We've seen our fair share of audits, and, of course, nobody likes dealing with them. That said, there are some basic steps business owners can take to ensure this doesn't happen to them.
1) Make sure that any third-party income and reports agree with your records.
2) Make sure you have selected the correct forms and schedules to fill out. Ask yourself: Do the forms apply? Am I stretching the situation?
3) Keep track of bank deposits so that all items will be easy to trace. Write the source of the check directly on the deposit slip, especially transfers between accounts, so that these are not inadvertently counted as income.
Good news for PPP loan recipients:
The IRS says you don't have to report the forgiven loan amount.
DONTMESSWITHTAXES.COM
No 1099-C for forgiven PPP loans, but this tax form still issued in other taxable canceled debt cases
Rhinehart & Associates, Inc. added a button to help you learn more about them.
Acts of kindness and courage are happening all around us, if we look for them, and create them. https://bit.ly/2RQnSr6
MSN.COM
Hero teen saves mother, 3 children from burning car
The most important time of the year for tax planning is right now, Q4.
That's because there are shifts available that, if you make them NOW, can dramatically lower your tax burden -- both on the business side, and the personal return. And almost all of these shifts can only occur before 12/31/20. Some of them take some time and doing.
So ... if you're interested in what this can look like for you, get in touch.
It's crazy season. No qualifiers are needed for that statement.
One strong antidote to the feelings of helplessness and anxiety that are running rampant around you (and maybe within you) is to take some time ... to dream.
We propose that this is the ideal time to take a hard look at what you are really working and living FOR. Because when you have clarity about these things, you have the ability to put all of these issues in their proper place.
Take time to write down what your ACTUAL big dreams are. Then you can lay out a plan that lets you use your precious time for what you really want in life.
And we'd love to help you formulate a financial plan to get there.
The day has come. All 2019 returns that were given an extension to file are due to be submitted today, which means our most recent marathon is coming to an end.
Next tax season is now not so very far away (along with the tax ramifications of what THIS tax season delivered). Are you ready for that?
You will be ... with our help.
We've been telling you about some tax professional rumors circulating about "automatic forgiveness" for PPP loans under $150K.
Well, they did it! Except it is for even smaller loans (under $50K).
And it's not "automatic", but it is very, very easy. Here is the simplified application if your loan falls in that category. https://bit.ly/318OOYh
Here are some questions to consider for your 2020 taxes that will set you up for long-term success. We're here to help you walk through these answers and how to affect your tax status in a positive way.
1) Have you had a significant change in your wage income this year?
2) Have you taken capital gains or losses this year? Are you planning to?
3) Did you start or sell a business this year?
4) Did you purchase real estate?
5) Did you make your full contributions to retirement accounts?
6) Have you considered a Roth IRA?
7) Did you withdraw from retirement accounts, and for what purpose?
Extension deadline is on THURSDAY, folks. Filing a tax return late (without reasonable cause) results in a 5% late FILING penalty (on whatever it is that you owe -- and the IRS will figure it for you if you don't), and an additional 5% for every month you wait to file.
PLUS there is an additional 0.5% to 1% late PAYMENT penalty (per month) on whatever it is you owe. NOTE: this is ON TOP of late filing penalties.
Then (yikes), interest accrues on both the late tax filing penalties AND the late payment penalties.
That's a lot of penalty. And at least the first one is completely avoidable.
If you can't pay the tax due on October 15, still file ... and talk to us about helping you set up an installment agreement or working out an offer in compromise to cover what you owe.
FORBES.COM
October 15 Is Almost Here. Don’t Have The Money To Pay Your Taxes? File Them Anyway.
Another PPP loan update for businesses:
If your PPP loan was less than $50K, a couple of time-consuming requirements have been removed from the forgiveness application, making the process *a little bit* less complicated.
Automatic forgiveness for certain loans, while still being discussed, is not yet available.
FORBES.COM
Was Your PPP Loan Less Than $50,000? Life Just Got (A Little Bit) Easier
If you filed an extension on your 2019 taxes (like many Americans), your extended deadline is a week away (on Oct. 15).
The work of a business owner is about planning, focus and execution (and later ... harvesting) vs. chasing the fad of the week, getting distracted and wasting time -- time you can't ever get back.
How many times did you look at social media today to gawk at political train wrecks? How much of your headspace is currently taken up with "pressing" client/staff questions? How many rabbits can you chase at one time?
Now, more than ever: Plan, focus, execute and harvest.
Regardless of what happens this week, we must all somehow move forward together and now is when the real work begins.
While the nation's eyes are fixated on political things, we're spending our days working hard on behalf of our clients, talking through tax-advantaged financial moves, entity formations, retirement options, and more. Because both Republicans and Democrats deserve amazing tax and accounting service.
Simply put, we're here for you, no matter what's happening.
"The future of this republic is in the hands of the American voter."
- Dwight D. Eisenhower
This is true everyday, but especially important on this day in 2020. No matter what divides us and no matter who wins today, we are all American.
The standard deduction is increasing in 2021, and new tax brackets and tax rates have been released.
"Note: These rates remain in place no matter what happens in November 2020. For these rates to change, Congress would have to vote to change the tax rates."
