We are less than a month removed from tax season, which means that we have recently spent a lot of time talking about planning and how it can help you avoid surprises. This week, though, I wanted to write a little bit about the surprises that you can’t do much about, and how planning even helps with those.

These thoughts occurred to me when I saw a Forbes article musing on whether the increased amount of people working from home would hurt city budgets. I won’t get into the minutiae of what the article says here, for the premise is obviously sound enough to at least warrant thinking about (and dare I say some planning).

From there I started to think not only about the budgets of the city themselves, but what about various shops and restaurants located in (what were at least once) areas saturated with businesses. And simply, once there are less people frequenting the area, that is less potential business for those establishments.

That is one of those types of surprises that could not have been planned for. One would have to possess some mystical level of clairvoyance to have predicted the pandemic, the increase of work-from-home situations, and calculate numbers of how that would look for businesses.

If one had already been doing general planning, though, then your books would have been in good enough shape to be make some reasonable general estimates. And from there, you are in a better position to realize when such unforeseen circumstances start affecting your business and can combat it as early as possible.

I am not writing with any actual answers to such a situation here. I am not even saying that every situation like this would have potential answers. Surely there were businesses so affected by what happened over the last couple years that saving things was impossible. What I am saying, though, is that planning – and the state you must keep your books and knowledge of your business in to be able to do so – will at least give you an opportunity.

Because even now when things have achieved some sense of normalcy, the ideas we are imagining involve situations where its effects will continue to trickle into the future. So one must maintain some vigilance, never think that all storms have been weathered, and remain in a position to see problems while there is still time to react to them. And as always, if there is anything we can do to help you get to that space, let us know.

Once the regular tax filing season passes, we here take a deep breath of relief as the deadline pressure eases and a much is taken off our plates. This is not the case for everyone, though, as those who did not file can feel the pressure and worry of what happens now since they did not.

Well let’s start off with really good news – if you are owed a refund, there generally will be no penalty for not having filed on time. For people in that situation, the IRS is largely happy if you don’t file, for then it doesn’t have to send you that refund money. So, if you think you may be getting a refund and you just didn’t file, you should, for that money can still be yours.

Of course, most who do not file their taxes on time are not in this position. A lot of people who do not file neglect to do so because they fear they will be unable to pay what they owe at the end of the process. First, know that if you are in this situation, you are only setting things up to snowball. You will face penalties for not filing, interest for not paying on time, and once you ignore this once, it becomes easier to push it off in future tax years – further snowballing the penalties, interest, and total you owe to the IRS.

Not filing your taxes is likely not going to help you avoid the bill, either. If you owe taxes, it’s because you did not pay what you owe on money you received – and all those forms you got that say you received this money, the IRS has those, too. Failing to file is not going to keep those powers-that-be from knowing that you should have done so and what you should have paid. 

In fact, without filing you are only going to owe more in taxes because the IRS may know of all the money you received, but it will not know about all the deductions for which you could be eligible to lower your burden.

Beyond that, there may be payment options that you are unaware of that will enhance your ability to pay beyond what you think it is. We cannot guarantee some wonderful solution to whatever issue you are fearing, but we can guarantee more concrete numbers and possible solutions.

If you are reading this after having not filed your taxes, not filed an extension, hiding, and just hoping that this doesn’t come back and bite you in the future, well, we can’t make you act differently.  But we can offer the opportunity for more clarity and help you get a better grip on where you really do stand. So please reach out if you would like to gain this.

As we rapidly approach the end of tax season, it is inevitable that many people have questions about audits. Even if someone has never had to undergo one, it feels like a big, scary thing that everyone wants to avoid. And although there is no way to ensure that you will be forever ‘audit-proof,’ there steps you can take to remain confident your return will hold up to an audit.

The first step here is to be honest. If you report all your income and only claim legitimate deductions, then you have followed the rules and there is nothing to catch you on. The next step, though, is to make sure that you can document all of this, too. It is one thing to have legitimate deductions, it is another to have the receipts and/or paperwork that back it up. Just know as a rule, anything that you cannot back up will be disallowed by an auditor.

