Tax Tips for Teenagers & Summer Jobs

Tax Tips for Teenagers & Summer Jobs

Does your teenager have a summer or part-time job? Depending on how much they earn, they may have to file a tax return next April. Just because you claim them as a dependent on your tax return does not excuse your child from filing their own return in certain situations. What’s more, you cannot claim your child’s earned income on your own tax return.

To qualify as your dependent, your child must:

  • Have a Social Security number (SSN)
  • Not file a joint return (if married)
  • Be your son, daughter, adopted child, stepchild, eligible foster child, sibling, half-sibling, step-sibling, or offspring of any of these
  • Be under age 19 at the end of the tax year, or under age 24 if a full-time student, or any age if permanently and totally disabled
  • Live with you for more than half the year in the U.S.

Teenagers can sign their own tax returns —
there is no minimum age to sign a tax return.

 

Filing Depends on Income

Your dependent child has to file a tax return once their income exceeds their standard deduction. For 2022, the standard deduction for a dependent child is total earned income plus $400, up to $12,950. So a child can earn up to $12,950 without paying income tax.

However, your child must file a return if he or she meets any one of these tests for 2022:

  • Has unearned income (e.g., from investment interest or gains) above $1,150.
  • Has earned income above $12,950 (as noted above).
  • Has net earnings from self-employment of $400 or more (self-employment tax may also be due).

If you’re unsure about your child’s tax situation, we’ll be happy to answer your questions. Just give us a call at 706-632-7850. And when the time comes, we can quickly and easily complete their tax return along with your own.

Fed Raises Rate Again

Last week, the Federal Reserve raised the benchmark policy rate by 0.75% for the second month in a row in an attempt to tame the country’s 40-year-high inflation. This is the Fed’s most aggressive cycle of monetary tightening since 1981. Experts expect a few more rate increases through at least the end of the year, with the federal funds rate projected to reach about 3.25% to 3.5%. The thought is that higher interest rates make borrowing and spending more difficult, thus slowing the demand for goods and services.

Housing Market Slows

After nearly two years of seemingly nonstop price increases and quick-turn inventory, home sales are finally slowing down. That’s in part due to market forces as well as higher mortgage rates.

 

  • While home prices are still high, the prices of building materials like lumber and windows are starting to come down.
  • Sales of newly built homes fell more than 8% in June from the prior month and were 17% lower than June of 2021.
  • Inventory rose to a 9.3-month supply, up from 5.6 months at the end of last year.
  • The average rate on 30-year fixed mortgages has been rising — roughly 5.5%, up from 3% at the beginning of the year.
Traveling for Business? Here’s What You Need to Know

Traveling for Business? Here’s What You Need to Know

Hotel stays, airfare tickets, public transportation costs — it all adds up fast when you’re traveling. The good news is, as a business traveler, you may be able offset some of those expenses by claiming business travel deductions when you file your tax return. Not everything qualifies, however, so be sure you know some of the details.

What Can You Deduct?

Business travel deductions are available when employees must travel away from their main place of work for business reasons. The travel period must be substantially longer than an ordinary day’s work and include a need for sleep or rest to meet the demands of the work while away. Keep in mind:

  • Travel expenses must be “ordinary and necessary.” They cannot be lavish, extravagant or for personal purposes.
  • Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.
  • Travel expenses for conventions are deductible if attendance benefits the business (note: there are special rules for conventions held outside North America).

Deductible travel expenses can include the cost of:

  • Travel by airplane, train, bus or car between your home and your business destination.
  • Fares for taxis or other types of transportation between an airport or train station to a hotel, from a hotel to a work location.
  • Shipping of baggage and sample or display material between regular and temporary work locations.
  • Using a personally owned car for business (including increased mileage rates).
  • Lodging and non-entertainment-related meals.
  • Dry cleaning and laundry.
  • Business calls and communication.
  • Tips paid for services related to any of these expenses.
  • Other similar ordinary and necessary expenses related to the business travel.

Claiming Travel Expense Deductions

If you are traveling at the request of your employer, then your employer will most likely reimburse you for any expenses not already covered. In this case, you cannot also claim a deduction for the costs incurred. If you are self-employed and traveling for business, you can deduct travel expenses on Form 1040, Schedule C: Profit or Loss From Business, Sole Proprietorship. Farmers can use Form 1040, Schedule F: Profit or Loss From Farming. National Guard or military reserve servicemembers can claim a deduction for unreimbursed travel expenses paid during the performance of their duty.

Whatever your situation, make good recordkeeping a priority. Well-organized records and copies of receipts, canceled checks and other documents make it easier to prepare your tax return and support your deductions. If you have any questions about what is or is not deductible, please don’t hesitate to contact us at 706-632-7850.

Did You Get Your GA Tax Rebate?

More than 2.5 million Georgia tax refunds have been issued so far. That’s 90% sent out since May, with more coming by next month. Announced in March, eligible Georgians received up to $250 for single filers, $375 for heads of household or $500 for married couples filing jointly.

If you have not yet received the rebate, you may not be eligible (or you may not have noticed it was direct deposited into your account). The refund is only available to residents who filed Georgia tax returns for both the 2020 and 2021 tax years.

IRS Online Account Provides Valuable Info

If you sign up for an IRS Online Account, you’ll have easy access to your tax account information, including balance, payments, tax records and more.

For example, you can view:

  • Key information from your most recent tax return.
  • Your payment history.
  • Any payoff amount (updated daily).
  • The balance for each tax year for which you owe taxes.
  • Payment plan details, if applicable.
  • Digital copies of select IRS notices.
  • Economic Impact Payments, if applicable.
  • Your current address on file.

