This chapter explains the
business taxes you may have to
pay and the forms you may have
to file. It also discusses
taxpayer identification numbers.
Table 1-1 lists the
benefits of filing
electronically.
Table 1-2 lists the
federal taxes you may have to
pay, their due dates, and the
forms you use to report them.
Table 1-3 provides
checklists that highlight the
typical forms and schedules you
may need to file if you ever go
out of business.
You may want to get
Publication 509, Tax Calendars
for 2005. It has tax calendars
that tell you when to file
returns and make tax payments.
Useful Items - You
may want to see:
Publication
505
Tax Withholding and
Estimated Tax
Form
(and Instructions)
1040
U.S. Individual Income
Tax Return
1040-ES
Estimated Tax for
Individuals
Sch C (Form 1040)
Profit or Loss From
Business
Sch C-EZ (Form 1040)
Net Profit From Business
Sch SE (Form 1040)
Self-Employment Tax
See chapter 12 for information
about getting publications and
forms.
Identification
Numbers
This section explains three
types of taxpayer identification
numbers, who needs them, when to
use them, and how to get them.
Social
security number (SSN).
Generally, use your SSN as
your taxpayer identification
number. You must put this
number on each of your
individual income tax forms,
such as Form 1040 and its
schedules.
To apply for an SSN, use
Form SS-5, Application for a
Social Security Card. This
form is available at Social
Security Administration (SSA)
offices or by calling
1-800-772-1213. It is also
available from the SSA
website at
www.socialsecurity.gov.
Individual
taxpayer identification
number (ITIN).
The IRS will issue an ITIN
if you are a nonresident or
resident alien and you do
not have and are not
eligible to get an SSN. In
general, if you need to
obtain an ITIN, you must
attach Form W-7, Application
for IRS Individual Taxpayer
Identification Number, with
your signed, original,
completed tax return and
mail both to the
Philadelphia Service Center.
The exceptions are covered
in detail in the
instructions for Form W-7
(Rev. 12-17-2003). If you
must include another
person's SSN on your return
and that person does not
have and cannot get an SSN,
enter that person's ITIN.
The application is also
available in Spanish. The
form is available from the
IRS website at
www.irs.gov or you can
call 1-800-829-3676 to order
the form.
An ITIN is for tax
use only. It does not
entitle the holder to social
security benefits or change
the holder's employment or
immigration status.
Employer
identification number (EIN).
You must also have an EIN
to use as a taxpayer
identification number if you
do either of the following.
Pay wages to one
or more employees.
File pension or
excise tax returns.
If you must have an EIN,
include it along with your
SSN on your Schedule C or
C-EZ.
You can apply for an EIN:
Online by
clicking on the EIN
link at
www.irs.gov/businesses/small.
The EIN is issued
immediately once the
application
information is
validated.
By telephone at
1-800-829-4933 from
7:00 a.m. to 10:00
p.m. in your local
time zone.
By mailing or
faxing Form SS-4,
Application for
Employer
Identification
Number.
New
EIN. You may need
to get a new EIN if either
the form or the ownership of
your business changes. For
more information, see
Publication 1635,
Understanding Your EIN.
When you
need identification numbers
of other persons. In
operating your business, you
will probably make certain
payments you must report on
information returns. These
payments are discussed under
Information Returns,
later in this chapter. You
must give the recipient of
these payments (the payee) a
statement showing the total
amount paid during the year.
You must include the payee's
identification number and
your identification number
on the returns and
statements.
Employee. If you
have employees, you must get
an SSN from each of them.
Record the name and SSN of
each employee exactly as
they are shown on the
employee's social security
card. If the employee's name
is not correct as shown on
the card, the employee
should request a new card
from the SSA. This may occur
if the employee's name was
changed due to marriage or
divorce.
If your employee does not
have an SSN, he or she
should file Form SS-5 with
the SSA.
Other
payee. If you
make payments to someone who
is not your employee and you
must report the payments on
an information return, get
that person's SSN. If you
must report payments to an
organization, such as a
corporation or partnership,
you must get its EIN.