I am not going to be so naïve as to pretend that I don’t know people are fudging some numbers on their returns. I even believe that a lot of fudging is genuine as in – “I made this purchase but don’t have the receipt” or “I made a donation in cash at an event.” That is where the deductions can be legitimate but cannot be proven.  At that point, you are kind of playing the audit lottery, assuming you’ll slide under the radar and not be called out to prove the numbers.

And of course, an overwhelming majority of tax returns are not audited, so much of this passes the without special notice. A lot of this is done with smaller numbers, which makes it easier to slip by. Once numbers start to get beyond the norm, though, that is when they can start to raise some flags.  And if you want a little more view into that process, you can read this recent article from CNBC.

Before I leave here, though, I want to mention the income side of the equation a little more. For sure, deductions can easily be transactions that take place outside the purview of tax forms, which is where a lot of that fudging exists. The money you have earned, though, is essentially already reported to the IRS. If you receive a 1099 for money you didn’t realize was going to be taxed, a form also went to the IRS. It is going to be more difficult to get away with thinking you can simply not report that to avoid the taxes.

In closing, remember the best way to feel comfortable when thinking about an audit is to do things the right way when you file your return.  And if you need any help with that, please do not hesitate to contact us.

There are times when we must discuss things that we have discussed before. It is part of the cyclical nature of much of what we do. Things happen year after year and they are big enough to warrant discussion and/or reminding. Now, as we approach the end of tax season, we are reaching one of those conversations again.

The start of the conversation is a bit new (or back to normal), though, for after two wacky years, there is not an extended tax deadline. This means that the regular deadline is fast approaching – less than two weeks away – on April 18.

Of course, with that always comes talk of extensions. And these can be great things for many reasons. There are plenty of legitimate situations that will cause people to not be able to file their taxes on time. Maybe you are having issues with some forms, maybe serious life issues got in the way, or maybe you fit in one of dozens of other stories as to why that deadline has become unmanageable.  No matter which one it is, it is not difficult to get yourself another six months of leeway to get that tax return filed.

Now comes the part that we have to drive home whenever speaking about this, though. When you receive an extension, you are getting an extension to file, NOT an extension to pay any taxes you owe. So of all those legitimate reasons why someone may need an extension, getting more time to pay what you owe is not one of them.

For even if you get an extension and do not file this month, penalties and interest will start accruing on any money you owe once the original deadline is missed.  This means that not only is needing more time to pay not a good reason to get an extension, but it will only result in you owing more money.

No matter where you find yourself in the process, though, know that we are willing to help where we can. Do you need assistance in getting an extension, let us know.  Do you need some guidance on how to handle a tax debt, let us know.

Now, keep in mind that we are in that crunch time and our availability may be limited. So we may need to ask for a little more patience than usual, but know that with a little understanding from both sides we will work to see that you receive what you need. 

Next time I put something in this spot it will be April. We are already that far through tax season and it seems a little hard to believe. But see, this is why I started telling you a couple months ago that it really does serve you well to get a start on prepping for tax filing season before it gets away from you.

So yes, to file on time, you are now into the crunch period when any snags you hit become immediate difficult hurdles. This means that you need to start checking in with yourself and what you have done so far (even if what you’ve done so far only involves looking at a pile of mail on a desk).

Do you not remember if you got that one form that you were expecting? Go look and make sure. Many people have digital access to such forms as a W2s, but you probably don’t have that immediate access to everything (or at least would have to work to set it up). You want to be sure you have left yourself some time to get those forms before we reach zero hour.

Beyond that, though, actually open up and look at the forms you have received. Chances are really good that they all look exactly like they should and like you are expecting them to. That doesn’t mean that all the thousands and thousands of pieces of paper sent to taxpayers every year are correct, though, and it is better to find out if there is some discrepancy now than in two weeks.

Both of those are situations that occur every year, but as you have heard a lot during the past two years, we are currently living in unprecedented times. This has trickled down to your tax return, so there is going to be some information you need to have that you have not before. This includes knowing if you received any economic impact payments last year and how much if so. This is not the most difficult information to track down, but it’s going to simply feel better to do now than in two weeks.

Finally, many taxpayers with children also received advance payments of their child tax credit. If so, you are also going to need to know the total number of that money received.

And if this feels like a lot, well, depending on your situation it could be. And when things feel like a lot, that is when we don’t always want to deal with them, but it is also exactly why we should. So consider this a little confidence boost telling you that you still have time to do this if you can get on it now and a promise that you will feel better once you do.

