If you’re wondering things like “What are the due dates for Washington Excise Tax” or “How to file Washington State Excise Taxes?” or “due date for federal tax return extension” then you’ve come to the right place.
In this article, I’m going to answer all of these questions and layout a simple, easy to follow step-by-step guide to how you can file a tax extension in Washington and help you limit any late fees you may have.
If you’re just looking for Federal Tax return information you can skip below to point #5.
1. Washington State Tax Requirements
If you’re worried about filing your Washington State Tax Return then great news! Washington is one of the states that doesn’t require individual or business income tax returns!
Businesses aren’t out of the clear yet, because businesses are subject to the Business and Occupation taxes which are calculated based on gross income.
Tax rates will vary depending on the B&O classification they fall under, but rates vary from .5% to 1.5% depending. For more information on classifications and tax rates check out the Washington State Department of Revenue’s website on Business & occupation tax.
Specifically the Tax classifications for common business activities page and the Business & occupation tax classifications page.
Classifications as of 7/27/2022
2. Washington State B&O Tax
Washington State’s B&O tax must be paid in different frequencies. The first step you’ll need to take to determine your filing frequency is to register for the Department of Revenue. This site will also cover the registration requirements.
Once you’ve finished and officially registered your business you’ll be given a packet about how to pay your taxes and what your frequency is, monthly, quarterly or annually.
They base the frequency off of your total estimated gross income for your business (thresholds not listed).
- Monthly returns are due on the 25th of every month.
- Quarterly returns are due the end of the month following the tax quarter (Quarter 1of Jan– Feb is due April 30th, etc)
- Annual returns are due April 15th.
If the due date falls on a weekend or legal holiday, the due date is extended to the next business day.
3. Calculating your B&O late fee
Don't be late, they are not very forgiving and the fees are steep.
The excise tax return due dates are listed here for future reference, but the 2022 excise tax return due date is listed here.
Washington State has 3 different late fee options depending on how delinquent your taxes are.
- There is a 9% penalty if the tax is even 1 day late.
- After roughly 30 days of being late the penalty jumps up to 19% (closer to 40 for annual returns).
- Finally, after roughly 60 days of being late the penalty maxes out at 29%.
4. Washington State B&O Penalty Waiver Options
The Washington State Department of Revenue has limited authority to waive delinquent or late return penalties under specific circumstances.
First, when the underpayment of tax or failure to pay happened due to circumstances beyond the taxpayer’s control (for more information see here). This does not generally include lack of funds, being unaware that taxes are due, or not receiving the return in the mail.
Second, when a taxpayer has filed and paid (on time) all tax returns required for 24 months prior to the period in question, the DOR has the authority to waive the penalty.
In other words, if you've been on time for 24 months, there's a higher likelihood they could waive penalties.
Submit your waiver request in writing with the late return and tax payment. If you file electronically you can check a box to request a penalty waiver .
5. Federal Tax Return – Extension
Federal tax returns are normally due by April 15th (April 18th in 2022), but the IRS does allow extensions until October 15th (October 17th in 2022).
Filing your extension is easy by using IRS Free File (available here), which can guide you through the tax options if you have an AGI of 73,000 or less. For those with an AGI that is higher, then you can find forms that won't do the free guidance, but will still give you all the information you need.
Federal extensions also require payment on the normal due date. If you haven't paid your estimated tax payment by April 18th, 2022 then you'll have to pay penalties and late fees.
The late fees for your Federal tax return is 0.5% penalty for every month you fail to pay up to 25% (article from IRS here).
Most small businesses will have the same filing due dates and deadlines as individuals, but for S corporations and partnerships their due date was March 15th, so late fees and other calculations need to be made based on that.
6. How to pay your Federal Tax Return Late Fees
If you’ve calculated how much you’ll owe (including late fees) and would like to see your payment options, then head over to www.irs.gov/payments. At the IRS.gov website portion you’ll be given the following payment options:
- Pay from your Bank Account
- Pay by Debit Card, Credit Card, or Digital Wallet (paypal, etc)
- Same-Day Wire
- Check or Money Order
- Electronic Funds Withdrawal
- Apply for a Payment Plan
The IRS also has a site where you can see if you qualify for an “Offer in Compromise” to settle your tax debt for less than the full amount. Check that out here.
Diwan Accounting is a premier one-stop-shop accounting service for small and medium sized businesses. We tackle the tax, bookkeeping, and finances for business owners so they can focus on their business. Our state of the art accounting solutions equip business owners with the information they need to make informed business decisions while having peace of mind knowing that they are paying their fair share of taxes and not a penny more.
If this sounds like something you’d like to explore for your business, please reach out to us for a free tax analysis or consultation.