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I am structured as an S Corporation and I have been making past due payments to the IRS. As the business has dramatically improved, I have taken the money directly out of the business account to pay the IRS this year and wanted to include it as an expense on the P&L (its over $40,000). Otherwise, it looks like there's going to be a lot of profits for this year. So, is there any way to acknowledge the $40,000 paid for past due taxes and make it an expense on a P&L.
ANSWER
The BIDaWIZ Team's Answer:
Unfortunately, past-due tax payments are never deductible just as tax refunds are never included in your income. This is referenced in Internal Revenue Code Section 6651. Having said that, there are certain ways to reduce your taxable income through retirement plan contributions, medical expenses, charitable donations, state and local taxes, and other miscellaneous expenses.
References: Internal Revenue Code Section 6651
State: Arizona
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