Last week, I took what I thought would be a quick detour into the workings of the IRS as the agency set out to hire thousands of new workers. This is just a piece of what’s going in that organization, though, to the point where I feel I have to continue this week to give a more complete picture.

So first, there is this negative look at how difficult it may be for the IRS to fulfill its goal of hiring 10,000 workers. But hey, even if they only meet 2/3 of the goal (as the article intimates), that would still be more than 6,000 new hires, and that can only still help in the end, right?

Then when it comes to further help, we also got word last week from the agency itself that it is looking for around 200 new technologists to help with its trend to modernization. This is an inevitable push that will only have to continue, so it is heartening to see the IRS putting some muscle behind its words claiming that it is looking to modernize. One could certainly argue that it is still far behind where it should be in this arena based on how the current world works, but again, let’s give some credit for moving in the right direction.

And then there was also news of a funding increase for the IRS last week. And no matter how negative your view of the entity is, it would be really difficult to imagine it doesn’t do SOMETHING good with new hundreds of millions of dollars, right?

Now again, I know that such stories are not exactly rare (last week, remember?) and dealing with the IRS since the pandemic started has been quite a bear. I am certainly not giving continued space to such news to absolve the agency in any way. I do, however, think that it’s important to know that issues are at least being acknowledged and steps taken to hopefully fix them. And the more that we do know such things, the more we can set reasonable expectations for what dealing with the IRS will involve.

Nothing is currently fixed and nothing has a date on when it will be fixed. But now you know the lay of the land. And if you need to traverse any of that land because of issues you are currently having, do not hesitate to reach out to us.

And now on to hopefully something different next week … 

Every tax season comes with us delivering surprises to tax clients. Granted, some of these can be nice ones when people find out they will be receiving money they were not expecting. But some of them are unpleasant when people find they must pay money they were not expecting. Sometimes this happens because people didn’t know that money they received was going to be taxed and did not plan for it. So this week, I just wanted to give a little rundown of some of these types of income.

Of course, probably the biggest is freelance work for which one receives a 1099.  This may not always be so much of a surprise, but it can be something that people did not plan for. After all, when you get paid, one can see many places where that money would be helpful that aren’t into an account where it waits for an eventual tax bill. This is also a type of income that an increasing number of people is receiving.

If this is a situation you are still working through and have questions about, I will point you to this recent article, which gives a very good overview. It also has a strong conclusion that warns how easily the IRS can know you made some of this money even if you choose not to report it on your taxes.

Also in the realm of “the new” is virtual currency. The IRS asks about it right on Form 1040. Of course, this is also something that people are dabbling in more and more, many of them for the first time. And if you dabble well, you can make some money from it. As it always does, though, the IRS wants to know about all money that you earn. And with this being such a new area where people do earn, the agency is working to try to find ways to make sure that it is captured and makes it something else that you cannot avoid reporting.

Finally, this is nowhere near as new a concept, but any money received through tips should also be reported on your tax return. Now granted, this is an area that can get a little grayer, because it can be more difficult for others to track money received in cash. But if this is something that is coming to your attention as an area you are not handling well, then the sooner you work on turning that around (instead of just hoping it never catches up to you), the better.

For overall, the better you are at keeping track of all monies you receive – and assume you will be taxed on it – the better handle you will have on your overall situation and the better chance you have at not receiving any bad surprises when tax time comes. 

As I write this, it is march.

March!

When we start talking about tax season as soon as the calendar turns to a new year, April feels so far away. But then it is like, well, January hardly counts. And then February is still early. Suddenly, though, it’s March and now April is just next month.

And this is how procrastination builds. Few people start by saying they are going to put things off until the last minute. No one really wants to subscribe to that as a life rule. But when you have ‘enough’ time to take care of something whose deadline is in the future, it moves to the bottom of the to-do list and then the longer something lives there, the easier it is to keep it there.

At some point, you become acclimated to how much it doesn’t have to get done yet. Then each time something else comes up that is more important (or more fun), it receives priority and gets done first.

But now suddenly, it is already March.

So this week, I am not writing about big, surprising news (we knew the way the calendar worked when this season started) or any tips, tricks, knowledge, etc. Instead, this is just a call to put thought into when you are ACTUALLY going to get this stuff done.

