Many wonder, “What is a tax year, and why is it important?”
Understanding the answer to this question is key to staying on top of fiscal responsibilities and meeting all deadlines. Working with an accountant, tax attorney, or other financial professional also makes it easier to comply with tax regulations while helping prevent fees and other penalties.
Because the tax filing deadline falls in April, people sometimes think that the tax year runs from April to April, but this is not usually the case unless the tax year aligns with a given organization’s fiscal year, which is any 12-month period of finances that does not end on December 31. Fiscal years only apply to businesses, and they may choose to use this type of tax schedule if, for instance, they open their business and start earning in the middle of the year. Businesses can choose to use the calendar year and follow a traditional tax year as long as they remain consistent with whichever calendar they select.
For individuals, the tax year is the same as a calendar year, running from January 1 to the last day in December each year. The IRS requires individuals to file their taxes by April 15 for the previous year. The only notable exception to this deadline is for Virginia’s state income tax, which has a filing deadline of May 1.
It is important to understand what a tax year is to track finances appropriately and prepare for the filing period. Those who earn a wage will report their wages to the IRS before the April filing deadline and then pay any shortfall or request a refund for any overpayment.
There are some variations in the April tax filing process to be aware of, primarily that small business owners and those who are self-employed or contracting tend to file their taxes each quarter rather than waiting until the end of the IRS reporting year. This allows them to pay an estimated amount of their owed taxes every few months, as state and federal taxes are not automatically withheld from their profits. Paying periodically ensures compliance and prevents a large bill at the end of the accounting year.
It is necessary to file taxes on time each year. Failing to file or filing for the incorrect dates instead of the previous tax year can result in civil or criminal penalties. The most common penalties are late fees, revoked return refunds, and interest on unpaid taxes. However, in the event of serious violations, the IRS may pursue criminal charges and bring those accused of tax violations to court.
For small businesses and self-employed individuals, staying updated with quarterly tax filings is crucial to avoid unexpected costs and penalties at the end of the year.
Working with a knowledgeable tax professional can help workers of all kinds avoid the penalties associated with improperly paid or late taxes.
Levy & Associates provides comprehensive tax assistance to Florida residents. Working with a tax consultant can make the filing process less stressful and ensure your documents comply with state and federal regulations, helping you avoid penalties and apply for a return if you qualify for one. Individuals and businesses can benefit from professional tax consultancy.
Now that you understand: “What is a tax year?” it can be helpful to seek further assistance with your taxes. To learn more, call 877-620-6490 or contact Levy & Associates online.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.