You can also use your Online Account to:

  • Select an electronic payment option.
  • Set up an online payment agreement.
  • Access tax records and transcripts.
  • Approve and electronically sign Power of Attorney and Tax Information Authorization requests from your tax professional.
It’s Time for a Mid-Year Tax Check-Up

It’s Time for a Mid-Year Tax Check-Up

T ax season was over in April, so you’re good until next year, right? Well, ignoring your financial situation for another six months may not be such a good idea. If you take a little time to plan ahead now, you can spot surprises before they become an issue, make things more manageable next tax season, and maybe even save some money.

That’s where a mid-year tax check-up comes in. Make an appointment with us now to review your projected tax responsibilities, and you’ll still have time to put together a plan and adapt. This is especially important if you encounter some big changes in 2022 — marriage, divorce, death, job change, move, etc. Own your own business? A mid-year review also makes sense for your company, too.

Mid-Year To-Do List

Take your time conducting a thorough examination of your personal and/or business finances. Here are some items to consider:

1. Check Your Withholding

Make sure you’re paying the correct amount of taxes as you go. If you don’t make sufficient income tax payments throughout the year, you may get hit with significant penalties on your tax return next year. So if your income, job or life situation has changed, it’s time to take a look at the amount of taxes your employer is withholding … and update that amount if needed.

If you are self-employed, pay your own taxes or earn additional income through gig work or hobbies, you may also need to make quarterly estimated tax payments. Keep in mind that late or insufficient payments may lead to fines, so calculating the right amount for your quarterly payments depends on accurately predicting your annual income.

2. Review Your Bookkeeping

Good bookkeeping practices are essential, whether for personal or business purposes. Did you categorize that donation as a charitable deduction? Make payments to a college for your child? Take some time to review your personal bookkeeping records now to ensure they are accurate.

Businesses also need clear income and expense records for calculating total income for tax liability and for claiming tax deductions. Be sure to record tax-deductible business expenses as you go so that you don’t forget any.

If you use QuickBooks, you can request us to conduct an audit and clean-up of your accounts to be sure financial records are accurate and correct (see sidebar).

3. Make Name & Address Changes

If you’re getting married (divorced) or moving this summer, you’ll need to report the changes. Report name changes to the Social Security Administration as soon as possible. The name on your tax return next year must match what is on file at the SSA. If it doesn’t, it could delay any tax refund. To update your information, file Form SS-5, Application for a Social Security Card (available at SSA.gov), call 800-772-1213 or visit your local SSA office.

To change your address, you probably already filed a forwarding order with the U.S. Postal Service. However, you should also change your address with the IRS by filing Form 8822, Change of Address.

4. Plan Ahead for Year’s End

Now is the time to think ahead and plan accordingly. Are you worried about being on the edge of two tax brackets? Do you need to make a required minimum distribution from a retirement account? Will you need to spend down an HSA by the end of the year? Start scheduling these items early so you don’t have to rush come December.

5. Make an Appointment Today

You don’t have to spend your summer working on taxes instead of going to the beach. But you should consider taking just a little time to review your financial situation. We’re taking appointments now for mid-year tax planning if you’re ready to plan ahead. Call our office at 706-632-7850 to make your appointment today.

Do Your QuickBooks Need a Clean Up?

You may use QuickBooks on a regular basis, and never think twice about entering transactions. But there’s probably a good chance you’ve made an error or two without realizing it … and that can lead to problems down the road.

If you’ve never done a QuickBooks audit, or it’s been awhile, now’s a good time to schedule one. We can go over your accounts to:

  • Look for coding errors.
  • Adjust balance sheet totals to actual.
  • Record any depreciation of assets.
  • Confirm payroll and sales match reports.
  • Correct any general input issues.

Once completed, we’ll print financial reports, review everything with you and go over any errors we corrected. Call our office today at 706-632-7850 to schedule your QuickBooks audit today.

2020 Census Update

According to the 2020 Census, Georgia’s population increased 10.6% from 2010 to 2020, with a total population of 10,711,908 in 2020. For Fannin County, the 2020 Census details include:

  • 25,319 = total population (up 6.9% from 2010)
  • 65.4 = population density (people per square mile)
  • 83.7% = residents age 18+ (29.1% are 65+)
  • 52.3 = median age
  • $46,028 = median household income
  • 77.8% = homeownership rate

For the city of Blue Ridge, the total population is 1,253 with a median age of 52.1. In the city of McCaysville, the population is 1,149 with a median age of 43.8.

IRS Video Tax Tip

If you have taxable income from any payer that doesn’t withhold tax for you, check to see if you need to make estimated tax payments.

Changes Are Coming to Your 401(k) Statements

Changes Are Coming to Your 401(k) Statements

A new information policy will soon impact your 401(k) statements, thanks to the Secure Act, which was passed in 2019. The legislation requires special disclosures be added to your quarterly statements issued after June 30.

In addition to the basic information about your investments and the size of your savings, you’ll now also see “lifetime income illustrations.” This information is meant to help you gain a “big picture” view of how long your nest egg may last when you retire. This will be illustrated by showing approximately how much income you would receive each month for the rest of your life if you were to buy an annuity with your current 401(k) savings at age 67.

There will be two examples shown on your statement:

  • A “single life” annuity, which pays income to an individual buyer for life.
  • A “qualified joint and survivor” annuity, which pays income for an individual and a surviving spouse for life.

Keep in mind that the estimates:

  • Are based on your current 401(k) balance.
  • Don’t include projections on how your savings may grow and affect your future nest egg.
  • Don’t account for Social Security or other retirement savings.
  • Assume your full balance will be fully “vested.”

Start Saving More Now

If you’re getting close to retirement age, the new disclosures will give you a clearer picture of your current financial situation. If retirement is still a ways off, however, the estimates will give you a better idea of how much more you should start saving now — while you still have time.

For example, you can better formulate a retirement plan now if you know how much you will have to spend when the time comes. Seeing it on your statement might inspire you to increase your 401(k) contribution — especially if your employer offers a 401(k) match that you haven’t maxed out yet.