I am not casting predictions of impending doom if you don’t get everything in order and complete this weekend. It is still EARLY March even, so there is time. But I am going to say it’s time to no longer leave your tax prep chores on the bottom of the list and start to carve out time for it. In fact, I will push this a little further and say that you should have it all done by the end of this month and leave April as your buffer.

If you are the type of person who needs a little more of a push to really get this done, though, then why not make your appointment to get your taxes done. If you have that on the calendar staring at you, you will be forced to complete what you need done beforehand.

For if you do get all this done, if you stop the procrastination spiral, then you can ease the stress that you feel next month. And how good a deal is that? Wouldn’t you choose to do what is needed now to give yourself peace in the future?

Accounting firms do not always garner headlines, and when they do, it tends not to be for good reasons. Things changed a little bit in this realm over the last week, though, as Mazars USA LLP ended its association with former president Donald Trump and his business interests while saying that it could no longer vouch for a decade’s worth of business statements.

Whether this accounting firm getting such attention is for good reasons or not, well, that can be (and is being) spun in both ways. I will try not to cast any such judgment in this space. Instead, I just want to look at this from the accounting perspective.

What seems clear is that Mazars received some information that led it to believe what was reflected in their financial statements for the Trump Organization was not a complete, accurate portrait. This speaks to a key cog in the accounting machine that the numbers reflected must be honest if they are to reflect anything of value. There are many key questions here that still need to be answered, though, before declaring how egregious any actions surrounding these statements may be.

The obvious first big one is what did Mazars discover that affected how it views that decade of statements?  Some still large questions follow that one, however, as to whether this was information that Mazars knew (or suspected), if they were given outright false information, or if there was information that should have been shared with them that was withheld.

This is because the reports that Mazars did are compilations, which essentially means that they are largely based on information provided to them by the client. They were not audited in any meaningful way by Mazars itself.

What may be key to figuring out what is going on here is that Mazars did not simply retract (and then presumably follow up by correcting) the compiled statements. It also ended its relationship with the Trump Organization. This would seem to imply that there was a breaking of trust. It’s possible that in conversations with a client, an accounting firm could discover that an honest mistake was made, but it can then be fixed and be correct moving forward. That is not what happened here.

So even in this quick summation of what is happening, we have hit upon honesty and trust, both pretty strong concepts. Again, I don’t want to cast any judgment on what may or may not have happened here or cast blame. For it is certainly plausible that this situation may just have become too much for Mazars and it wants to step away. Instead, we will wait to see how this is judged by those whose job it is to do so. I will, though, state how important those concepts are to what we do and that clients, accountants, and any third parties observing the work done between those two, deserve to have things be clear and not lay in gray areas, and we commit ourselves to accomplishing this.

It is unfortunate that we are a couple weeks into the current tax season and still must talk about how the IRS is handling the last one. The numbers vary a bit depending on where you look, but the truth is that the IRS is still dealing with a significant amount of tax returns (and other issues) from 2020. There are various reasons for this, the most obvious being the nature of the pandemic, so we can understand how it happened. At the same time, however, it is also easy to understand how this is frustrating for those dealing with the situation’s ramifications.

For one, this is hopefully something you have not had to deal with often but getting the IRS on the phone is never a fun task. Take our word for it that doing this over the last year has been an even less fun task than usual.

Another effect that you have a better chance of having seen, though, is the number of notices the IRS has sent out that it did not have to. For example, people are seeing collection notices for taxes from a return that the IRS has received but not yet processed. Thankfully over the past week, the IRS has stopped sending many of these until it catches up on its backlog.

Most of the time, we file our taxes, and assume it is just taken care of. To then get these notices for something you thought was taken care of, and then taking the work (and more of it than usual) to determine that your return was received but just not processed, adds to the frustration.

Of course, this backlog of unprocessed returns means that some people are still waiting to receive refunds, too. And we are about to the point where this wait could be going on for about a year. That is quite a holdup for money due to you.

The IRS has said that it is shifting some employees around in an effort to play catch-up. This is great, but at the same time, so many people can only do so much work, and if it has gone on this long already, it is not going to be magically solved in a week.