To get the payee's SSN or
EIN, use Form W-9,
Request for Taxpayer
Identification Number and
Certification.
A payee who does not
provide you with an
identification number may be
subject to backup
withholding. For information
on backup withholding, see
the Form W-9 instructions
and the General Instructions
for Forms 1099, 1098, 5498,
and W-2G.
Income Tax
This part explains whether
you have to file an income tax
return and when you file it. It
also explains how you pay the
tax.
Do I Have To
File an Income
Tax Return?
You have to file an
income tax return for 2004
if your net earnings from
self-employment were $400 or
more. If your net earnings
from self-employment were
less than $400, you still
have to file an income tax
return if you meet any other
filing requirement listed in
the Form 1040 instructions.
How Do I
File?
File your income tax
return on Form 1040 and
attach Schedule Cor Schedule C-EZ.
Enter the net profit or
loss from Schedule C or
Schedule C-EZ on page 1 of
Form 1040. Use Schedule C to
figure your net profit or
loss from your business. If
you operated more than one
business as a sole
proprietorship, you must
attach a separate Schedule C
for each business. You can
use the simpler Schedule
C-EZ if you operated only
one business as a sole
proprietorship, you did not
have a net loss, and you
meet the other requirements
listed in Part I of the
schedule. (Part I of
Schedule C-EZ is printed in
chapter 10.)
You may be able to file
your tax returns
electronically using an IRS
e-file option.
Table 1-1 lists the benefits
of IRS
e-file. IRS
e-file uses
automation to replace most
of the manual steps needed
to process paper returns. As
a result, the processing of
e-file returns
is faster and more accurate
than the processing of paper
returns. As with a paper
return, you are responsible
for making sure your return
contains accurate
information and is filed on
time.
Using
e-file does not
affect your chances of an
IRS examination of your
return.
You can file most
commonly used business forms
using IRS
e-file. For more
information, visit the IRS
website at
www.irs.gov.
Electronic signatures.
Paperless filing is
easier than you think
and it's available to
most taxpayers who file
electronically—including
those first-time filers
who were 16 or older at
the end of 2004. If you
file electronically
using tax preparation
software or a tax
professional, you may be
able to participate in
the Self-Select PIN
(personal identification
number) program. If you
are married filing
jointly, you and your
spouse will each need to
create a PIN and enter
these PINs as your
electronic signatures.
To create a PIN, you
must know your adjusted
gross income (AGI) from
your originally filed
2003 income tax return
(not from an amended
return, Form 1040X, or
any math error notice
from the IRS). You will
also need to provide
your date of birth
(DOB). Make sure your
DOB is accurate and
matches the information
on record with the
Social Security
Administration before
you
e-file.
To do this, check your
annual Social Security
Statement.
If you use a
Self-Select PIN, there
is nothing to sign and
nothing to mail—not even
your Forms W-2. For more
details on the
Self-Select PIN program,
visit the IRS website at
www.irs.gov.
Forms
8453 and 8453-OL.
Your return is not
complete without your
signature. If you are
not eligible or choose
not to sign your return
electronically, you must
complete, sign, and file
Form 8453, U.S.
Individual Income Tax
Declaration for an IRS
e-file
Return, or Form 8453-OL,
U.S. Individual Income
Tax Declaration for an
IRS
e-file
Online Return, whichever
applies.
State
returns. In most
states, you can file an
electronic state return
simultaneously with your
federal return. For more
information, check with
your local IRS office,
state tax agency, tax
professional, or the IRS
website at
www.irs.gov.
Refunds. You can
have your refund check
mailed to you, or you
can have your refund
deposited directly to
your checking or savings
account.
With
e-file,
your refund will be
issued in half the time
as when filing on paper.
Most refunds are issued
within 3 weeks. If you
choose Direct Deposit,
you can receive your
refund in as few as 10
days.
Offset against debts.
As with a paper
return, you may not get
all of your refund if
you owe certain past-due
amounts, such as federal
tax, state tax, a
student loan, or child
support. You will be
notified if the refund
you claimed has been
offset against your
debts.
