Many parents will receive advance tax credit payments beginning July 15
Eligible parents will soon receive payments from the federal government by direct deposit, paper check or debit card. The IRS announced that the 2021 advance child tax credit (CTC) payments, which were created in the American Rescue Plan Act, will begin July 15, 2021, and run through Dec. 15, 2021. Payments will get up to $300 monthly for each child under 6, and up to $250 monthly for each child 6 and older. The increased credit amount will be reduced or phased out for households with modified adjusted gross income above: $150,000 for married taxpayers filing jointly and qualifying widows and widowers; $112,500 for heads of household; and $75,000 for other taxpayers. Questions? Contact us.
The IRS has announced 2022 amounts for Health Savings Accounts
The IRS has released the inflation-adjusted amounts for Health Savings Accounts (HSAs) next year. For calendar year 2022, the annual contribution limitation for an individual with self-only coverage under a HDHP will be $3,650. For an individual with family coverage, the amount will be $7,300. This is up from $3,600 and $7,200, respectively, for 2021. For calendar year 2022, an HDHP will be a health plan with an annual deductible that isn’t less than $1,400 for self-only coverage or $2,800 for family coverage. And annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) won’t be able to exceed $7,050 for self-only coverage or $14,100 for family coverage.
Getting max value out of your CRM software
The days of the Rolodex are long gone. To connect with customers and prospects, many businesses now rely on customer relationship management (CRM) software. Whether you’re just now shopping for a CRM solution, or already have one in place, you should take steps to get max value out of this technological investment. Make a point of aligning CRM goals with your company’s overall strategic objectives. Encourage “CRM champions” to extol the benefits of the software by telling real-world success stories. Training is also key. Introduce (or reintroduce) your employees to the solution’s benefits by embedding CRM lessons in meetings or training sessions about other topics. Contact us for more info.
Still have questions after you file your tax return?
After filing a tax return, you may have questions. 1) When will you receive your refund? Go to irs.gov and click on “Get Your Refund Status” to find out. 2) How long should you save tax records? In general, save records for three years after filing although you should keep the actual returns indefinitely. However, there are exceptions to this general rule. 3) If you overlooked claiming something on your return, can you still claim a refund for it? You can generally file an amended return to claim a refund within three years after the date you filed the original return or two years of the date you paid the tax, whichever is later.
An S corporation could cut your self-employment tax
If your business is organized as a sole proprietorship or a wholly owned limited liability company, you’re subject to both income tax and self-employment (SE) tax. There may be a way to cut your tax bill by operating as an S corporation. SE tax is imposed on 92.35% of SE income at a 12.4% rate for Social Security up to $142,800 for 2021 and at a 2.9% rate for Medicare. An extra 0.9% Medicare tax is imposed on income exceeding $250,000 for married filers and $200,000 for singles. If you conduct business as an S corp, you’re subject to income tax, but not SE tax, on your share of business income. But the S corp must pay you a reasonable salary. Contact us if you want to discuss these issues.
Look at your employee handbook with fresh eyes
Many businesses have revised their policies and procedures during the COVID-19 pandemic. If yours has done so, be sure to accurately document the changes in your employee handbook. And while you’re at it, review the entire handbook with fresh eyes. Ask your attorney to assess its legal soundness and make all recommended changes. Use the handbook to express to workers how you’re supporting their well-being, thoroughly describing employee benefits, paid sick time and leave policies, and fringe benefits. Avoid using prefabricated templates or boilerplate language; revise the handbook so it’s truly your own. Our firm can help you develop cost-effective solutions to your employment challenges.
Working in the gig economy results in tax obligations
Before the pandemic hit, the number of people engaged in the “gig” or sharing economy was growing. And even more people turned to gig work during the pandemic to make up lost income. There are tax consequences for the people who perform these jobs. Generally, if you receive income from gigs or freelancing, it’s taxable. That’s true even if the income comes from a side job and if you don’t receive a 1099-NEC or other form reporting the money you made. You may need to make quarterly estimated tax payments because your income isn’t subject to withholding. Some or all of your business expenses may be deductible on your tax return, subject to the normal tax rules. Contact us to learn more.
Help ensure the IRS doesn’t reclassify independent contractors as employees
Many businesses use independent contractors to help keep costs down. If you’re among them, make sure workers are properly classified for federal tax purposes. If the IRS reclassifies them as employees, it can be a costly error. It can be complex to determine whether a worker is an independent contractor or an employee for federal income and employment tax purposes. The IRS and courts have generally ruled that individuals are employees if the businesses they work for have the right to control and direct them in their jobs. Otherwise, they’re generally contractors. Contact us if you’d like to discuss how the rules apply to your business. We can help ensure your workers are properly classified.
The Restaurant Revitalization Fund is now live
The COVID-19 pandemic has affected various industries in very different ways. Widespread lockdowns and discouraged movement have led to increased profitability for some manufacturers and many big-box retailers. The restaurant industry, however, has had a much harder go of it — especially smaller, privately owned businesses in economically challenged areas. In response, the Small Business […]
Tax filing deadline is coming up: What to do if you need more time
This year, the deadline for filing 2020 individual tax returns is May 17, 2021. The April 15 due date was postponed due to the pandemic. If you still aren’t ready to file, request a tax-filing extension. Anyone can request an automatic extension with IRS Form 4868. This extends the filing deadline until Oct. 15, 2021. Be aware that a filing extension doesn’t grant you an extension of time to pay your taxes. You need to estimate and pay any taxes owed by the deadline to help avoid possible penalties. In some special situations, people can receive more time without filing Form 4868. This includes victims of certain disaster victims, military members in a combat zone and U.S. citizens abroad.
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