Be sure to check with your plan administrator to see if they offer online resources that can help you determine your future income needs. Organizations like AARP and the American Institute of Certified Public Accountants also offer free online retirement calculators.

Did You Know?

Google offers digital training courses and tools to help your small business adapt, grow and better serve your community. Visit Grow With Google for information on improving your online presence, including:

  • Setting up an online business
  • Getting listed on search & maps
  • Using YouTube to grow your business
  • Learning about Google tools
  • And more

Mid-Year Mileage Rate Increase

Due to rising fuel costs, the IRS is increasing the standard mileage rates for the rest of the year. Beginning July 1, the new business mileage rate will be 62.5 cents per mile, up 4 cents from the current rate. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents, up 4 cents. The 14 cents per mile rate for charitable organizations remains unchanged.

Enhanced Business Meal Deduction Still Available

Don’t forget that, through the end of the year, you can continue to take advantage of the enhanced business meal deduction. For 2021 and 2022 only, businesses can generally deduct the full cost of business-related food and beverages purchased from a restaurant. Otherwise, the limit is usually 50% of the cost of the meal.

To qualify:

  • A business owner or employee must be present when food or beverages are provided.
  • Meals must be from restaurants (i.e., businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption).
  • Payment or billing for the food and beverages (including taxes & tips) must occur before January 1, 2023.
  • The cost of food and beverages must be billed separately from any entertainment
  • The expense cannot be lavish or extravagant.
Selling Your Home? Keep These Tax Effects in Mind

Selling Your Home? Keep These Tax Effects in Mind

With today’s hot real estate market, you may be considering selling your home. Before you do, consider these possible repercussions to your federal income tax:

Gains & Losses

If you sell your main residence and have a gain from the sale, you may be able to exclude up to $250,000 of that gain from your income ($500,000 if filing jointly). What’s more, if you qualify to exclude all of the gain, you do NOT need to report the sale on your federal tax return —unless a Form 1099-S was issued.

Keep in mind that if you happen to experience a loss on the sale of your home (it sells for less than you paid for it), you cannot deduct the loss on your taxes.

Ownership & Use

To claim the tax exclusion, you must meet certain ownership and use tests. During a five-year period ending on the date of the sale, you must have owned the home and lived in it as your main residence for at least two years.

If you own more than one home (e.g., a vacation cabin in Blue Ridge and a main home elsewhere), you can only exclude the gain on the sale of your main home. You must pay taxes on any gain you receive from selling your vacation or second home.

Reported Sale & Mortgage Debt

If you don’t qualify to exclude all or part of the taxable gain from the sale, you must report it when you file your tax return. If you receive Form 1099-S, Proceeds from Real Estate Transactions, you must report the sale even if you have no taxable gain.

Generally, you must also report forgiven or canceled debt as income on your tax return, including a mortgage workout, foreclosure or other canceled mortgage debt.

There Are Always Exceptions

Certain individuals may be excluded from these rules, including people with a disability, members of the military or intelligence community, and Peace Corps workers. If you have questions about the tax ramifications of selling your main or vacation home, please contact us today. We’ll be happy to help you work through the numbers.

Request an Extension? Don’t Wait to File

If you requested an extension, consider filing your tax return sooner rather than later. October 17 is the deadline, but we encourage you provide us with your documents so your return can be filed before the deadline. Completing your tax return this summer can either help you get a refund quicker or save you money if you owe by avoiding additional interest and penalties. Please drop off your materials at our office Monday–Thursday from 8:30am–5pm (we’re closed for lunch from 12–1).

IRS Interest Rates Increasing

For the calendar quarter beginning July 1, 2022, the new IRS interest rates will be:

  • 5% for overpayments (4% in the case of a corporation).
  • 2.5% for the portion of a corporate overpayment exceeding $10,000.
  • 5% for underpayments.
  • 7% for large corporate underpayments.
Graduation Season Reminder: Save Money with Tax Credits & a 529 Savings Plan

Graduation Season Reminder: Save Money with Tax Credits & a 529 Savings Plan

If your child is graduating from high school this year, congratulations! You’re obviously very proud. But you may also be more than a little worried about how to pay for higher education. Whether it’s specialized job training or an advanced degree, there are a lot of costs associated with higher education.

Thankfully, there are two education tax credits designed to help offset these costs: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits can reduce the amount of tax you owe. To be eligible to claim either of these credits, you or your dependent must receive a Form 1098-T from an eligible educational institution.

The American Opportunity Tax Credit Is:

  • Worth a maximum benefit of up to $2,500 per eligible student.
  • Only available for the first four years at an eligible college or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable (up to $1,000 back).

The Lifetime Learning Credit Is:

  • Worth a maximum benefit of up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years.

Open a 529 Plan, Too

If you still have a few years before your child graduates, consider opening a 529 plan — a tax-advantaged savings plan designed to help you save for future education costs. Any contributions you make to Georgia’s official college savings plan, called Path2College 529 Plan, are eligible for up to an $8,000 state income deduction on your 2022 Georgia income tax return (when filing jointly). What’s more, any earnings on those contributions are federal and Georgia income tax deferred.

When it’s time to use your savings, withdrawals for qualified higher education expenses — such as tuition, books, supplies and many other items — are federal and Georgia income tax-free. And that applies to schools in the United States and abroad for eligible education-related expenses.

 If you have any questions about the education tax credits or 529 plan, contact us for details. We’re here to help you make the most of your money.

If You Get Mail from the IRS …

Now that you’ve filed your federal income taxes, you could receive a letter or notice from the IRS for any one of a variety of reasons, including:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • The IRS has a question about your tax return.
  • The IRS needs to verify your identity.
  • The IRS needs additional information.
  • The IRS made a change to your return.

What Should You Do?

If you receive an IRS letter or notice, you should respond accordingly.