Refund
inquiries. You can
check the status of your
refund if it has been at
least 3 weeks from the
date you filed your
return. Be sure to have
a copy of your tax
return available because
you will need to know
the filing status, the
first social security
number shown on the
return, and the exact
whole-dollar amount of
the refund. To check on
your refund, do one of
the following.
Go to
www.irs.gov,
and click on
Where's My
Refund.
Call
1-800-829-4477
for automated
refund
information, and
follow the
recorded
instructions.
Call
1-800-829-1954
during the hours
shown in your
form
instructions.
Balance
due.
If you owe tax, you
must pay it by April 15,
2005, to avoid
late-payment penalties
and interest. You can
make your payment
electronically by
scheduling an electronic
funds withdrawal from
your checking or savings
account or by credit
card.
Using an
Authorized
IRS
e-file
Provider
Many tax
professionals can
electronically file
paperless returns for
their clients. You have
two options.
You can
prepare your
return, take it
to an authorized
IRS
e-file
provider, and
have the
provider
transmit it
electronically
to the IRS.
You can have
an authorized
IRS
e-file
provider prepare
your return and
transmit it for
you
electronically.
You will be asked to
complete Form 8879 to
authorize the provider
to enter your
self-selected PIN on
your return.
Depending on the
provider and the
specific services
requested, a fee may be
charged. To find an
authorized IRS
e-file
provider near you, go to
www.irs.gov or look
for an “Authorized
IRS
e-file
Provider” sign.
Using Your
Personal
Computer
A computer with a
modem or Internet access
is all you need to file
your tax return using
IRS
e-file.
Best of all, when you
use your personal
computer, you can
e-file
your return from the
comfort of your home any
time of the day or
night. Sign your return
electronically using a
self-selected PIN to
complete the process.
There is no signature
form to submit or Forms
W-2 to send in.
Free Internet filing
options. More
taxpayers can now
prepare and
e-file
their individual
income tax returns
free using
commercial tax
preparation software
accessible through
www.irs.gov or
www.firstgov.gov.
The IRS is
partnering with the
tax software
industry to offer
free preparation and
filing services to a
significant number
of taxpayers.
Security and privacy
certificate programs
will assure tax data
is safe and secure.
To see if you
qualify for these
services, visit the
Free Internet Filing
Homepage at
www.irs.gov.
If you cannot use
the free services,
you can buy tax
preparation software
at various
electronics stores
or computer and
office supply
stores. You can also
download software
from the Internet or
prepare and file
your return
completely online by
using a tax
preparation software
package available on
the Internet.
Through
Employers
and
Financial
Institutions
Some businesses offer
free
e-file
to their employees,
members, or customers.
Others offer it for a
fee. Ask your employer
or financial institution
if they offer IRS
e-file
as an employee, member,
or customer benefit.
Free Help
With Your
Return
Free help in
preparing your return is
available nationwide
from IRS-trained
volunteers. The
Volunteer Income Tax
Assistance (VITA)
program is designed to
help low-income
taxpayers and the Tax
Counseling for the
Elderly (TCE) program is
designed to assist
taxpayers age 60 or
older with their tax
returns. Some locations
offer free electronic
filing.
Table 1-1.
Benefits of IRS
e-file
Accuracy
•
Your
chance
of
getting
an error
notice
from the
IRS is
significantly
reduced.
Security
•
Your
privacy
and
security
are
assured.
Electronic
signatures
•
Create
your own
personal
identification
number
(PIN)
and file
a
completely
paperless
return
through
your tax
preparation
software
or tax
professional.
There is
nothing
to mail!
Proof of
acceptance
•
You
receive
an
electronic
acknowledgement
within
48 hours
that the
IRS has
accepted
your
return
for
processing.
Fast
refunds
•
You get
your
refund
in half
the
time,
even
faster
with
Direct
Deposit—in
as few
as 10
days.
Free
Internet
filing
options
•
Use the
IRS
website
www.irs.gov
to
access
commercial
tax
preparation
and
e-file
services
available
at no
cost to
eligible
taxpayers.