So the purpose of my writing here is twofold. First, if you are still waiting on resolution from filing last year, know you are not alone. This is a real problem the agency is dealing with and is taking action to see that progress is made. Second, when it comes to filing this year, it will be beneficial to have everything in order as soon as possible to ease your way into the current year’s pipeline of returns.

And as always, if you have questions about any of these situations, we will be happy to help you address them.

When it comes time to file taxes, that means it’s also time for something else – Super Bowl snacks! So here is to hoping you are using this weekend as an excuse to eat a treat you probably shouldn’t.

It is also time, however, to make mention of how one should be a little more wary of scams than usual. When people’s minds are a little more tuned in to the idea of taxes than usual, scammers can use that to try to take advantage of us a little more than usual. So here are a few things to keep in mind to try to protect yourself.

Even though not directly related to taxes, I recently have had a couple text messages pass my screen saying there are problems with accounts that I don’t even have. And this comes with a ‘friendly’ link to a webpage where you can fix this. Now with this coming from an institution I have no relationship with, it Is quite a bit easier to ignore and realize it is a phishing scam trying to collect information from me. It will be much easier to click, however, if it comes from an institution you recognize. This still teaches the right lessons on how to deal when scammers reach out, though.

First, if you have any reason to suspect something is not genuine, treat it as if it’s not genuine. Whether this be a text or email with a link or an actual phone call, you can halt the interaction and contact or access the institution by yourself. This way, you will know you are on a real website or talking to an actual employee. And if there is an actual issue, you can actually deal with it.

Next, be aware of what people are actually asking for. As soon as it feels like they are asking for personal information they should not need (like why does someone on the phone need the expiration date and three-digit code from your credit card?), let that trickle of unease burn brighter and remove yourself from the interaction.

This can be difficult as scammers are good at easing you into giving some more innocuous information before asking for the more crucial pieces. There are lots of little tip-offs to be aware of, however, such as: calling from a blocked number; demanding payment through prepaid cards or wire transfers; threatening to bring in law enforcement; or even saying you are to receive money of which you are unaware of.

A lot of these things are not necessarily new tactics, but scammers evolve new ways (like those text messages) to get in touch with you. So in this time when scammer activity is only bound to increase, remain vigilant and listen to those voices that tell you something if wrong. Those things are your friends. 

We are barely into tax season and are already seeing some people experience surprises when they start to see what their tax return is going to look like. As always, we don’t want to say, “I told you so,” but it is not as if any of these surprises had to be surprises.

One of the biggest of those surprises is going to continue to be the advance payments of the Child Tax Credit that people received in 2021. Many just took the money not realizing how it could affect the final number on their tax return. For many, this does not even mean that they are receiving less back as a tax refund, it is just some that some of it was received earlier.

This is also the time of year when everyone is looking at their W2, though, and only now taking stock of what taxes were withheld from their pay last year. Granted, I don’t know if this was ever something that people tracked on a week-to-week basis, but it is even easier to not think about now when so many now get paid digitally and may not even look at a paystub during the year.

Of course, this is also a time when many people are making money outside of their main job, too, which can only further complicate tax matters. To return to the original point, though, none of this has to be a surprise.

Many people may not have filled out a W-4 in years, but the form was revamped a couple years ago to account for many different situations. It is no longer just a few spaces that largely only record if you are married or not and have dependents. Instead, now you can indicate if you have another job, how much money you expect to make outside of W2 jobs, how much you expect to be able to take in deductions, and any additional money you would like withheld from your paycheck.

As with most things tax-related, doing this can feel daunting and difficult. The IRS has a pretty powerful tool in its tax withholding estimator, though, which can help you make sure you are withholding the amount you wish from your paycheck. This tool can be reached via a website (https://www.irs.gov/individuals/tax-withholding-estimator) although it is currently down until sometime early this month. If it is something that will benefit you, though, tuck the information away for a little bit and don’t be afraid to use it. After all, it will keep the surprises at bay. 

This week’s writing needs to come with a disclaimer. I like to write in a more conversational manner here but that may not be possible today, for it is difficult to discuss shareholder basis and a new tax form for it that is showing up this year for S Corporations in a light and breezy manner. So to that end, if you know that does not apply to you, come back next week.