  • Do NOT ignore it. Most IRS letters and notices are about your federal tax return or tax account. Read the notice to learn the reason for the contact and find out the instructions on what to do (if anything). Most of the time, you simply need to read the letter and take the appropriate action.
  • Read it carefully. If the IRS made changes to your tax return, you should compare the information provided in the notice or letter with the information in your original return. In general, there is no need to contact the IRS if you agree with the change.
  • Respond in a timely manner. If the notice or letter requires a response by a specific date, be sure to reply quickly to avoid delays in processing your tax return, minimize interest and penalty charges, and preserve your rights to an appeal.
  • Pay any amount due. If there is an additional tax due, you should pay as much as you can, even if you can’t pay the full amount. You can pay online or apply for a payment agreement (i.e., installment agreement) or an offer in compromise.
  • Keep a copy. It’s important to retain copies of all notices or letters with your other tax records.
  • Do not call the IRS unless requested to do so. If you must contact the IRS by phone, use the number in the upper right-hand corner of the notice. You should have a copy of your related tax return and letter when calling. Generally, however, it’s better to write to the IRS to respond to any requests so you have a written history.

Contact Us First

If we prepared your tax return, we are prepared to help you with any notices you receive from the IRS. Please send us a copy of the notice and we’ll draft any letters and supply any necessary information you may need. If you’re unsure, show us the letter and we can help you determine your best course of action.

Also keep in mind that the IRS will never contact you via social media or text message. The first contact from the IRS usually comes in the mail, so be alert to possible scams asking you for money.

Educator Deduction Increases to $300

For the first time in 20 years, teachers will now be able to deduct up to $300 of out-of-pocket classroom expenses beginning with their 2022 tax return. Previously, the limit was $250; it will now rise in $50 increments in future years based on inflation. Married teachers who file jointly with another eligible educator can deduct up to $600.

Eligible educators include anyone who is a K-12 teacher, instructor, counselor, principal or aide in a public or private school for at least 900 hours during the school year. Eligible expenses include:

  • Books, supplies and other materials used in the classroom.
  • Equipment, including computer equipment, software and services.
  • COVID-19 protective supplies.
  • Professional development courses (not claimed via the lifetime learning credit).

IRS Video Tax Tip

See if money you pay for day camp or other child care expenses can help you claim the Child and Dependent Care Tax Credit.

Thinking of Starting a New Business?

Thinking of Starting a New Business?

 Last week was National Small Business Week. Because small businesses play a pivotal role in the nation’s economy, the Small Business Administration and the IRS teamed up to highlight the tax benefits and resources available to entrepreneurs. Here are some of the highlights you need to know.

 

Selecting a Business Structure

When opening a new business, you need to decide what form of business entity to establish. Talk with us and your attorney to determine which of these common business structures is best for you:

  • Sole Proprietorship — When you own an unincorporated business by yourself.
  • Partnership — When you form a business with one or more other people.
  • Corporation — When prospective shareholders exchange money, property or both for the corporation’s capital stock.
  • S Corporation — When the corporation elects to pass corporate income, losses, deductions and credits through to its shareholders for federal tax purposes.
  • Limited Liability Company (LLC) — When a business is formed by state statute and is treated as a either a Sole Proprietorship, Partnership or Corporation (depending on elections made) for tax purposes.

Understanding Business Taxes

The form of business you set up determines the type of income tax return you’ll file next year. what taxes you’ll owe and how you’ll pay them. Generally, there are four types of business taxes. Note, however, that you’ll probably need to pay taxes on income by making regular estimated tax payments throughout the year.

  • Income Tax — Your new business must file an annual income tax return, unless you establish a Partnership, which is required to file an information return.
  • Self-Employment Tax — This is a Social Security and Medicare tax paid if you work for yourself. Payments contribute to your Social Security coverage.
  • Employment Tax — If you hire employees, you will have to pay employment tax and file additional forms.
  • Excise Tax — This tax is imposed on various goods, services and activities. Such taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.

Get an Employer Identification Number (EIN)

An EIN, also known as a Federal Tax Identification Number, is used to identify your business entity. You can apply for an EIN from the IRS online and receive it immediately.

 

Choose Your Business Year

Your new small business must use a “tax year,” which is an annual accounting period for reporting your income and expenses. Tax years you can use are:

  • Calendar Year — 12 consecutive months beginning January 1 and ending December 31.
  • Fiscal Year — 12 consecutive months ending on the last day of any month except December. A typical fiscal year runs October 1-September 30.

Keep Good Records

Maintaining adequate records will help you monitor your progress, prepare financial statements, identify sources of income, keep track of deductible expenses, keep track of your property basis, prepare your tax returns, and support items reported on your tax returns. You should keep detailed records for at least three years.

When you’re ready to get started, we can help you make the best choices for your new business. We also recommend you talk with your attorney to help set up the legal paperwork. Then you can get busy on your new endeavor!

FREE Workshop for Small Business Owners

The IRS has created a FREE online workshop of eight lessons to help new business owners understand federal tax obligations. The first four lessons are relevant no matter what kind of business you have. The remaining four lessons apply if you have or are thinking about hiring employees.

You can watch any or all of the lessons free of charge at any time. The topics include:

  • Federal taxes and your new business
  • Schedule C and other small business taxes
  • Filing and paying taxes electronically
  • Business use of your home
  • Federal taxes when hiring employees or independent contractors
  • Managing payroll to withhold the correct amount of taxes
  • Tax deposits and filing a return to report payroll taxes
  • Hiring people who live in the U.S. who aren’t citizens

Tax-exempt? Your Information Return is Due May 16, 2022

If you run a nonprofit, charity or foundation, you need to file a 2021 Information Return by Monday, May 16, 2022. The form you use will depend on the size and type of the organization:

  • Form 990: Return of Organization Exempt from Income Tax
  • Form 990-EZ: Short Form Return of Organization Exempt from Income Tax
  • Form 990-PF: Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation
  • Form 990-N: Electronic Notice, e-Postcard, for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ
  • Form 990-T: Exempt Organization Business Income Tax Return
  • Form 4720: Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code

Note that tax-exempt organizations must file their forms electronically, and that the IRS will reject incomplete or incorrect returns. We can help make sure that you’re using the right return, have fully completed it and don’t have missing schedules. If you need additional time, we can help you request an automatic six-month extension by filing Form 8868.