Electronic
payment
options
•
Convenient,
safe and
secure
electronic
payment
options
are
available.
E-file
and pay
your
taxes in
a single
step.
Schedule
an
electronic
funds
withdrawal
from
your
checking
or
savings
account
(up to
and
including
April
15,
2005) or
pay by
credit
card.
Federal/State
filing
•
Prepare
and file
your
federal
and
state
tax
returns
together
and
double
the
benefits
you get
from
e-file.
When Is My
Tax Return Due?
Form 1040 for calendar
year 2004 is due by April
15, 2005. If you use a
fiscal year (explained in
chapter 2), your return is
due by the 15th day of the
4th month after the end of
your fiscal year. If you
file late, you may have to
pay penalties and interest.
If you cannot file your
return on time, use
Form
4868, Application
for Automatic Extension of
Time To File U.S. Individual
Income Tax Return, to
request an automatic 4-month
extension.
How Do I Pay
Income Tax?
Federal income tax is a
pay-as-you-go tax. You must
pay it as you earn or
receive income during the
year. An employee usually
has income tax withheld from
his or her pay. If you do
not pay your tax through
withholding, or do not pay
enough tax that way, you
might have to pay estimated
tax. You generally have to
make estimated tax payments
if you expect to owe taxes,
including self-employment
tax (discussed later), of
$1,000 or more when you file
your return. Use
Form
1040-ES to figure
and pay the tax. If you do
not have to make estimated
tax payments, you can pay
any tax due when you file
your return. For more
information on estimated
tax, see Publication 505.
What
are my payment options?
You can pay your
estimated tax
electronically using
various options. If you
pay electronically,
there is no need to mail
in Form 1040-ES payment
vouchers. These options
include:
Paying
electronically
through the
Electronic
Federal Tax
Payment System
(EFTPS).
Paying by
authorizing an
electronic funds
withdrawal when
you file Form
1040
electronically.
Paying by
credit card over
the phone or by
Internet.
Other options include
crediting an overpayment
from your 2004 return to
your 2005 estimated tax,
and mailing a check or
money order with a Form
1040-ES payment voucher.
EFTPS
To enroll in
EFTPS, go to
www.eftps.gov
or call
1-800-555-4477.
Effective in
January 2004,
when you request
a new EIN and
you will have a
tax obligation,
you are
automatically
enrolled in
EFTPS.
Benefits of
EFTPS:
The
chance
of an
error in
making
your
payments
is
reduced.
You
receive
immediate
confirmation
of every
transaction.
Penalty
for underpayment of tax.
If you did not pay
enough income tax and
self-employment tax for
2004 by withholding or
by making estimated tax
payments, you may have
to pay a penalty on the
amount not paid. The IRS
will figure the penalty
for you and send you a
bill. Or you can use
Form 2210,
Underpayment of
Estimated Tax by
Individuals, Estates,
and Trusts, to see if
you have to pay a
penalty and to figure
the penalty amount. For
more information, see
Publication 505.
Self-Employment Tax
Self-employment tax (SE tax)
is a social security and
Medicare tax primarily for
individuals who work for
themselves. It is similar to the
social security and Medicare
taxes withheld from the pay of
most wage earners.
If you earned income as a
statutory employee, you do not
pay SE tax on that income.
Social
security coverage.
Social security benefits
are available to
self-employed persons just
as they are to wage earners.
Your payments of SE tax
contribute to your coverage
under the social security
system. Social security
coverage provides you with
retirement benefits,
disability benefits,
survivor benefits, and
hospital insurance
(Medicare) benefits.
By not reporting all of
your self-employment income, you
could cause your social security
benefits to be lower when you
retire.
How to
become insured under social
security. You
must be insured under the
social security system
before you begin receiving
social security benefits.
You are insured if you have
the required number of
credits (also called
quarters of coverage),
discussed next.
Earning
credits in 2004 and 2005.
For 2004, you received one
credit, up to a maximum of
four credits, for each $900
($920 for 2005) of income
subject to social security
taxes. Therefore, for 2004,
if you had income
(self-employment and wages)
of $3,600 that was subject
to social security taxes,
you received four credits
($3,600 ÷ $900).
