation files Form 1120S and individual shareholders receive a Schedule K-1 showing individual share of corporate profits or losses. Read more about how a corporation and S corporation pay federal income taxes.
Filing estimated business taxes. You may be required to pay estimated taxes for your business and/or personal taxes. Estimated taxes are due quarterly throughout the year. Read more about paying estimated taxes.
Filing an application for an extension. While filing an application for an extension doesn't get you off the hook for paying your taxes by the due date, you may find that there are benefits to filing an extension and allowing your tax preparer more time to work on your tax return. Find out the details due dates and forms for filing an extension. The forms are different for different types of businesses.
Filing an amended tax return. If you or your tax preparer finds an error on your business tax return, you will need to file an amended return. Filing an amended tax return is not difficult, but you should enlist the help of your tax advisor.
Getting Help with Business Taxes
Most business tax returns are complicated and you may be missing something or making mistakes if you try to do your business return yourself. Getting help with your business taxes means finding a CPA or other tax advisor you can trust. It's never too late to get help.
William Perez, Guide to Tax Planning, has more information on 2011 taxes that you might also find helpful as you prepare your 2011 business taxes.