Thank You for Allowing Us to Serve You

Thank You for Allowing Us to Serve You

 Whew!

Tax season has come and (mostly) gone. All those forms and figures are put to rest for another year. And while we’re catching our breath, we wanted to say “Thank You!” for putting your trust in us. For more than 10 years, Premier CPA Services has strived to provide you with the best tax preparation possible. Our goal is always to help you pay the minimum amount of taxes necessary while making sure everything is done efficiently, timely and accurately.

If we didn’t get your return done by April 18, we’ll notify you as soon as it’s complete. And if you’ve requested an extension for filing your taxes, we’re ready to start working on them whenever you have your paperwork ready.

Also, if you ever receive a notice from the IRS, please don’t hesitate to contact us. We’ll be happy to answer your questions and help you resolve any tax-related issues.

Thank you again for a busy and successful tax season!

Jackie, Mimi & the entire Premier CPA Services staff

How to Check Your Refund Status

If you filed electronically and chose direct deposit for your refund, you chose the safest and fastest way to file. Most tax refunds are issued within 21 days (though some may take longer).

And the easiest way to check on your tax refund is by using the “Where’s My Refund?” tool on the IRS website or through the IRS2Go mobile app. You can use the tool within 24 hours after your e-filed return is received or four weeks after you mail a paper return.

To use the tool, you will need:

  • Your Social Security number or Individual Taxpayer Identification number
  • Your tax-filing status
  • The exact amount of the refund claimed on your tax return

The tool shows the progress of your tax return as:

  • Return Received
  • Refund Approved
  • Refund Sent

When the status changes to “Refund Approved,” then the IRS is preparing to send the refund as a direct deposit to your bank account, or mail it to you via check. The IRS updates the “Where’s My Refund?” tool once a day, usually overnight, so you can check the status daily. Note that calling the IRS won’t speed up your refund. The information available on “Where’s My Refund?” is the same information available to IRS telephone assistors.

For state tax updates, please visit:

Video Tax Tip

This video explains how to check the status of your tax refund.

Tax Matters: Report Those “Miscellaneous” Types of Income & Assets

Tax Matters: Report Those “Miscellaneous” Types of Income & Assets

 

When you earn several types of income throughout the year, it’s easy to lose track and forget to report some. The IRS does not forget, however. So be sure to report:

Gig Work

This is income earned providing on-demand work, services or goods, often through a digital platform (e.g., Uber or Fiverr). This applies even if the work is part-time or temporary, not reported on Form 1099 or W-2, or is received via cash, property, goods or virtual currency.

Virtual Currency

If you received any virtual currency as compensation or disposed of any virtual currency in a trade or business, you must report the income (or loss). This includes receiving virtual currency as payment for goods or services provided, as a result of mining and staking activities, or even exchanging for another virtual currency.

Foreign Income & Assets

You must report unearned income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or a tax treaty. You must also report foreign-earned income and assets, such as wages and tips. You are allowed an automatic two-month extension to June 15 if you serve in the military, or both your tax home and abode are outside the U.S. and Puerto Rico, though any tax due must still be paid by April 18, 2022.

Have You Taken Your RMD?

A Required Minimum Distribution (RMD) is the minimum amount that you must withdraw from your IRA or retirement plan account each year AFTER you reach age 72 (or 70½ if you were 70½ before January 1, 2020). In a workplace retirement plan, you can delay taking your RMD if you continue working and you’re not a 5% owner. However, you are still required to take RMDs from your traditional IRAs, and SEP, SIMPLE and SARSEP IRAs even if you continue working.

If you altered taking your RMDs in 2020 due to the CARES Act or SECURE Act, you may need to consider your current status.

If you reached age 70½ in 2019, you may have waived your RMDs due in 2020. However, you did have a 2021 RMD due by December 31, 2021, based on your account balance on December 31, 2020.

If you reached age 72 in 2021 (and didn’t reach 70½ in 2019), your 2021 RMD is due by April 1, 2022, and is based on your account balance on December 31, 2020. Your 2022 RMD is due by December 31, 2022, based on your account balance on Dec. 31, 2021.

If you left your job in 2021 and rolled over your workplace retirement plan into your IRA, the RMD from your IRAs for 2021 won’t be affected by the rollover, but you may have an RMD due from the retirement plan.

  • Amounts rolled over to your IRA from a workplace retirement plan in 2021 don’t affect your IRA RMD calculation since 2021 RMDs are based on your IRA account balances on December 31, 2020.
  • If you have a 2021 RMD due from your workplace retirement plan, it cannot be rolled over to your IRA.

Beneficiaries of IRA accounts must follow special distribution rules, which can be confusing. The SECURE Act changed how and when beneficiaries must take distributions when the account holder dies after 2019. If you’re unsure of your status, please contact us today. Missing deadlines can be costly, but we’re here to help.

Are Your Social Security Benefits Taxable?

If you receive Social Security benefits — monthly retirement, survivor and disability benefits — you may need to pay taxes on some of those benefits depending on your income and filing status. To determine if your benefits are taxable, take half of the Social Security benefits you received and add it to your other income, including pensions, wages, interest, dividends and capital gains.

50% of your benefits may be taxable if you are:

  • Filing single, head of household or qualifying widow or widower with $25,000 – $34,000 income.
  • Married filing separately and lived apart from your spouse with $25,000 – $34,000 income.
  • Married filing jointly with $32,000 – $44,000 income.

Up to 85% of your benefits may be taxable if you are:

  • Filing single, head of household or qualifying widow or widower with more than $34,000 income.
  • Married filing jointly with more than $44,000 income.
  • Married filing separately and lived apart from your spouse with more than $34,000 income.
  • Married filing separately and lived with your spouse at any time during 2021.