At its most, well, base level, basis is the amount a shareholder has invested in an S Corporation. This is important because it determines whether distributions are taxable and whether losses can be deducted on a personal tax return. The new tax form that will deal with this is Form 7203. The form itself can viewed in a draft form here and a draft of instructions for the form can be visited here. If this is something your business has been tracking all along, filling this form out may take some time, but is not overly complicated. If you have not, though, be thankful it is early in the year and you can start to get your books and recordkeeping in order to complete the task.

So you need to be sure that your bookkeeping is properly tracking this – making sure that any money contributed to the business from, and distributions to, individual shareholders are being recorded.

This form is going to be necessary if you are claiming a deduction for your share of a loss in an S corporation. The IRS wants to see that it is really your money that paid the expenses of the business that resulted in that loss.  After all, you should not get to claim a deduction for expenses that you did not help pay for.

Call it coincidence or not, but this increased reporting is coming at a time when many businesses may be reporting a loss. There are few businesses that have not been affected by the COVID-19 pandemic and many industries were so affected that they saw some big losses. At the same time, however, there was a lot of money available from many different programs whose purpose was to help businesses weather those difficult times. This means there are businesses that will not be showing a profit, but at the same time, their shareholders did not see what they had invested in the business evaporate. Rather, those businesses were paying expenses with money that came from elsewhere. And in that situation, its shareholders should not then get to deduct losses on their personal returns.

So as promised, that is a bit more explanation and actual accounting talk than we usually put here. But as something new, it deserved the space and hopefully will help some of you out there be more prepared for handling the new requirements.

Recently, I been writing about how it will do you good to be on top of tax season early. You likely have now already received some tax documents, so here is to hoping you know where they are instead of burying them somewhere that you will find eventually (hopefully). That is a simple way to help tax season go well, but today, let’s talk about some ways it could go wrong.

The last two tax seasons came with new complications and challenges. They were so challenging that there are a significant number of paper returns from last year still being processed as we sit days away from the start of the 2021 tax season. So this year already promises to have its own challenges, but maybe we can stay out ahead of a couple of them.

Over the pandemic, many people paused their student loan payments. I do not want to cast any aspersions on this plan, for I am sure there are people who were greatly helped by not having to pay that bill during a time of diminished income. When you made those payments, though, it came with a tax deduction for paying the interest. Without that, it’s possible that some people could see a smaller refund than in the past, or possibly even owe some money. Again, getting ahead of things will get you that answer earlier and give you more of a chance to figure out how to handle it.

What could turn out to be even more of a difference for some, though, were the advance payments of the Child Tax Credit. I don’t think it’s right to go in depth on what it is here, but if you were getting money from the government on the 15^th of the month for the second half of last year, yeah, it’s that money. And that money isn’t like the three stimulus payments many received during the pandemic, which was essentially free money handed to you. Instead, the Child Tax Credit money consisted of prepayments of a credit that you may have already been receiving on your tax return. Granted, this credit was larger than it was in the past, but there are still many situations when getting some of it ahead of time will affect the amount of a refund, or again, leave a taxpayer owing some money. And yet again, this is where being out ahead of things and having this answer early could be beneficial.

Of course, there are a lot of people who have had little change in their lives over the last couple years and their tax situation will likely not be a big surprise. These interesting times, though, mean there are more people than usual who are going to be surprised, so don’t let that happen to you and make those times even more harrowing.

So it is here – the new year. Hopefully this writing finds you full of the promise this can come with and feeling the strength necessary to make it all come true.

In these parts, it is impossible to move to a new year without feeling like it is time to gear ourselves up for the coming tax season. Now I know few others out there get personally excited by this, but I will be so bold as to say that this is something you should start giving some thought to, as well.

Many of the most important tax forms are required to be mailed to you by the end of this month. This means you will be seeing them hit your mailbox (be it real or electronic) soon and you should have a plan for what to do when this happens. This does not have to be an elaborate scheme, for now you can just gather them in a safe, predetermined place. Have a folder (again, be it real or electronic) where you just put them when they are received. There is rarely anything you have to do with these forms other than look at them, confirm they are reasonable, and turn them over to your tax preparer. Keeping them in one location, though, means you don’t have to scramble through a pile of mail (yep, real or electronic) that has been growing for a couple months to find the forms you need.

