A Week of IRS Letters
This week, I’ve received a number of letters from various tax-related agencies. I imagine these are sent to everyone, once their business is registered and tax season is coming up.
1: This letter was from IRS and it contained forms 1040-ES/V and instructions. Basically, they provide information on how to file estimated tax payments and attach pre-labeled forms and envelopes to allow you to do it. From their instructions: “Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, etc). The estimated tax payment vouchers are preprinted with your name, address, and social security number (SSN). In most cases, you must make estimated tax payments if you expect to owe at least $1,000 in tax…”
I expect to invest a bunch of money into my business and not make enough of a return on it to re-coup my losses by year-end, so I don’t think I need to be worried about estimated tax payments on my self-employment earnings just yet. But if you think your website will be a cash cow in its first year, then this is probably something you should look into.
2: This letter was labeled EFTPS (Electronic Federal Tax Payment System). According to the letter: “When you were assigned your EIN, you were enrolled in EFTPS to make your Federal Tax Deposits online or by phone. To make your deposits, you will instruct EFTPS to transfer funds from your bank account to Treasury. This brochure will walk you through your activation.”
Basically, you’re provided a pin and your call up their automated system, put in the pin, your EIN, and your bank account information, and it will activate the service for you. I will not be reporting any income/loss/tax for previous year, since I just registered the company in mid-December and had no activity by year end, but this will help me when I do my next tax return.
3: This last letter was from the Department of Treasury. I guess it was automatically dispatched after I submitted form SS-4 and received my EIN. IRS generates a Tax ID as soon as the form is submitted online, but this letter is the official receipt. Anyways, one of the things stated in the letter was:
Based on the information from you, you must file the following form(s) by the dates shown:
- Form 941 - 10/31/2007
- Form 1065 - 04/15/2008
- Form940 - 01/31/2008
If you believe your employment taxes for 2007 will be less than $1,000, please file Form 944, Employer’s Annual Federal Tax Return. Otherwise, you are required to file Form 941, Employer’s Quarterly Federal Tax Return.
I guess once I get employees this will become even more complicated and confusing. I don’t even know what the other forms are, but I’m guessing they are IRS-related. I don’t have to fill them out for at least another half a year, which, I guess, gives me some time to read up on them.