For an explanation of the
number of credits you must
have to be insured and the
benefits available to you
and your family under the
social security program,
consult your nearest Social
Security Administration
(SSA) office.
Making false
statements to get or to
increase social security
benefits may subject you to
penalties.
The Social
Security Administration
(SSA) time limit for posting
self-employment income.
Generally, the SSA will
give you credit only for
self-employment income
reported on a tax return
filed within 3 years, 3
months, and 15 days after
the tax year you earned the
income. If you file your tax
return or report a change in
your self-employment income
after this time limit, the
SSA may change its records,
but only to remove or reduce
the amount. The SSA will not
change its records to
increase your
self-employment income.
Who must
pay self-employment tax.
You must pay SE tax and
file Schedule SE (Form 1040)
if either of the following
applies.
Your net
earnings from
self-employment
(excluding church
employee income)
were $400 or more.
You had church
employee income of
$108.28 or more.
The SE tax rules apply no
matter how old you are and even
if you are already receiving
social security or Medicare
benefits.
Methods for
figuring net earnings.
There are three ways to
figure net earnings from
self-employment.
The regular
method.
The nonfarm
optional method.
The farm
optional method.
You must use the regular
method unless you are
eligible to use one or both
of the optional methods.
Multiply your total earnings
subject to SE tax by 92.35%
(.9235) to get your net
earnings under the regular
method.
Why use
the optional methods?
You may want to use the
optional methods when you
have a loss or a small net
profit and any one of the
following applies.
You want to
receive credit for
social security
benefit coverage.
You incurred
child or dependent
care expenses for
which you could
claim a credit. (An
optional method may
increase your earned
income, which could
increase your
credit.)
You are entitled
to the earned income
credit. (An optional
method may increase
your earned income,
which could increase
your credit.)
You are entitled
to the additional
child tax credit.
(An optional method
may increase your
earned income, which
could increase your
credit.)
You are entitled
to the self-employed
health insurance
deduction.
SE tax
rate.
The SE tax rate on net
earnings is 15.3% (12.4%
social security tax plus
2.9% Medicare tax).
Maximum
earnings subject to SE tax.
Only the first $87,900 of
your combined wages, tips,
and net earnings in 2004 is
subject to any combination
of the 12.4% social security
part of SE tax, social
security tax, or railroad
retirement (tier 1) tax.
All your combined wages,
tips, and net earnings in
2004 are subject to any
combination of the 2.9%
Medicare part of SE tax,
social security tax, or
railroad retirement (tier 1)
tax.
If your wages and tips are
subject to either social
security or railroad
retirement (tier 1) tax, or
both, and total at least
$87,900, do not pay the
12.4% social security part
of the SE tax on any of your
net earnings. However, you
must pay the 2.9% Medicare
part of the SE tax on all
your net earnings.
Deduct one-half of your
SE tax as an adjustment to
income on line 30 of Form 1040.
More
information. For more
information on the SE tax,
see Publication 533,
Self-Employment Tax.
Table 1-2. Which
Forms Must I File?
IF you
are
liable
for:
THEN use
Form:
DUE by:
1
Income tax
1040 and
Schedule C
or C-EZ
2
15th day of
4th month
after end of
tax year.
Self-employment
tax
Schedule SE
File with
Form 1040.
Estimated
tax
1040-ES
15th day of
4th, 6th,
and 9th
months of
tax year,
and 15th day
of 1st month
after the
end of tax
year.
Social
security and
Medicare
taxes and
income tax
withholding
941
April
30, July 31,
October 31,
and January
31 4.
8109 (to
make
deposits)
3
See
Publication
15.
Providing
information
on social
security and
Medicare
taxes and
income tax
withholding
W-2 (to
employee)
W-2 and W-3
(to the
Social
Security
Administration)
January 31
4.
Last day of
February
(March 31 if
filing
electronically)
4.
Federal
unemployment
(FUTA) tax
940 or
940-EZ
January
31 4.
