Understanding Tax Relief

For those that don’t have the money to pay their tax bills in full, the IRS offers tax relief programs. The initiatives help taxpayers settle tax-related debts for less than the total amount, thereby preventing liens from being placed on their assets. They typically utilize a monthly repayment plan.

Tax relief programs won’t eliminate the money owed to the IRS, but it will help make it easier to repay. The IRS will charge interest on any unpaid taxes, along with a setup fee for its programs. To qualify for a long-term repayment plan of more than 120 days, individuals must owe $50,000 or more in taxes, penalties and interest.

Individuals that have been affected by natural disasters have access to tax relief initiatives. People should consult a tax specialist that’s knowledgeable in the regulations and forms required to take advantage of specific programs.

The IRS is currently offering tax relief programs to victims of wildfires, straight line winds, landslides and mudslides, flooding, tornadoes and hurricanes in certain areas. The tax relief initiatives provide extra time for taxpayers to file their federal return, pay their taxes, and file any required forms.

Another initiative of the IRS is penalty relief/interest abatement. Under the program, the IRS may forgive any penalties charged to the person’s tax bill, providing they meet certain criteria. Individuals will still owe their taxes, but eliminating penalties can save a substantial amount of money.

There are also companies that negotiate with the IRS on behalf of a client. Their fees can run into thousands of dollars and there’s no guarantee that they’ll be successful. Individuals should be wary of upfront fees, undesirable refund policies, and default billing if they decide to cancel.

The best option for those seeking tax relief is to engage the services of a qualified tax professional that has the authority to represent individuals with the IRS. Those include a CPA, attorney, or federally authorized tax practitioner.

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Tax Deductions
posted by Mark Battalini
July 26, 2022

When Can You Deduct Mileage

One of the many deductions possible on your federal income taxes is mileage driven for work-related endeavors if you use your own vehicle. Those deductions can be taken if you’re self-employed. It’s also possible to deduct mileage if your employer requires you to travel using your own vehicle – providing the employer doesn’t reimburse you for mileage.

There are two ways to calculate the mileage. The first is based on the business-related percentage of the total miles driven. The second method is by multiplying the miles you drive for work by the IRS’s standard mileage rate. The rate changes each year. In 2022, the IRS increased the mileage rate to 62.5 cents per mile due to soaring gas prices.

There are a great number of jobs in which an employer expects the employee to use their own vehicle as part of the job. They include delivery drivers, salespeople, couriers, service techs, reporters, on-demand shoppers, and ride-shares. You can also claim mileage for medical-related reasons and charitable driving.

A key component for claiming mileage is keeping a detailed record of the date, miles driven with the beginning and ending mileage stated, and the reason. There are apps that will do this. The IRS may demand to see a logbook of the miles traveled to determine if you’re eligible for the deduction. While it’s unusual for the IRS to do so, they have the option of doing so.

If an employer requires you to use your personal vehicle for work, but doesn’t reimburse you for mileage, you can claim the mileage by the actual number of miles or the IRS’s standard mileage rate. It’s a lot more complicated if you have an employer that reimburses you for mileage. You’ll first have to know if the company’s reimbursement policy is an accountable plan.

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Uncategorized
posted by Mark Battalini
July 26, 2022

Avoid Being Scammed Online

There are thousands of scams being perpetrated each year. Most victims are the elderly, but a substantial number of younger individuals are also affected. The scams may work by eliciting an emotional response or promising a financial return. They all have the same goal – to strip people of their money and peace of mind.

Scammers try to gain trust by claiming to be from a person or organization with which the victim is familiar. Others try to instill fear, such as a suspension of an account, threats of being arrested, utilities being shut off, or that the victim’s account has been compromised.

Scammers will attempt to make their victim take immediate action, pay in gift cards, or make wireless transfers. There are a number of precautions that individuals can take to protect themselves from being scammed.

Security Software

Install security software on all computers and mobile devices. Turn on automatic updates to ensure they’re protected against the latest threats.