 

Do You Need More Time to File?

If you’re not ready to file your federal tax return by this year’s April 18 deadline, you can easily request an automatic six-month extension — to October 17. An extension allows for extra time to gather, prepare and file paperwork with the IRS. However, keep in mind that:

  • You must file an extension by April 18.
  • An extension to file does NOT grant you an extension to pay.
  • You should estimate and pay any tax owed by April 18 to avoid possible penalties.

Just let us know if you’d like us to request an extension for you. Or you can e-file an extension yourself using IRS Free File.

To get the extension, you must estimate your tax liability on Form 4868 and pay any amount due by April 18. You may also request an extension by using IRS Direct Pay, the Electronic Federal Tax Payment System or by paying with a credit or debit card or digital wallet. There’s no need to file a separate Form 4868 when making an electronic payment and indicating it’s for an extension. The IRS will automatically count it as an extension.

1st Quarter Estimated Tax Payments Due April 18

If you don’t pay taxes through withholding from your paycheck, pension or government benefits, then you may need to pay estimated taxes each quarter. This typically applies if you’re self-employed, retired, an investor, or have a business or corporation. If you have a side-gig, such as driving an Uber, you may need to make additional tax payments each quarter. Other income generally not subject to regular withholding includes interest, dividends, capital gains, alimony and rental income. By paying quarterly estimated taxes, however, you can typically lessen or eliminate any underpayment penalties.

You can make payments online at IRS.gov/payments. When you set up an account, you can view your payment history, any pending payments and other useful tax information.

Other important reminders for Monday, April 18:

  • File your 2021 federal tax return and pay any tax due, or request a 6-month extension.
  • Contribute to your IRA for 2021.
  • Contribute to your HSA for 2021.
  • Contribute to your 401(k) or SEP for 2021 if self-employed.
Will You Be Receiving a Special Georgia Tax Refund?

Will You Be Receiving a Special Georgia Tax Refund?

 

Thanks to a State of Georgia revenue surplus, legislators passed (and Governor Kemp signed) HB 1302, which provides Georgia taxpayers a refund of some or all of their 2020 income taxes due. Here’s what you need to know.

Determining Your Refund

Refer to your 2020 Georgia income tax return. If you filed a Form 500, the amount will be based on your tax liability listed on line 16. If you filed a Form 500EZ, the amount will be based on your tax liability listed on line 4. Tax liability is the amount of tax owed on the return before credit for any withholding, tax credits or other tax payments.

The amount you receive will depend on your filing status:

  • Single filers and married individuals filing separately could receive a maximum refund of $250.
  • Head of Household filers could receive up to $375.
  • Married individuals filing joint returns could receive up to $500.

Note that if your tax liability in 2020 was less than the amounts listed above, you will only receive a refund for the amount of your actual tax liability. Also, you will not receive a refund if you were a dependent on another person’s return in 2020.

Eligibility for the Refund

To be eligible, you need to have filed your 2020 return and your 2021 return by the deadline for filing the 2021 return (including any extensions), which is April 18, 2022. If you were a part-year resident of Georgia, you will be eligible for a proportional refund based on your filing status and share of Georgia taxable income.

Also, any refund due would be subject to offset first against any existing liabilities you owe to the state. This includes debt collection or payments owed to the state, such as delinquent child support payments.

Receiving Your Refund

The bill was signed into law on March 23. If you filed your 2021 return recently or have not yet filed, you may receive the HB 1302 refund along with any other refund due. If your return has already been processed, you’ll receive a separate refund. The Department of Revenue will automatically deposit the refund into your bank account or mail a check if you did not request direct deposit.

For more details, visit the Georgia Department of Revenue website.

Have You Taken Your RMD?

A Required Minimum Distribution (RMD) is the minimum amount that you must withdraw from your IRA or retirement plan account each year AFTER you reach age 72 (or 70½ if you were 70½ before January 1, 2020). In a workplace retirement plan, you can delay taking your RMD if you continue working and you’re not a 5% owner. However, you are still required to take RMDs from your traditional IRAs, and SEP, SIMPLE and SARSEP IRAs even if you continue working.

If you altered taking your RMDs in 2020 due to the CARES Act or SECURE Act, you may need to consider your current status.

If you reached age 70½ in 2019, you may have waived your RMDs due in 2020. However, you did have a 2021 RMD due by December 31, 2021, based on your account balance on December 31, 2020.

If you reached age 72 in 2021 (and didn’t reach 70½ in 2019), your 2021 RMD is due by April 1, 2022, and is based on your account balance on December 31, 2020. Your 2022 RMD is due by December 31, 2022, based on your account balance on Dec. 31, 2021.

If you left your job in 2021 and rolled over your workplace retirement plan into your IRA, the RMD from your IRAs for 2021 won’t be affected by the rollover, but you may have an RMD due from the retirement plan.

  • Amounts rolled over to your IRA from a workplace retirement plan in 2021 don’t affect your IRA RMD calculation since 2021 RMDs are based on your IRA account balances on December 31, 2020.
  • If you have a 2021 RMD due from your workplace retirement plan, it cannot be rolled over to your IRA.

Beneficiaries of IRA accounts must follow special distribution rules, which can be confusing. The SECURE Act changed how and when beneficiaries must take distributions when the account holder dies after 2019. If you’re unsure of your status, please contact us today. Missing deadlines can be costly, but we’re here to help.

Tax Filing Deadline: April 18, 2022

If we have not yet received your materials to file your Personal Tax Return, we’ll be happy to file an extension for you. Just let us know. Then, when you’re ready, just bring your paperwork to our office during regular business hours. Our 2021 Personal Tax Preparation Checklist will help make sure you provide everything we need.

Where’s My Refund?

