The 2010 tax season is over, but if your smart, you’re always thinking about next year’s taxes. This year has been bad for most businesses and experts predict this trend will continue. You can’t do much about the economy but you can take control of your taxes. So, here are some tax tips to consider for the 2010 tax year.

Estimated tax payments
As far as tax planning goes, knowing where you’ve been can help you get to where you want to go. This is especially true if you’re self-employed. In other words, seeing how you came out on your last tax return can alert you to changes you need to make to minimize your tax burden next time. For example, if you underpaid your estimated taxes and were assessed a penalty, or if you overpaid your taxes and got a huge refund, you should adjust your estimated tax payments for this year accordingly. Get on the ball now. The second installment of your estimated payments is due this month–June 15. To figure out how much you should be paying, talk to your tax professional.

Tax credits
Tax credits reduce your tax liability. Here are some to take advantage of.

Health-care reform
Small businesses and tax-exempt organizations can get tax relief offered in the new Small Business Health Care Tax Credit. Small businesses that have fewer than 25 full-time-equivalent employees with average wages of less than $50,000, and that pay at least half of individual health-care coverage costs, will be eligible for credits of up to 35 percent of their share of health-care premiums. This credit is retroactive to the beginning of 2010 and is in effect through 2013. Businesses with 10 full-time-equivalent employees making an annual average of less than $25,000 will receive the maximum credit. Those with more staff members with higher salaries will receive progressively less. Exactly how this credit will play out is yet to be seen; look for the “how-to” in claiming this credit.

Green Businesses
Businesses that make changes in their energy systems can get sizable federal tax credits. Installing a solar water heater, for example, could qualify a business for a tax credit of 30 percent of the cost. But a more significant incentive is the Energy Efficient Commercial Buildings Deduction. Although it is a deduction and not a dollar-for-dollar credit, there is still potential for saving big bucks. By modifying things such as lighting, HVAC systems and other parts of a building to improve energy efficiency, companies could qualify for a deduction of up to $1.80 per square foot of commercial building space. So the owner of a 100,000-square-foot building could receive a one-time, $180,000 federal tax deduction.

Work Opportunity Tax Credit
With so many unemployed people out there, if your business is in a position to hire, do it. You can get the Work Opportunity Tax Credit for hiring people who typically have a hard time finding and keeping gainful work, such as low-income ex-felons, disadvantaged youths and veterans, or those who receive food stamps or supplemental Social Security income benefits. The credit equals 40 percent of the first $6,000 of an employee’s wages for the first year of employment, as long as he or she has worked at least 180 days or at least 400 hours. The rate is 25 percent for fewer than 400 hours, but there’s no credit for an employee who works fewer than 120 hours. To qualify for the credit, you have to file a special form with the state workforce agency, which will certify that the worker is eligible for the credit.

Tax season is really never over and it makes business sense to think about tax planning throughout the year.

There are various options for payment of an outstanding federal income tax liability. Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay in full as soon as you can to minimize the additional charges. Penalties are also assessed for failure to file a tax return so you must file immediately even if you cannot pay your balance in full.

IRS Tax payment options allow you to pay your tax liability by sending a check or money order, made out to “United States Treasury.” You may pay by transferring money electronically from your bank account. You can even pay your federal income tax liability by credit card or debit card. Be advised that a service provider, not the IRS, may charge a convenience fee for electronic payments from your bank account or for a payment by credit card. If you cannot pay in full you should pay as much as possible to reduce the accrual of interest on your account.

You should consider financing the full payment of your income tax liability through loans, such as a home equity loan from a financial institution or a credit card cash advance. The interest rate and any applicable fees charged by a bank or credit card are usually lower than the combination of interest and penalties imposed by the Internal Revenue Code. If you cannot pay in full immediately, the IRS offers a short amount of additional time, up to 120 days, to pay in full. No fee will be charged for entering this type of payment arrangement.

Another IRS tax payment option is by installments. Tax payment installment agreement allow you to make a series of monthly payments over time. The IRS offers various options for making monthly payments such as:

1. Direct Debit from your bank account
2. Payroll Deduction from your employer
3. Payment via check or money order
4. Electronic Federal Tax Payment System (EFTPS)
5. Payment by credit card via phone or Internet, or
6. Online Payment Agreement (OPA)

A one-time installment agreement fee of $105.00 will be charged when you enter into an installment agreement unless you choose to pay through a Direct Debit from your bank account, in which case the fee is $52.00. Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines can apply to pay a reduced user fee of $43.00.

If you can pay your IRS tax payment in a shorter period of time, you can request a short amount of additional time, up to 120 days, to pay in full. This payment arrangement does not carry a fee.

If you decide on entering into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that can be paid each month to avoid defaulting.

If you are not able to provide full payment when you file your tax return, you can request a pre-assessment installment agreement on current tax liabilities by using the Online Payment Agreement (OPA) application on the IRS.gov website.

If you are not able to provide full payment after you have filed your tax return and received a bill from the IRS (a balance due notice), you can request an installment agreement using the Online Payment Agreement (OPA) application on the IRS.gov website.

You may also request an installment agreement by calling the toll-free number on the bill.

You will need to specify the amount you can pay and the day (1st-28th) you wish to make your payment each month. The IRS will expect to receive the payment ON the day you indicate so be sure to figure mailing time into the date you select. The IRS will respond to your request, usually within 30 days, to advise you as to whether your request has been approved, denied or more information is needed.

Direct debit or payroll deduction installment agreements provide an opportunity to make timely payments automatically and reduce the possibility of default. For a direct debit installment agreement you will need to provide your checking account number and your bank routing number to initiate the automated withdrawal of the payment.

You may contact the IRS by phone or in person, or you may submit Form 9465 (PDF), Installment Agreement Request, through the mail. The form has space for you to write in your checking account number and your bank routing number, or you may staple a voided check to the form.

To initiate a payroll deduction installment agreement, submit Form 2159, Payroll Deduction Agreement. Form 2159 must be completed by your employer. The IRS will set up a regular installment agreement for you and convert it to a payroll deduction agreement upon receipt of the completed form from your employer.

It is important not to ignore an IRS notice. If you do not pay your tax liability in full or make an alternative payment arrangement, the IRS is entitled to take collection action.

If you are unable to make any payment at this time, have your financial information available (e.g., pay stubs, lease or rental agreement, mortgage statements, car lease/loan, utilities) and call the appropriate number below to receive assistance:

Individual taxpayers: 800-829-1040
Business taxpayers: 800-829-4933

You have rights and protections throughout the collection process. If you would like information on making arrangements regarding any of the IRS tax payment options refer to Publication 594 The IRS Collection Process

source: irs.gov