Passwords

Create strong passwords that are at least 8 characters in length, includes a mix of upper- and lower-case letters, at least 1 number, and a special character. Password protection also applies to home internet connections. Secure home routers with a password and use extreme caution when connecting to public Wi-Fi networks.

Phishing

These scams use emails and fake websites to trick people into providing personal information. Don’t disclose personal information online, click on links in emails, or disclose login information. Report these to the Federal Trade Commission and to the organization being impersonated.

Personal Information

Never provide personal information on social media sites and lock down privacy settings. Scammers can glean a lot about people through their social media profiles. Don’t accept friend requests from unknown people.

Safe Shopping

Make sure the online shopping website’s address begins with https, indicating it uses secure technology. When checking out, make sure https is part of the address and/or check to see if a padlock symbol is visible on the page.

Privacy Policies

Read the website’s privacy policy to see how it protects personal information that’s collected and if it shares that information with third parties. If the policy isn’t easy to understand or not provided, consider going elsewhere to shop.

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Tax
posted by Mark Battalini
July 26, 2022

How is Mortgage Tax Calculated?

Not to be confused with interest rates on a mortgage or ongoing property taxes to be paid each year, a mortgage recording tax is used to document a loan transaction. It’s a fee that’s paid when someone takes out a mortgage. There are currently eight states that charge a mortgage tax and one of those is Florida. Numerous lending institutions offer online mortgage tax calculators that perform the financial calculations.

Individuals can do the math themselves by taking the total amount being borrowed and dividing it by 100. Then round up that number to the nearest whole number. Local laws may allow for a deduction to reduce the amount.

Florida residents pay 35 cents per $100, based on the amount of debt being incurred on the mortgage. However, that amount can vary among counties and a surtax may also apply. It’s customary for the seller to pay the tax, though that isn’t a mandate. The real estate agent is responsible for securing a check for the amount before the deed is recorded.

Failure to pay the amount promptly can result in the state assessing a monthly penalty fee. A floating interest rate may also be placed on any unpaid document. Parties exempt from the tax include state and federal government agencies, political subdivisions, and Florida counties and municipalities. When an entity is exempt from the tax, the other party must pay it.

Many types of deeds require this documentation, including warranty and quit claim deeds, easements, and contracts for mineral, timber, gas and oil rights. A mortgage tax is also collected if an individual refinances. However, a mortgage reassignment can transfer the original mortgage tax to the new lender. Not all lending institutions will do this, but if the lender agrees to do so, it can save individuals a significant amount of money.

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Tax Preparation
posted by Mark Battalini
June 26, 2022

What to Know About Filing an Extension

One of the biggest misconceptions about filing an extension on federal tax returns is that it means individuals don’t have to pay any amount owed on time. An extension gives people more time to file, but not more time to pay.

Individuals can file an extension on their federal taxes, but it has to be done before the last day for filing the taxes. An extension provides taxpayers with additional months to prepare and file their return for any reason. The IRS automatically grants a request for an extension, but the proper forms must be filed and the extension is valid until Oct. 15. The extension can be filed electronically.

Taxpayers are expected to pay the full amount they owe by the tax deadline, even if they file an extension. The IRS assesses a penalty for late payments, usually 0.5 percent per month of the balance that’s due, but failing to pay can increase that penalty to a maximum of 25 percent.

There are 3 primary reasons that individuals file an extension. The first is missing or inaccurate information. Many people find that they haven’t received a form they need in time to file.

The second most common reason for an extension is that a taxpayer will be out of town during tax season. Many people from northern states winter in the south, while others choose to vacation during spring break. If they anticipate a refund, they often file an extension.

Lastly, people run out of time. Filing federal taxes can be stressful, leading to procrastination. Despite taxes being due on or near the same date every year, some individuals lose track of time, simply get busy, or find themselves dealing with a major life event.

For those that don’t have the money to pay their tax bill in full, the IRS offers some payment plans. Individuals will still have to pay their tax bill, along with any applicable penalties and interest, but at a lower rate. Installment agreements are also available, in which individuals pay a set amount each month. The IRS advises individuals pay their tax burden with a credit card or take out a loan to save money.

