Someday we will hopefully reach a point where discussing tax matters won’t just involve things that happened (or happened more) during the pandemic.
But we are not there yet. So today I wanted to write a little bit about location. This really stood out last year as more people worked from home. And that home was not always in the same state as where they used to work. That changed how many had to pay and file taxes. And now this year, many people are still doing so, some others are joining the work-at-home forces for the first time, others who could not travel for a time are working in new areas, and all these situations could raise new questions. These issues came back into my view through a recent Accounting Today article that covers a lot of these situations for mobile entertainers. I don’t have the space to go as in depth here but wanted to put out a couple key points for those who may be affected. The biggest one of these is to just keep records of what you are doing and where you are doing it. You are not going to be able to look back at a year of transactions and payments if you are working in various areas and specifically recall where each happened. This is also good practice for people who may not be setting up shop in different areas but travel for work. The better your record keeping when on trips, the more you will be properly tracking your potential deductions and keeping yourself from missing any expenses. In addition to record keeping, though, I also want to stress the important of planning. So often in situations like this, where someone may be working in a new state, they understand that there could be tax implications, but tend to push that idea away and plan to deal with it when tax filing comes. Of course, this could lead to a nasty surprise if you did not set things up correctly, owe more money than you realized, and hit yourself with a surprise, large bill. At the same time, though, maybe you’ll be paying way more than you would have had to and could have been using that money that was being withheld to do something different along the way. Either way, planning would have prevented the situation. So be aware and be active in addressing your situation. After all, in a time that has upended a lot of our lives, the more we have control over, the better we feel. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter
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It is not like it is difficult to understand procrastination. Of course it is easier to not do something than to do something, no matter how much you should do it. And when it is not difficult to get a deadline extended for something you don’t want to do, kicking that can further down the road becomes super tempting. But even with all that, we are approaching the October 15th deadline for submitting taxes even if you received an extension.
Aside from procrastination, sometimes you can’t complete tasks because of circumstances beyond your control. So if you have been affected by one (or unfortunately more) of the numerous disasters that have ravaged parts of our country, it is possible that this deadline could have been pushed back further for you. If things have happened that would prevent you from reaching the October 15th deadline because of such disasters, it can be worth looking into if you qualify for the added time. Please do not hesitate to reach out to us if you need clarity with this. But for the rest of you, it is time to get moving. The sooner you get everything together to prepare your taxes, the more time you have to confidently answer any questions that come up, and the better chance you have to use those answers to your best advantage. After all, if you are expecting a refund, why would you not want that money and as much of it as you are entitled to? Getting this done can be even more important for those who still owe money to the IRS, though. We say this every year, but every year still see people who were unaware of it – receiving an extension to file is not an extension to pay your taxes. The deadline to pay 2020 taxes was still May 17, 2021. At that time, fees and interest started to accrue on your balance. The sooner you get your taxes filed, the sooner you get a handle on how you will pay that amount. Every year it is true that filing electronically (and receiving payments via direct deposit) will get your return through the system faster. That is going to be even more true this year, however. As we have recently said in this space, we are seeing people who filed at the regular deadline still waiting for their return to be processed. That is already a long line so if you can avoid joining the slower one, it will only be good for your peace of mind. So yeah, what are you waiting for? Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Small Business Week typically takes place in the first week of May each year, but as with, well, everything else over the past year and a half, it was postponed and is now being celebrated this week. There is nothing inherently necessary about that May date anyway, and it can always be a good time to think about a small business, so let’s join in the festivities.