And then, of course, you’re going to question whether you really got them all, because you kind of remember possibly getting one that didn’t look exactly like the ones you have now …

Taxes are never really fun. I mean they involve looking at how much money you have paid out to receive things that are not always the most tangible. This makes it really easy to push off for as long as possible. Then they get pushed off and become something that places a time crunch on you, thus becoming even less fun. This means that next year, you’ll be looking forward to it even less …

Hopefully this early in January, though, you are not dreading the process that much yet. Use the current mood to get a head start on things. So you know that place where you’re going to keep all of this information? Put something in there that you know you’re going to need but will not necessarily come via a form in the mail. This way you won’t have to worry about it at the end of March, instead tackling it now when things still feel full of promise. 

 Our heads aren’t so big here that we think you want to read anything long or in-depth from us this week. After all, if you are actually even present at work this week, you are spending half the time looking at the clock and the other half daydreaming about not being there.

So just let this be a call to make them good daydreams, then. After all, this is our second straight year where the holidays may not be being fully celebrated in the ways that we like. Even the best-case scenario involves them coming with some extra concerns and considerations. No matter then where you fall on that spectrum of celebration, this is a wish that you craft something good from it, find joy, and get special time to enjoy yourself, your friends, and your family.

We can all use some propping up during difficult times, and the start of the 2020s certainly has qualified as difficult times. Everyone deserves whatever solace and comfort they can find within it. So if that comes in the form a holiday-week daydream (even if you’re supposed to be working), then go ahead and enjoy it. We promise not to tell anyone.

Happy Holidays!

At the end of 2020, it would have been disheartening to think that a similar level of uncertainty would still be present at the end of 2021. But … here we are, and questions still abound. Have we gone through the worst of a pandemic or are we still in the middle of it? Where will the midterm elections bring us in 2022? Are we sitting on as much of a political powder keg as it sometimes feels?

During times when so much feels uncertain, it becomes ever more important to check in with yourself, to see how you are really doing. This is also applicable to your business if you happen to own one. So this week, I wanted to implore those of you in that situation to take a moment and do that check in with your yourself and your business.

One reason this is a good idea is because you can’t really move forward without knowing where you have been. If you don’t take the time to do that check-in, then you aren’t learning. You will be making choices based on whims and that is never going to lead to long-term success. When you think about the last year, be sure to look at both successes and failures. Did you not complete everything you had hoped to? If so, why? And even if outside circumstances are to blame, how could you have handled and/or prepared for them better? But also, where did you shine despite those circumstances?

If there is unfinished business that you hoped to complete, how can you still get there moving forward? And don’t just answer such questions with vague assurances and promises. Saying you’ll get there eventually means you can keep kicking your definition of ‘eventually’ down the road. Be sure to set very distinct goals with definite timeframes.

And do not only commit yourself to finishing what remains unfinished. Be sure to ask yourself new questions, too. What would you still like to change about yourself or how you behave in your business? What are you looking forward to learning or implementing? Where can you continue to improve? What is a big risk you are willing to take?

A way to deal with a time of uncertainty is to just kind of move along, be tossed around by the waves, and just keep your head above water. And you may ‘just survive’ for a while with that attitude, but things will never improve. And then when times get more certain, you will not be ready to adapt to them because you haven’t been looking forward the whole time. So may this moment of reflection serve you well, help you find solace, and let you derive strength from where you are even in tumultuous times.

If you started a business before March of 2020, the landscape of your industry is most likely nothing like it was when you started. The pandemic changed nearly anything in some way. One of the biggest results of this was an increase in technological advances and how much they were embraced.

We clearly are not yet through this global sea change, so it is impossible to give any definitive conclusions about its fallout. It is naïve, however, to think that everything is going to go back to just how it was in February 2020. So this is a call to business owners out there to embrace any new technologies your industries have moved toward during this time.

I started to think of this when word came out that the IRS was going to be accepting more digital signatures through Oct. 31, 2023. This is something that had already been extended a few times by the agency, and is looking like one of those things that they probably won’t be able to take back.

And why can’t things go back to how they were here? Convenience.

The key with a lot of the new technologies that have been being embraced is that they are designed to take less time and less work. If we can collaborate on a task in different locations at different times, it removes a lot of obstacles. There is no need to set up meeting times or possibly sit around while you watch someone complete one part of their task before doing yours.

