News & Tech Tips

Do you owe estimated taxes? If so, when is the next one due?

Federal estimated tax payments are designed to ensure that certain individuals pay their fair share of taxes throughout the year. If you don’t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains, a pension, or other income that’s not covered by withholding.

Individuals must pay 25% of a “required annual payment” by April 15, June 15, September 15, and January 15 of the following year, to avoid an underpayment penalty. If one of those dates falls on a weekend or holiday, the payment is due on the next business day.

So the third installment for 2024 is due on Monday, September 16 because the 15th falls on a Sunday. Payments are made using Form 1040-ES.

The amount due

The required annual payment for most individuals is the lower of 90% of the tax shown on the current year’s return or 100% of the tax shown on the return for the previous year. However, if the adjusted gross income on your previous year’s return was more than $150,000 ($75,000 if you’re married filing separately), you must pay the lower of 90% of the tax shown on the current year’s return or 110% of the tax shown on the return for the previous year.

Most people who receive the bulk of their income in the form of wages satisfy these payment requirements through the tax withheld by their employers from their paychecks. Those who make estimated tax payments generally do so in four installments. After determining the required annual payment, divide that number by four and make four equal payments by the due dates.

However, you may be able to use the annualized income method to make smaller payments. This method is useful to people whose income flow isn’t uniform over the year, perhaps because of a seasonal business. For example, if your income comes exclusively from a business operated in a resort area during June, July, and August, no estimated payment is required before September 15.

The underpayment penalty

If you don’t make the required payments, you may be subject to an underpayment penalty. The penalty equals the product of the interest rate charged by the IRS on deficiencies, times the amount of the underpayment for the period of the underpayment.

However, the underpayment penalty doesn’t apply to you if:

  • The total tax shown on your return is less than $1,000 after subtracting withholding tax paid;
  • You had no tax liability for the preceding year, you were a U.S. citizen or resident for that entire year, and that year was 12 months;
  • For the fourth (January 15) installment, you file your return by that January 31 and pay your tax in full; or
  • You’re a farmer or fisherman and pay your entire estimated tax by January 15, or pay your entire estimated tax and file your tax return by March 1.

In addition, the IRS may waive the penalty if the failure was due to casualty, disaster or other unusual circumstances and it would be inequitable to impose the penalty.

The penalty can also be waived for reasonable cause during the first two years after you retire (and reach age 62) or become disabled.

We can help

Contact us if you need help figuring out your federal estimated tax payments or you have other questions about how the rules apply to you.

Public policy organization reports increase in financial restatements

Accurate financial statements are essential to making informed business decisions. So, managers and other stakeholders may express concern when a company restates its financial results. Before jumping to premature conclusions, however, it’s important to dig deeper to evaluate what happened.

Uptick in restatements 

In June 2024, the Center for Audit Quality (CAQ) reported a recent uptick in financial restatements by public companies. The report, “Financial Restatement Trends in the United States: 2013–2022,” delves into a ten-year study by research firm Audit Analytics. It found that the number of restatements in 2022 had increased by 11% from the previous year.

More alarming is a trend toward more “Big R” restatements. Big Rs indicate that the company’s previously filed financial reports were deemed unreliable by the company or its auditors. Although most restatements are due to minor technical issues, the proportion of total restatements that were Big Rs rose to 38% in 2022, up from 25% in 2021. The 2022 figure is also up from 28% in 2013 (the peak year for restatements in the study) — and it’s the third consecutive year that the proportion of Big Rs has increased.

However, the CAQ report states, “It is too early to tell if the increase in restatements toward the end of the sample period is a true inflection point or simply a brief disruption of the previous downward trend.” Overall, financial restatements have decreased from 858 in 2013 to 402 in 2022.

Reasons for restatement 

The Financial Accounting Standards Board defines a restatement as a revision of a previously issued financial statement to correct an error. Whether they’re publicly traded or privately held, businesses may reissue their financial statements for several “mundane” reasons. For instance, management might have misinterpreted the accounting standards, requiring the company’s external accountant to adjust the numbers. Or they simply may have made minor mistakes and need to correct them.

Common reasons for restatements include:

  1. Recognition errors (for example, when accounting for leases or reporting compensation expense from backdated stock options),
  2. Income statement and balance sheet misclassifications (for instance, a company may need to shift cash flows between investing, financing and operating on the statement of cash flows),
  3. Mistakes reporting equity transactions (such as improper accounting for business combinations and convertible securities),
  4. Valuation errors related to common stock issuances,
  5. Preferred stock errors, and
  6. The complex rules related to acquisitions, investments, revenue recognition, and tax accounting.

Often, restatements happen when the company’s financial statements are subjected to a higher level of scrutiny. For example, restatements may occur when a private company converts from compiled financial statements to audited financial statements or decides to file for an initial public offering. They also may be needed when the owner brings in additional internal (or external) accounting expertise, such as a new controller or audit firm.

Material restatements often go hand-in-hand with material weakness in internal controls over financial reporting. In rare cases, a financial restatement also can be a sign of incompetence — or even fraud. Such restatements may signal problems that require corrective actions. However, the CAQ report found that only 3% of all restatements and 7% of Big Rs involved fraud over the 10-year period.

We can help

The restatement process can be time-consuming and costly. Regular communication with interested parties — including lenders and shareholders — can help businesses overcome the negative stigma associated with restatements. Management also needs to reassure employees, customers and suppliers that the company is in sound financial shape to ensure their continued support.