8109 (to
make
deposits)
3
April 30,
July 31,
October 31,
and January
31, but only
if the
liability
for unpaid
tax is more
than $500.
Filing
information
returns for
payments to
nonemployees
and
transactions
with other
persons
See
Information
Returns
Forms
1099–to the
recipient by
January 31
and to the
IRS by
February 28
(March 31 if
filing
electronically).
Other
forms—See
the General
Instructions
for Forms
1099, 1098,
5498, and
W-2G.
Excise tax
See
Excise
Taxes
See the
instructions
to the
forms.
1
If a due
date falls
on a
Saturday,
Sunday, or
legal
holiday, the
due date is
the next
business
day. For
more
information,
see
Publication
509, Tax
Calendars
for 2005.
2
File a
separate
schedule for
each
business.
3
Do not use
if you
deposit
taxes
electronically.
4
See the form
instructions
if you go
out of
business,
change the
form of your
business, or
stop paying
wages.
Employment Taxes
If you have employees, you
will need to file forms to
report employment taxes.
Employment taxes include the
following items.
Social security and
Medicare taxes.
Federal income tax
withholding.
Federal unemployment
(FUTA) tax.
For more information, see
Publication 15 (Circular E),
Employer's Tax Guide. That
publication explains your tax
responsibilities as an employer.
To help you determine whether
the people working for you are
your employees, see Publication
15-A, Employer's Supplemental
Tax Guide. That publication has
information to help you
determine whether an individual
is an independent contractor or
an employee.
If you incorrectly
classify an employee as an
independent contractor, you may
be held liable for employment
taxes for that worker plus a
penalty.
An independent contractor is
someone who is self-employed.
You do not generally have to
withhold or pay any taxes on
payments to an independent
contractor.
Excise Taxes
This section explains the
excise taxes you may have to pay
and the forms you have to file
if you do any of the following.
Manufacture or sell
certain products.
Operate certain
kinds of businesses.
Use various kinds of
equipment, facilities,
or products.
Receive payment for
certain services.
For more information on
excise taxes, see Publication
510, Excise Taxes for 2005.
Form 720.
The federal excise taxes
reported on Form 720,
Quarterly Federal Excise Tax
Return, consist of several
broad categories of taxes,
including the following.
Environmental
taxes on the sale or
use of
ozone-depleting
chemicals and
imported products
containing or
manufactured with
these chemicals.
Communications
and air
transportation
taxes.
Fuel taxes.
Tax on the first
retail sale of heavy
trucks, trailers,
and tractors.
Manufacturers
taxes on the sale or
use of a variety of
different articles.
Form 2290.
There is a federal excise
tax on the use of certain
trucks, truck tractors, and
buses on public highways.
The tax applies to vehicles
having a taxable gross
weight of 55,000 pounds or
more. Report the tax on Form
2290, Heavy Highway Vehicle
Use Tax Return. For more
information, see the
instructions for Form 2290.
Depositing
excise taxes. If you
have to file a quarterly
excise tax return on Form
720, you may have to deposit
your excise taxes before the
return is due. For details
on depositing excise taxes,
see the instructions for
Form 720.
Information Returns
If you make or receive
payments in your business, you
may have to report them to the
IRS on information returns. The
IRS compares the payments shown
on the information returns with
each person's income tax return
to see if the payments were
included in income. You must
give a copy of each information
return you are required to file
to the recipient or payer. In
addition to the forms described
below, you may have to use other
returns to report certain kinds
of payments or transactions. For
more details on information
returns and when you have to
file them, see the General
Instructions for Forms 1099,
1098, 5498, and W-2G.
Form
1099-MISC.
Use Form 1099-MISC,
Miscellaneous Income, to
report certain payments you
make in your business. These
payments include the
following items.
Payments of $600
or more for services
performed for your
business by people
not treated as your
employees, such as
fees to
subcontractors,
attorneys,
accountants, or
directors.
Rent payments of
$600 or more, other
than rents paid to
real estate agents.
Prizes and
awards of $600 or
more that are not
for services, such
as winnings on TV or
radio shows.