And of course I can understand why some have reluctance to embrace some of these technologies. I mean, I just talked about things taking less time but there is clearly a time commitment involved in learning how to use and implement anything new. And of course, as with most new things, there can be a reluctance to look at it because you already know how to do what you’re doing, and likely do it very well, so why could you change?

Well the reason to change is that others are. How can you draw in new people to your business if a competitor is offering them more services with less hassle and it takes less time from them? I foresee many businesses that don’t adapt with the times being left behind by these times.

And if even a Luddite like the IRS is looking at new ways to make things easier, shouldn’t you?

It happened. We are actually in the final month of the year. We have already talked a bit here about getting to the end of the year and your last chances to make moves that can affect your tax picture. And now, it is December, the chances are decreasing, and it will be 2022 almost before we know it.

So consider that another little warning about timing.

But there’s no need to be all doom and gloom here, for there can be good news when it comes to taxes. (I know, I know, that sounds utterly impossible.)

First, last month the IRS released some guidance over a 100% deduction for food and beverage from restaurants. That’s right, 100%! Now, can you even get more good news than that?

You can! It applies to next year, too!

Hyperbolic exclamation points aside, this is something that will be a pretty good benefit for many. The actual IRS news about this is full of boring notices and procedures, but what they represent is not complicated. The meals deduction is usually 50%, so when you double what you are eligible for, that’s a good thing. Granted, this isn’t something so huge that I’m recommending planning some more end-of-year work dinners, but it is still a benefit worth highlighting. So just remember to keep those receipts after you have finished eating.

And yes, it is now time for the return of excessive punctuation! For did you know that teachers were also eligible for some deductions?!?!

This essentially is a deduction for classroom expenses that teachers paid out of their own pockets. Again, there is some hyperbole involved here, though, for this deduction caps out at $250 for an individual. The IRS sent out another notice about it last month, though, so I figured it was worth highlighting it here, too.

These may be only small bits, but they call attention to a bigger point about timing. The more prepared you are for your tax return, the more deductions you will have time to find out about, document, and claim. Each individual deduction may not be the difference between owing money and getting a hefty refund, but enough of them could shift things in a significantly better direction. And sure, the things we most look forward to this month aren’t tax preparation, but don’t forget about how good it can be to be on top of things before it is too late and time gets away from you.

It is a good general rule to know that if anyone receives money for a good or service, the IRS wants to know about it. Income is taxable, no matter how it is received. This basic tenet is reasonable and understandable, but as more people use more money in new ways, it can take a while for some of the rules around that to make complete sense.

This has been most noticeable in recent years when it comes to cryptocurrency. No matter whether you think of it as an investment or another type of currency, if it is worth more than you paid for it, there’s an amount in there that is taxable and the IRS has been working on cracking down on getting its share of that. Beginning next year, it will start to have its hands deeper in payment apps, as well.

Your first question may be just what is a payment app? The answer is probably simpler than you realize, for most of us have used something along the lines of PayPal or Venmo to send and/or receive money. At the same time, you may be surprised to think that this could affect your tax picture if you mainly use it to pay someone back when they go pick up coffee. If that is all you use such platforms for, though, then don’t worry, you will not be affected by this. What will be changing is payment app providers will have to start reporting if a user’s business transactions total $600 or more a year. If you want to get into the weeds on this, you can read this recent article from CNN.

This isn’t the space to get into deep details, but I do want to highlight a couple takeaways from this:

The biggest thing is that this is not making any sort of transaction newly taxable. Rather, this is being put in place because the IRS is trying to track down transactions that are already taxable and may be slipping through the cracks. So if you are already paying taxes on everything you should be, this is not increasing your tax burden.

The next thing to know about this, though, is that it might be making things messier for some and placing the burden on the taxpayer to find a way through that mess. First, it’s possible that one could receive a 1099 from a payment app for transactions that should not be taxable. It could then fall to the taxpayer to have to explain that to the IRS. It’s also possible that you will receive a 1099 from a payment app and also a 1099 from a client for the same transaction. Again, it would then fall to the taxpayer to explain to the IRS that they are not covering separate events and reflect the same money.

So don’t be afraid that this is going to increase your tax obligation in any way, but be aware that you may need to be vigilant to ensure that this reported on your tax return in the right way. Even if this isn’t going into action until next year, I wanted to mention it now so that we can be ready to help you handle this in the right way.