FORBES.COM
IRS Releases 2021 Tax Rates, Standard Deduction Amounts And More
Taxpayers collectively spend six billion hours annually --
or 8,758 lifetimes
-- trying to comply with the tax code. Fortunately, YOU don't have to be the one doing all the heavy lifting. We are on your side.
Save ALL of your tax returns. After you file, save the paper and/or electronic copies with the rest of that year's financial documents for at least 7 years.
If the IRS suspects you underreported your gross income by 25% or more, they have up to six years to challenge your return. And because we can all file for an extension at the October 15 deadline, you must keep your records for at least seven years.
Regardless of those rules, though, if the IRS suspects you filed a fraudulent return, no statute of limitations applies. Because the IRS is run and organized by fallible people (with all of their attendant biases, emotions, etc.), we suggest keeping your tax returns and documents forever.
Renters and landlords, the second coronavirus relief bill affects you.
This new act extends the moratorium on evictions under the CARES Act, designed to protect renters from eviction, until January 31, 2021.
That means, if you are a renter, you have one more month to get right. For landlords, you need to know that you will have to wait one more month.
So you don't have to read all 5,500 pages of the second Covid Relief Bill (?!) or the selectively worded news reports, we're working this week to break it down into what you need to know. Today, we're talking about changes to child tax credits.
There is now a special temporary rule allowing lower-income people to use their earned income from tax year 2019 to determine the Earned Income Tax Credit and the refundable portion of the Child Tax Credit (i.e., the Additional Child Tax Credit) in the 2020 tax year. This is very good news.
The Assurance Team, LLC updated their website address.
Taxpayers who filed returns through H&R Block and TurboTax in recent years are experiencing a delay in receiving their second round of stimulus checks. The issue is for those who had their tax prep fee deducted from their refund, causing stimulus payments to be sent to temporary accounts set up for that purpose.
"The IRS says that the financial institutions that received the funds will return them to the IRS, and then the IRS will reissue payments to the right accounts. This will cause delays in people receiving their payments."
Maybe ... next time ... try a different solution? 🤷♀️
CNBC.COM
H&R Block and TurboTax customers report issues with second stimulus check deposit
We're digging into the new Covid Relief Bill this week and breaking it down into simple info you can digest. (Because: 5,500 pages?!)
Apart from the $600 stimulus checks coming, here is more good news for those receiving unemployment:
They tacked on an additional $300 per week for all workers receiving unemployment benefits, from Dec. 26, 2020 to March 14, 2021. The bill also extended the "PUA", a temporary federal program covering self-employed and gig workers, to March 14 (after which no new applicants) through April 5, 2021.
The bill also provides an extra benefit of $100 per week for certain workers who have both wage and self-employment income but whose base UI benefit calculation doesn’t take their self-employment into account.
A new round of stimulus checks are in the mail, and you should receive it by January 15th.
CNET.COM
Second stimulus check: IRS has 11 days to send out payments. When will yours arrive?
Today's the day, everyone! Tax Season is officially open.
Because of the IRS' delayed opening, this year's filing window is shorter than normal. Time is of the essence.
As you know, your 2020 taxes aren't going to look like every other year's, so get your appointment scheduled with a qualified pro ASAP. (That's us.) 😊
If you have an outstanding debt with the IRS, by law, the IRS must "consider" settling your debt.
We're talking here about the Offer in Compromise (OIC), and they are indeed authorized to settle for less than the full amount that you owe. In fact, they always have to listen to an offer.
But be careful -- not everyone qualifies for an offer in compromise. The IRS has very rigid guidelines for examining an offer in compromise. The IRS will look at your household income, living expenses and asset values, and determine if they can collect the FULL amount owed from you. In most cases, to accept a compromise, the IRS has to be convinced that they will never collect the full amount owed from you. If so, then they can agree to settle for a lower amount, representing what can be paid and recovered.
Usually, you need help for this process.
The rise of self-employment and the side hustle is an exciting trend for the US economy. If this is you, there are important deductions you'll want to make use of to make your venture as profitable as possible.
If you file your taxes with us, we're always looking out for these money-savers. Let us know if you have questions.
MONEY.USNEWS.COM
15 Self-Employment Tax Deductions
In the realm of preparing your tax return, I urge you ... do NOT fall prey to the thinking that a software program or talking heads on a floating desk can suffice to enable you to preserve your resources or properly leverage the multiplicity of credits, loopholes and deductions available.
Give yourself the gift of financial peace of mind during tax season, and do it with someone who knows how to do it right.
Lowered gas and insurance costs in 2020 led the IRS to reduce the mileage deduction rates for 2021. This is now what you can deduct for driving for business purposes this year:
- 56 cents/mile for business (down from 57.5)
- 16 cents/mile for medical or moving (down from 17)
- 14 cents/mile for charitable purposes
But with gas prices seemingly on the way up again in 2021, we'll probably see mileage rates affected accordingly next year.
Depending on how you handle your 2020 taxes, you'll end up in one of two groups:
1) Sitting on top of a mountain of tax benefits that are available to those who use them effectively, or
2) Crying at the bottom of a pit of missed tax opportunities that could have eased the financial strain of 2020.
We're here to help YOU process tax season. No matter what happened during the donkey that was "2020" ... we're going to ensure that your taxes are as locked tight, cost-efficient and SAVINGS-OPTIMIZED for you as legally and ethically possible.