The fastest and easiest way to check on your tax refund is by using the “Where’s My Refund?” tool on the IRS website or through the IRS2Go mobile app. You can use the tool within 24 hours after your e-filed return is received or four weeks after you mail a paper return.

The tool shows the progress as:

  • Return Received
  • Refund Approved
  • Refund Sent

Filing electronically and using direct deposit is the safest and fastest way to file and receive your refund. Most tax refunds are issued within 21 days, though some may take longer.

For state tax updates, visit:

There’s Still Time To Contribute To Your IRA for 2021

There’s Still Time To Contribute To Your IRA for 2021

If you haven’t yet made a contribution to your IRA for 2021, you still have time. The deadline is the same as the tax-filing deadline: April 18, 2022. What’s more, if you plan to make a contribution by that date, you may be able to claim the deduction on your 2021 tax return.

 

Know Your Traditional IRA

An Individual Retirement Account (IRA) is a tax-advantaged personal savings plan that lets you set money aside for retirement. Generally, you can contribute up to $6,000 to your IRA for 2021. If you were 50+ by December 31, 2021, you can add another $1,000 to that limit. Depending on your status, your contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of your compensation, whichever is less.

If you make contributions to employer retirement plans, such as a 401(k) or 403(b), an IRA, or an Achieving a Better Life Experience (ABLE) account, may also be able to claim the Saver’s Credit. Also known as the Retirement Savings Contributions Credit, the amount of the credit is generally based on the amount of your contributions, your adjusted gross income and your filing status (see the chart below).

 

Know Your Roth IRA

While you may contribute to a Roth IRA, you cannot deduct those amounts. However, any qualified distributions you take at retirement age are tax-free. Note that Roth IRA contributions may be limited based on your filing status and income.

Please don’t hesitate to call us at 706-632-7850 with any questions. 

 

March 25th Deadline

March 25 is the last day we can accept materials to file your Personal Tax Return by the April 18 due date. If you’re running late, we’ll be happy to file an extension for you. Please bring your paperwork to our office during regular business hours, or drop it off in our after-hours dropbox. Our 2021 Personal Tax Preparation Checklist will help make sure you provide everything we need.

Remove Excess Salary Deferrals by April 15, 2022

If you contribute to a retirement plan at work, you are allowed a total of $19,500 (plus an additional $6,500 if age 50+) in salary deferrals. If you exceeded this limit in 2021, however, you must withdraw any excess deferral amounts, plus earnings, by April 15, 2022.

If you withdraw the excess salary deferrals, plus earnings, by April 15:

  • Excess deferrals are taxed in the calendar year deferred (2021).
  • Earnings on the excess are taxed in the year withdrawn (2022).
  • Excess is not subject to the 10% early distribution tax, 20% withholding, or spousal consent requirements.

If you do NOT withdraw the excess salary deferrals, plus earnings, by April 15:

  • Excess deferrals are taxed in the calendar year deferred (2021) and again in the year withdrawn.
  • Earnings on the excess are taxed in the year withdrawn.
  • Withdrawals may be subject to the 10% early distribution tax, 20% withholding, and spousal consent requirements.

If you made contributions to more than one retirement plan, you may have accidentally gone over the limit. If you’re not sure, contact us today for help determining this amount.

Parental Custody & Tax Credits: What You Need to Know

Parental Custody & Tax Credits: What You Need to Know

Do you have a legal agreement with your child’s other parent about who claims the child on their taxes? If so, you may have some questions about how to handle the Child Tax Credit and the 2021 Recovery Rebate Credit when filing your tax return.

Economic Impact Payments and the Recovery Rebate Credit

The third Economic Impact Payment (EIP) was an advance payment of the 2021 Recovery Rebate Credit. The IRS used your 2020 or 2019 tax information to determine eligibility and amounts. Here’s what that means for you:

  • If you did NOT receive a third-round EIP for a child you will be claiming on your tax return, you can claim the Recovery Rebate Credit, regardless of any EIP the other parent received.
  • If you DID receive a third-round EIP for a child you will NOT be claiming on your tax return, you are NOT required to pay back the EIP if, based on the information reported on your 2021 tax return, you should have received less.

Child Tax Credit

The IRS determined who received 2021 Advance Child Tax Credit payments based on the information on your prior-year’s tax return. So if you claimed the Child Tax Credit on your 2020 return, you would have received the Advance Child Tax Credit payments in 2021. Here’s what that means for you: 

  • If you knew you would not claim a child on your 2021 return, you had the option to unenroll from receiving monthly payments. If you did NOT unenroll and received monthly payments last year for a child you won’t be claiming on your 2021 tax return, you may have to repay those payments when you file. You may be excused from repaying some or all of the excess amount if you qualify for repayment protection.
  • If you were an eligible parent who did NOT receive advance payments for your child, you will be able to claim the full amount of the Child Tax Credit on your 2021 tax return — even if the other parent received Advance Child Tax Credit payments.

Where Do You Stand?

The rules on economic impact and child tax credit payments can be confusing. If we’re preparing your taxes for you, we’ll make sure to take advantage of every tax credit available to you. Please don’t hesitate to call us at 706-632-7850 with any questions.

 

Start 2022 Off Right by Checking Your Withholding

If you’re getting back a large tax refund, that only means that you’ve been giving the IRS more money from each paycheck than you should. Since you don’t earn interest on that money, you should not be using that as a way to save. It’s often smarter to have less money withheld from your paycheck and sock it away in a savings account that pays you interest.

On the other hand, if you owe a lot on your taxes, then you should be having more money taken out of your paycheck, or you should be making quarterly estimated payments. Not paying enough taxes throughout the year can incur fees and penalties, adding to your tax bill.

Get the new year off to a good start by checking your federal income tax withholding and adjusting it if necessary. You can use the IRS’ Tax Withholding Estimator to help you figure the right amount of tax to withhold, whether you’re an employee or self-employed. To use the tool, you’ll need to estimate:

  • Your 2022 income.
  • The number of children you will claim for the child tax credit and earned income tax credit.
  • Other items that will affect your 2022 tax return.

