Worried about an IRS audit? Prepare in advance
- ByPolk & Associates
- Oct, 05, 2022
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IRS audit rates are historically low, according to a recent GAO report (https://bit.ly/3SLZ9Sb). That’s little consolation if your return is selected. But with proper preparation, you should fare well. It helps to know what might catch the attention of the IRS. For example, some audit “red flags” are unusually high deductions, major inconsistencies between previous years’ tax returns and the current one, profit margins and expenses markedly different from those of similar businesses. The IRS normally has three years in which to conduct an audit. If the IRS selects you for an audit, we can help you understand the issues, gather the needed documents and respond to the inquiries effectively.
Investing in the future with a 529 education plan
- ByPolk & Associates
- Oct, 05, 2022
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If you have a child or grandchild who’s heading to college in the future, you may wonder about investing in a qualified tuition program or 529 plan. You don’t get a federal tax deduction for a contribution, but the earnings aren’t taxed while the funds are in the program. (There may be a state deduction in your state.) You can change the beneficiary without income tax consequences. Distributions are tax-free up to the amount of the qualified higher education expenses. These include tuition (including up to $10,000 in tuition for an elementary or secondary public school), fees, books, supplies and required equipment. Room and board is also a qualified expense if enrolled at least half time.
Formalizing your business’s BYOD policy
- ByPolk & Associates
- Oct, 03, 2022
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Many businesses have established bring your own device (BYOD) policies regarding employees’ use of personal phones, tablets, laptops and other tech. It’s a good idea to regularly review and, if necessary, formalize yours. A comprehensive BYOD policy needs to anticipate a multitude of situations, such as voluntary or involuntary terminations and what to do if a device is lost, shared or recycled. Clarify who pays the bill for voice and data usage, as well as whether you or the employee owns the cell phone number in question. Above all, formalizing your BYOD policy should mean having all participants sign a written user’s agreement carefully drafted in consultation with a qualified attorney.
Year-end tax planning ideas for individuals
- ByPolk & Associates
- Oct, 03, 2022
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It’s time to think about steps to lower your tax bill for this year and next. If you itemize deductions, you may be able to deduct medical expenses, state and local taxes up to $10,000, charitable donations and eligible mortgage interest. But these deductions won’t save taxes unless they’re more than your standard deduction ($25,900 for joint filers, $12,950 for singles and $19,400 for heads of household). You may be able to work around the deduction limits by bunching discretionary medical expenses and charitable donations into the year where they’ll do some tax good. For example, if you itemize for 2022 but not 2023, you may want to make two years of charitable contributions this year.
Work Opportunity Tax Credit provides help to employers
- ByPolk & Associates
- Oct, 03, 2022
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In today’s tough job market and economy, the Work Opportunity Tax Credit (WOTC) may help business owners. The WOTC is available to employers that hire workers from targeted groups who face significant barriers to employment. The credit is worth as much as $2,400 for each eligible employee. The maximum credit amounts are different for some employees ($4,800, $5,600 and $9,600 for certain veterans; $9,000 for long-term family assistance recipients; and $1,200 for summer youth employees). The IRS recently issued information on the pre-screening and certification processes. A pre-screening notice must be completed by the job applicant and the employer on or before the day a job offer is made.