Tax deductions: There's still time for small business
| NEW YORK
Many small business owners looking for tax deductions for 2011 still have time.
Tax聽returns for 2011 are due next week, but the Internal Revenue Service has liberal deadlines for contributions to many retirement plans. A contribution for the prior year must be made by the due date, Tuesday, April 17.
You can get even more time if you're planning to file for an extension. In that case, you have to make the contribution by Oct. 15 and you don't have to pay a penalty or extra聽tax. Many small business owners get extensions routinely so they have more time to make their retirement plan contributions.
You get the extra breathing room if your plan is a SEP, or Simplified Employee Pension; a SIMPLE, or Simplified Employee Pension; or a plan like a 401(k).
There's more. If you don't have a SEP, you can create one by April 17 or Oct. 15, and get the聽deduction聽for 2011. SEPs are the simplest retirement plans to set up. There's little paperwork and you don't have to file any documents with the IRS.
The聽tax聽agency explains what you need to do to set up a retirement plan on its website,聽聽. Search for Publication 560, titled "Retirement Plans for Small Business."
It's a good idea to check with a certified public accountant before setting up any retirement plan. If you have a benefits or human resources consultant, they can also help you.
TAX聽PAYMENT TIPS
Small business owners who haven't filed their 2011 returns yet may be trying to decide how to pay their taxes. If cash is short, credit cards are an option 鈥� but make sure that you use the card that has the lowest interest rate. You can also use more than one card to pay your聽tax.
The IRS website has directions for paying your聽tax聽by credit card. Visit聽聽. The same page has instructions for paying your funds by an electronic withdrawal from a bank account.
If you're thinking of getting an extension of the filing deadline, remember that you still have to estimate how much聽tax聽you owe and pay it. If you can't pay your聽tax聽right now, you can request an extension of the deadline to pay, or an installment payment plan. You can get more information by downloading these publications and forms from the IRS website:
鈥擨nstructions for Form 1040.
鈥擣orm 4868, "Application for Automatic Extension of Time to File U.S. Individual Income聽Tax聽Return."
鈥擣orm 1127, "Application for Extension of Time for Payment of聽Tax聽Due to Undue Hardship."
鈥擨nstructions for Form 9465, "Installment Agreement Request."