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Accounting
posted by Mark Battalini
June 26, 2022

What is Farm Accounting?

Farm businesses need the services of an agricultural accountant. In many instances, farm businesses are large corporations. Farm accountants provide an essential service for farmers, helping them anticipate expenses, track expenditures, and ascertain ventures that will be most profitable – such as planting more corn, wheat or soybeans and letting field lie fallow.

Reporting and tracking farm expenses pose some interesting challenges. Cash basis accounting is one type of method to report income and costs and can be used to report taxable farm income. Farm accounting is utilized to record all goods, money and services used in the farming industry.

A farm accountant will deal with a variety of aspects relating to their client, from cash flow, day-to-day expenses, government subsidies when applicable, and even estate planning. Farm accountants provide a wide range of information to their clients to help them make informed and strategic decisions about their business and potential risks.

Agriculture plays a major role in the nation’s overall economy, just as much as oil and other resources. The accounting specialists will need an extensive variety of knowledge. They’ll need to be cognizant of fluctuating costs and prices, have an understanding of how unpredictable weather affects the business, and changing commodity prices locally and around the globe.

Farming is a unique type of business with special challenges. Farmers always have the last decision, but they rely on an agricultural accountant to help them plan for purchases of land, equipment and the operation of their business. Agricultural accounts are responsible for filing taxes on time, accounting for assets, liabilities and depreciation, along with meeting specific government regulations and definitions.

Farm accounting is an ideal profession for anyone that loves numbers and farming. They’ll be called upon to keep track of arable land to native plants, pasture to crop production, changes in land use, and even green/sustainable farming practices.

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Accounting
posted by Mark Battalini
June 26, 2022

Top Career Opportunities in Accounting 2022

A significant number of college students are reassessing their career path. They’re discovering they won’t make as much as they anticipated. A study conducted by Real Estate Witch found that undergrads across all majors overestimated their starting salaries by 88 percent. There are numerous well-paying opportunities in accounting for 2022 and the U.S. Bureau of Labor Statistics projects a significant growth rate in all areas.

Bookkeeper

A bookkeeper maintains a company’s day-to-day financial transactions. They record, prepare and present financial statements to supervisors and managers about some or all of an organization’s accounts. They’re responsible for keeping a running total of costs and income and it represents an excellent opportunity for those entering the field. Bookkeepers enter data, verify billing statements, and work with multiple types of financial software.

Personal Accountant

There’s an almost endless need for personal accounts. They keep track of and help individuals and business owners manage credit card and bank statements, keep tax records, review expenditures, and ensure staff are paid.

Tax Preparer

Individuals, entrepreneurs and small businesses utilize the services of a tax preparer throughout the year to ensure their finances stay on track. Tax preparers prepare taxes, ensure clients are only paying what they should, and help them organize records. They may work for a larger company, but often operate their own business out of their home.

Forensic Accountant

Law enforcement agencies, lawyers, private investigators, insurance companies, government agencies and financial institutions employ forensic accountants. They’re often called as expert witnesses in court cases to prove embezzlement, fraud and other financial wrongdoing. They analyze financial statements, bank records and other documents.

Environmental Accountant

The job includes recording income, expenditures and other transactions related to cost savings. Many companies and corporations employ environmental accountants to create social responsibility statements in terms of energy costs and similar changes relating to green practices.

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Tax Preparation
posted by Mark Battalini
June 26, 2022

Adjusting Your W-4

There are some very good reasons to adjust your withholdings on your W-4. The form tells your employer how much money to keep out of your check for federal income tax. It will have an effect on your tax liability and prevent you from receiving an unexpected tax bill when filing your federal return.

Your W-4 is also critical for preventing a penalty for underpayment. Some people choose to claim every possible withholding, essentially living on less throughout the year to obtain a large refund at tax time. The IRS wants you to reduce your tax bill and have a refund that’s as close to zero as possible.

Life Events

Any time that your life circumstances change, you should complete a new W-4 with your employer. That includes a marriage, divorce or the birth or adoption of a child. Major life events also include buying a house, getting a raise, and contributing to educational funds. Some of those changes will make you eligible for credits on your federal tax return.