Accounting and tax rules are continuously updated and revised. So, your in-house accounting team may need help understanding the evolving accounting and tax rules to minimize the risk of restatements, as well as help them effectively manage the restatement process. We can help you stay atop the latest rules, reinforce your internal controls, and issue reports that conform to current Generally Accepted Accounting Principles.

Dental Care Update: Good News for Appointments and Staffing!

Here’s a summary of the latest economic outlook for dentistry according to the American Dental Association’s Health Policy Institute (ADA HPI):

 

Good News for Appointments:

Wait times are down! New patients waited an average of just over two weeks for appointments in the first quarter of 2024, a significant decrease from nearly 23 days in June 2023.

Staffing:

Hiring is getting easier! While dentists are still looking for dental assistants, hygienists, and administrative staff, the difficulty of recruiting these positions has lessened compared to 2023.

  • In 2023, 96% of dentists found it extremely challenging to hire a hygienist, but that number dropped to 89% in 2024.
  • Similarly, hiring dental assistants became less difficult, with 86% of dentists reporting it a big challenge in March 2023 compared to 77% in March 2024.

Overall Economic Outlook:

  • Dentists are cautiously optimistic about the U.S. economy overall, with steady confidence in the dental sector and their own practices.

Looking for More Information?

Stay informed about the ever-changing dental landscape! Browse thru Whalen CPAs experienced backed dental blogs & visit the ADA Health Policy Institute website for the full report: https://www.ada.org/en/resources/research/health-policy-institute/economic-outlook-and-emerging-issues

 

Source:

• [1] American Dental Association Health Policy Institute: Economic Outlook and Emerging Issues in Dentistry https://www.ada.org/en/resources/research/health-policy-institute/economic-outlook-and-emerging-issues

Beat Staffing Challenges & Boost Profits

If your dental office is experiencing rising costs and staffing frustrations, you are not alone. In January 2023, Dental Economics and The Levin Group conducted a survey on dentists’ challenges in 2022 (Levin, 2023). That survey highlighted dentists’ most significant concerns, as shown here:

The 2023 Dental Economics Fee and Staffing Survey, conducted by Dental Economics and Endeavor Business Intelligence collected data on staffing challenges and fee schedules by region and practice location (Urban, Suburban, Rural). In this survey, Midwest region dentists reported the following:

  • 79% of respondents had difficulty filling hygiene positions, 58% had trouble hiring assistants, and 28% struggled to hire office managers;
  • 87% of respondents stated staffing costs negatively impacted their practices to varying degrees.

 

According to DeStefano (2023) hygienist shortages impact the timeliness of care and dental assistant shortages slow the practice’s pace resulting in an overall decrease in office production. Additionally, these shortages negatively impact the timeliness of patient care. Offices suffering from inadequate front office coverage may experience lapses in insurance filing and inefficient patient communication, resulting in lost opportunity and weaker profitability. To stress this disadvantage, DeStefano (2023) reveals that the average dental practice collections were 10% lower in 2023.

 

Roger Levin of the Levin Group argues (as cited in DeStefano, 2023) that productivity is further impacted by failure to align dental fees with price increases to maintain healthy profit margins. Levin supports annual fee updates of approximately 5% to keep up with rising inflation.

 

Overall, the Dental Economics Fee and Staffing Survey found that 65% of participants had increased fees within the last year. Multilocation practices were the most likely to have updated fees within the last 6 months. Interestingly, fee-for-service model or membership model practices were more likely to update more frequently than practices operating under a PPO model. Dr. David Rice, chief editor of Dentistry IQ states that PPO practices may be hesitant to raise fees since they operate under contract limitations, but reminds that this hesitancy prevents PPOs from updating reimbursement tables resulting in lower reimbursement for the practice itself and for nearby practices (DeStefano, 2023).

 

Although submitting an updated fee schedule is no guarantee of increased payer reimbursement, Levin remarks that it provides payers the opportunity to re-evaluate their fees (DeStefano, 2023).

 

If your office has not recently performed a fee update, the 2023 Fee and Staffing Survey provides a fee table by region for many dental CDT codes to help you align your fees more appropriately. You can find the survey results here Dental Economics 2023 Fee and Staffing Survey.

 

References

Levin, R. P. (2023, April 10). Profit down, overhead up (a lot!): Findings from the 2022 Dental Economics/Levin Group Annual Practice Survey. Dental Economics. Findings from the 2022 Dental Economics–Levin Group Annual Practice Survey | Dental Economics

DeStefano, A. W. (2023, August). The 2023 Dental Economics Fee and Staffing Survey. Dental Economics.com Download: The 2023 Dental Economics Fee and Staffing Survey | Dental Economics

Corporate Transparency Act

As a business owner, you probably have heard of the new reporting requirement mandated by the Corporate Transparency Act (CTA). The CTA creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to discourage using shell companies and other opaque corporate structures for illicit activities, such as financing terrorism, money laundering, and other financial crimes.

 

Because advising clients regarding compliance with the Act may be considered the unauthorized practice of law, we are unable to assist with this filing. Therefore, we recommend you comply with this filing requirement by either

  1. Consulting your legal counsel for assistance;
  2. Reporting directly to the Financial Crimes Enforcement Network (FinCEN) and complete the necessary information online through their website (here); or
  3. Contacting FileForms * to assist with the filing (FileForms.com).

*FileForms is a company who represents they can assist with the completion of this process. Whalen CPAs does not validate the offerings of this company.