Royalty payments
of $10 or more.
Payments to
certain crew members
by operators of
fishing boats.
You also use Form 1099-MISC
to report your sales of
$5,000 or more of consumer
goods to a person for resale
anywhere other than in a
permanent retail
establishment.
Form W-2.
You must file Form W-2,
Wage and Tax Statement, to
report payments to your
employees, such as wages,
tips, and other
compensation, withheld
income, social security, and
Medicare taxes, and advance
earned income credit
payments. For more
information on what to
report on Form W-2, see the
Instructions for Forms W-2
and W-3.
Penalties.
The law provides for the
following penalties if you
do not file Form 1099-MISC
or Form W-2 or do not
correctly report the
information. For more
information, see the General
Instructions for Forms 1099,
1098, 5498, and W-2G.
Failure to file
information returns.
This penalty applies
if you do not file
information returns
by the due date, do
not include all
required
information, or
report incorrect
information.
Failure to
furnish correct
payee statements.
This penalty applies
if you do not
furnish a required
statement to a payee
by the required
date, do not include
all required
information, or
report incorrect
information.
Waiver
of penalties.
These penalties will not
apply if you can show that
the failure was due to
reasonable cause and not
willful neglect.
In addition, there is no
penalty for failure to
include all required
information, or for
including incorrect
information, on a
de minimis
(small) number of
information returns if you
correct the errors by August
1 of the year the returns
are due. (A
de minimis
number of returns is the
greater of 10 or ½ of 1% of
the total number of returns
you are required to file for
the year.)
Form 8300.
You must file Form 8300,
Report of Cash Payments Over
$10,000 Received in a Trade
or Business, if you receive
more than $10,000 in cash in
one transaction, or two or
more related business
transactions. Cash includes
U.S. and foreign coin and
currency. It also includes
certain monetary instruments
such as cashier's and
traveler's checks and money
orders. Cash does not
include a check drawn on an
individual's personal
account (personal check).
For more information, see
Publication 1544, Reporting
Cash Payments of Over
$10,000 (Received in a Trade
or Business).
Penalties. There
are civil and criminal
penalties, including up to 5
years in prison, for not
filing Form 8300, filing (or
causing the filing of) a
false or fraudulent Form
8300, or structuring a
transaction to evade
reporting requirements.
Table 1-3. Going Out
of Business
Checklists
(Note.
The
following
checklists
highlight
the typical
final forms
and
schedules
you may need
to file if
you ever go
out of
business.
For more
information,
see the
instructions
for the
listed
forms.)
IF you
are
liable
for:
THEN you
may need
to:
Income tax
□
File
Schedule C
or C-EZ with
your Form
1040 for the
year in
which you go
out of
business.
□
File Form
4797 with
your Form
1040 for
each year in
which you
sell or
exchange
property
used in your
business or
in which the
business use
of certain
section 179
or listed
property
drops to 50%
or less.
□
File Form
8594 with
your Form
1040 if you
sold your
business.
Self-employment
tax
□
File
Schedule SE
with your
Form 1040
for the year
in which you
go out of
business.
Employment
taxes
□
File Form
941 for the
calendar
quarter in
which you
make final
wage
payments.
Note.
Do not
forget to
check the
final return
box on line
A and enter
the date
final wages
were paid
above line
1.
□
File Form
940 or
940-EZ for
the calendar
year in
which final
wages were
paid.
Note.
Do not
forget to
check the
box,
If you will
not have to
file returns
in the
future...,
under
Question C.
Information
returns
□
Provide
Forms W-2 to
your
employees
for the
calendar
year in
which you
make final
wage
payments.
Note.
These forms
are
generally
due by the
due date of
your final
Form 941.
□
File Form
W-3 to file
Forms W-2.
Note.
Note.
These forms
are
generally
due within 1
month after
the due date
of your
final Form
941.
□
Provide
Forms
1099-MISC to
each person
to whom you
have paid at
least $600
for services
(including
parts and
materials)
during the
calendar
year in
which you go
out of
business.
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