Part-Time Employment

If you normally work all year, but get laid off or experience downtime, you’ll need to adjust your withholding to account for those changing circumstances.

Second Job

It doesn’t matter whether you get a part-time job, work the gig economy, run a side hustle, or have a home business, you’ll need to adjust your withholding. There are a great many types of income producing ventures that are viewed as self-employment by the IRS, which makes you liable for income tax on the amount, along with the self-employment tax, Social Security and Medicare.

Spousal Employment

If your spouse gets a new job or changes jobs, they’ll also have to complete a W-4. Any change in income – an increase or a decrease – will have an impact on your income and amount of taxes you owe. Couples need to use both incomes and approximate as closely as possible what they need to claim on their W-4.

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Accounting
posted by Mark Battalini
May 21, 2022

When do You Need Payroll Services?

If you’re a small business owner, you may attempt to maintain your payroll with software that can be obtained anywhere software is sold. You may think you’re saving money, but you may find yourself spending more time attending to accounting and payroll tasks than operating your enterprise. Even if you only have a single employee, you can benefit from the services of a payroll processing service.

It’s important that you understand the IRS ultimately holds you responsible for all payroll requirements, even if you hire a payroll service. Do your research and choose a payroll company that meets your individual needs and has experience. Ask friends, family and other business owners which service they use and if they’re satisfied with the company.

Accuracy

A payroll service will know exactly how much in taxes to keep out for each employee and ensure their pay check arrives on time, whether pay periods are weekly or bi-monthly. The service will calculate federal, state and FICA for employees, along with creating W-2s and 1099s. It will enable you to stay compliant with all applicable state and federal laws.

Filing Requirements

Businesses are held to different filing times and requirements than private individuals. A payroll service will help ensure you meet filing deadlines and pay the appropriate tax amounts to avoid penalties and fines.

Paying Yourself

Depending upon the type of business you have, you may be required to pay yourself. A payroll service can do this and it’s especially important if you’re considered self-employed. The service will calculate your own taxes, along with personal state unemployment taxes and federal unemployment taxes.

Saves Time

Payroll is a complicated process and the average business owner spends more than 6 hours per month handling payroll. A payroll service will streamline the process, take care of all the details, and give you more time to spend on operating your business.

Are You Eligible to Claim Child Tax Credits?

If you have children, you’re probably familiar with the Child Tax Credit. It can put some much-needed cash in your pocket, but there are criteria for qualifying for the credit.

Age and Qualifying Child

A qualifying child is one that didn’t turn 18 before Jan. 1, 2022. A qualifying child is defined as the taxpayer’s son or daughter, stepchild, eligible foster child, brother, sister, stepbrother or stepsister, or half-brother or half-sister. Descendants of those qualifying children may also qualify, such as a grandchild, niece or nephew. The child must have a Social Security number that’s valid for employment.

Financial Support

The child can’t have provided more than one-half of their own support during 2021.

Living Arrangements

The child must have lived with the taxpayer for more than one-half of the tax year. The home must have been in one of the 50 U.S. states or District of Columbia for more than half the year. A permanent home can be a house, apartment, mobile home, or temporary lodging and doesn’t have to be in the same location throughout the taxable year.

You may still be eligible for a lesser amount of money if your home wasn’t in the U.S. for more than half the year. Bonafide residents of Puerto Rico may also be eligible to claim a Child Tax Credit even if they received no income and paid no U.S. Social Security taxes.

Taxpayer Dependent

You can’t claim a child as a dependent if you or your spouse are claimed as a dependent on someone else’s tax return or are residents of Canada or Mexico. The dependent must be a U.S. citizen, U.S. resident alien, or a U.S. national. Joint custody situations only allow one parent to claim a child on their income taxes. You can also claim that child if they died before Jan. 31, 2022.

Earned Income

You must have some type of earned income during the tax year as an employee or through self-employment. It includes wages, salaries, tips, bonuses and commissions.

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Posts by Mark Battalini