You can amend a tax return if it is within three years from the date you filed your original return OR if it is within two years from the date you paid the tax due, whichever is later. If you amend your tax return past the 3- or 2-year window (whichever applies to you), the IRS may not issue any refund arising from the amended return.

Generally, if you expect to owe $1,000 or more in taxes in the year, you should make estimated tax payments. The need to make estimated tax payments is triggered by having non-W2 sources of income (rents, self-employment, crypto/stock capital gains, etc.) that have not been subjected to any tax withholding. You may also need to make estimated tax payments if you are routinely owing tax on your W2 income despite tax withholding. Unless you have done some reliable tax planning using a knowledgeable tax expert, you should make estimated tax payments to avoid paying penalties and interest on the tax you will owe.

While the S-Corp entity structure benefits you as an owner by allowing you to retain profits without paying tax, you are required to take taxable compensation from the S Corp, and this compensation must reflect what similar businesses in your industry would pay you for comparable services. If the IRS is concerned that you are underpaying yourself, it can reclassify some of your retained earnings as compensation and assess tax, penalties, and interest on such amounts. It is important that S Corp owners calculate their compensation on a basis that the IRS would consider reasonable, taking into consideration factors such as owner-employee skills and experience, size of firm, geographic location, typical job descriptions for the role, business profitability, and similar considerations. We can assist you with calculating periodic reasonable compensation for your unique firm, freeing you to focus on running your business and satisfying your clients.

While you are not required to take depreciation expense on your property (e.g., rental property), this may end up being an expensive mistake when you sell that property. This is because upon the future sale of the property, the IRS requires you to recapture any depreciation that was allowed (i.e., that you took over the business life of the property) or was allowable (i.e., was available to you by law but you did not take!). This can often lead to owing some tax, and it is better to benefit from a depreciation deduction annually on your property.

Other depreciation mistakes include:

• Using the wrong cost basis
• Expensing costs that should be depreciated
• Failing to recapture depreciation when you sell or retire business property
• Failing to calculate the right depreciation proportion for mixed-use property
• Assuming that your state follows federal depreciation rules when it does not

We can help you correct any depreciation mistake that applies to you.