Know that is even possible to starting thinking about a small business without actually having a business. Everything has a starting point after all. I think the biggest thing here is to have a passion for something you want to do. Have you ever had a tickle of an idea that you thought could become a business? That spark that you knew could be profitable if someone would just do it? Well, that probably came out of something you would like to do and when it comes to work, the things you want to do are going to thrive more than the things you need to do. So lean into it, identify that opening you saw, and think about how you could fill it. As a quick tip, once you actually decide to pursue something as a business (even if you don’t envision it ever being more than a side hustle), set up a new bank account for it. This doesn’t have to be any special type of account and can likely be accomplished in minutes with your current bank. Keeping your business and personal spending separate, though, will fend off the headache of going through lists of transactions and determining what was what months down the road. For those who try to make the transition from side hustle to business, the biggest hurdle can be getting from doing those things you want to doing the things you need to do. This can be as simple as properly forming the business legally, keeping a bank account balanced, paying the right taxes, or knowing whether you are actually making a profit. All of these are things that one understands need to happen on some level, but they aren’t why you start the business, and they aren’t what you know about. So when it comes to them, do not shy away from seeking out help from those who do know such things. So to that end, know that the federal government runs a Small Business Administration, which shares a lot of information on its website at sba.gov. For more strictly tax-related issues, the IRS has put together a website in celebration of this week that offers up some information. And as always, if there is anything we can do to help facilitate your success, do not hesitate to reach out. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter Last week in this spot I wrote about how the dealing with the IRS and getting 2020 taxes processed still involved a long waiting game for many. The agency does not get put in the best light when the conclusion is that all you can do is just shrug and continue twiddling your thumbs.
But when the IRS does things right, we should also give it credit and it recently has done that a couple times. Almost as if in response to some of the waiting times involved with paper forms and phone calls mentioned last week, the IRS extended the ability to digitally sign a variety of forms. That ability is currently only slated to run through the end of this year but hopefully shows an increasing openness to allowing it more as a rule. If you are interested in what forms are included in this, you can find a list at the end of this article. Of course, there are security concerns with such signatures as they are being placed on sensitive documents. It is obviously impossible to be able to guarantee nothing will ever go wrong. It is also impossible, however, to deny that digitally signing documents is only going to become more the norm in numerous areas in the future. It is a genie that can’t be put back into the bottle and as the IRS works through its backlog, further embracing of it is only going to help ease that situation. This is probably another area where we have to embrace the electronic world. Also on the positive side of the IRS’s ledger is it instituting some help for victims of Hurricane Ida. The biggest headline here is that those affected by the storm now have until January 3, 2022 to file various tax returns and make some tax payments. Granted, this is not the largest type of help that many need, but it is at least something and is what the IRS itself can directly provide. The agency has also put together a web page that gives more information on its own actions for the victims, and also directs those who need it to other resources that may be needed. In the interest of doing good then, I want to close this week by urging anyone reading this who can help people affected by this disaster to do so. From the storm making landfall to dropping massive amounts of rain across various sections of the US, it upended life for many. Every little thing we can do to help others works to put them back on an even keel because enough little things add up to big ones. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter As the calendar turns to September, as Labor Day Weekend looms as the traditional end of summer, you would think that the IRS should be pretty much finished with forms it received months ago at the tax deadline.
Well, you would be thinking wrong. This isn’t exactly new news as the agency experienced a large backlog during the early days of the pandemic when fewer of its workers were working in their offices. Then they probably started to catch up a little bit at some point, but at the end of the 2021 tax season were still left with over 35 million returns that require manual processing. There are many reasons for this, and if you want to get a little more into the workings of the agency, you can do so by reading this article. We have received enough recent inquiries about the state of tax returns, though, that I thought it was worth putting this article out this week to make everyone aware of what is happening. The first thing to remember in this is that even if you submitted your tax return months ago and it still has not been processed, that does not mean that there is anything wrong with your return. You are just among millions still being handled. Clearly at that point, though, you want to do something to speed up the process. And many people want to call the IRS to do that. Well, just as there is a backlog of returns that the agency must process, there is a pretty constant barrage of phone calls they are fielding, too. Wait times on the phone can extend to longer than you want to wait to just find out your return is in that large pile they are still getting to. This then is an urging for patience if you are still waiting. I know this can be very difficult, especially if you are expecting a refund and have that money earmarked for specific purposes. Unfortunately, we do not have any secret key that can be turned to speed up the process. Unless you have been informed of specific issues with your tax return, it really is just a waiting game at this point. The agency does appear to be increasing (or is at least planning to increase) its workforce to try to solve some of these waiting issues. So maybe this will not be such an issue in the future. Until then, though, we are sorry that we cannot do much more but wait alongside you. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter |
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