If you have more complicated income and expenses, such as pension income or long-term capital gains, you will not get a valid result using the Tax Withholding Estimator. Instead, contact us for help determining the appropriate withholding for your situation.

Tax Checklists & Deadlines

Please note the following deadlines for providing your materials to us:

  • March 1: Corporate/Partnership Tax Returns to file by March 15 (without extension).
  • March 25: Personal Tax Returns to file by April 18 (without extension).

You may bring your paperwork to our office during regular business hours, or drop it off in our after-hours dropbox. To make sure you provide everything we need, please use our 2021 Tax Preparation Checklist (Personal and/or Business):

IRS Video Tax Tip

Don’t have all the documents needed to file your return? Watch this tax tip for information on what to do.

Mark Your Calendar for Tax Prep Deadlines

Mark Your Calendar for Tax Prep Deadlines

Please note the following deadlines for providing your materials to us in time for the tax-filing deadline:

  • March 1: Corporate/Partnership Tax Returns to file by March 15 (without extension).
  • March 25: Personal Tax Returns to file by April 18 (without extension).

You may bring in your paperwork to our office during regular business hours, or drop it off in our after-hours dropbox out front. To make sure you provide everything we need, please use our 2021 Tax Preparation Checklist (Personal and/or Business). Just click here to download and print out:

Please note that most financial advisor companies are not issuing 1099 forms until February 15 or later. It’s OK to drop off everything else and just send us any lagging paperwork as soon as you receive it.

If you have any questions, please contact us at 706-632-7850 or email our office manager, Kimberly Mortimer, at kimberly@premiercpaservices.com.

 

Don’t Forget to Report Gig Economy Earnings

Whether it’s a full-time job or just a side-hustle, those extra earnings you make need to be reported on your tax return. Here are some things to keep in mind:

  • You should receive a Form 1099-K for any gig or freelance work that exceeds $600 total. The IRS expects you to report it even if you don’t receive a Form 1099-K, though.
  • If you are an independent contractor, you may be able to deduct some of your business expenses. Be sure to keep good records.
  • As an employee, your employer typically withholds income taxes for you. As a freelancer or gig worker, however, you are responsible for your own taxes. If you also have a job that takes out taxes, you can submit a new Form W-4 to your employer to have additional taxes withheld from your paycheck to help cover the difference. Otherwise, you’ll need to make quarterly estimated income tax payments throughout the year, as well as Social Security and Medicare taxes. (We can help you with this.)

If you’re not sure about your status as a worker in the gig economy, let us help. We can help you figure out whether you should be paying additional taxes and how to best set that up. And be sure to provide us with any Form 1099-Ks you receive when you drop off your tax-preparation materials.

Money Minute: Reporting Tips

If you receive tips while working, then you must report them as part of your gross income. Here are some “tips” for reporting your tips. Tips include:

  • Cash tips received directly from customers.
  • Non-cash tips added using credit, debit or gift cards.
  • Tips from a tip-splitting arrangement with other employees.
  • Non-cash items, such as tickets, passes or other items of value.

To help keep track of your tips:

  • Keep a daily tip record.
  • Report tips of less than $20 a month on your income tax return.
  • Report tips of more than $20 a month to your employer by the 10th day of the following month. Your employer must withhold taxes on those reported tips (so you don’t have to).

IRS Video Tax Tip

If you have taxable income from any payer that doesn’t withhold tax for you, check out this IRS video to see if you need to make estimated tax payments.

8 Tips to Avoid Costly Tax Return Mistakes

8 Tips to Avoid Costly Tax Return Mistakes

While tax laws are complicated, most common tax return errors are surprisingly simple. While we’ll do everything possible to help you avoid these mistakes, it’s important for you to know what they are and how to avoid them. Many errors can be avoided by filing electronically, which is how we file all the returns we complete.

#1: Don’t File Too Early

While you don’t want to file late, you should avoid filing as soon as the IRS begins accepting returns (January 24 this year). If you file before you receive all the necessary tax reporting documents, you risk making mistakes, incurring processing delays or even reducing your refund.

#2: Check Your Details

Missing or inaccurate Social Security numbers will cause problems, so beware of transposing numbers. Likewise, the names listed on your tax return should match the names on each person’s Social Security card.

#3: Gather All Your Paperwork

Wages, dividends, bank interest and other income received must all be entered (and added up correctly). We’ll need copies of all your information returns (i.e., W-2s, 1099s, etc.) to be sure nothing is left out.

#4: Know Your Filing Status

It’s possible to choose (and use) the wrong tax-filing status, especially if more than one filing status applies. Let us help you determine the best filing status for your situation. (See the article below for more details.)

#5: Double-Check the Math

Math errors are some of the most common mistakes, and they typically occur if you’re still filing your taxes by mailing in a paper return. We use professional-level tax-filing software and file electronically, which eliminates these types of errors. Input errors can still occur, so we always double-check the math — and ask you to do the same.

#6: Figure Credits and Deductions

With such intricate tax laws, it’s easy to overlook money-saving credits and deductions — Earned Income Tax Credits, Child and Dependent Care Credits, Child Tax Credits, Recovery Rebate Credits and others. We’ll make sure that you get credit for each and every possible deduction so you don’t pay more in taxes than required.

#7: Verify Bank Account Numbers

If you are due a refund, you should choose direct deposit to get your money quick and easy. However, be sure to include the correct routing and account numbers on your tax return, especially if you’ve recently changed banks or accounts.

#8: Sign Your Return

Your tax return must be signed to be valid. For a joint return, both spouses must sign unless one spouse is a member of the armed forces or there’s a valid power of attorney. When you file electronically, you can “digitally” sign your return before sending it to the IRS.

Avoid Costly Errors

When we process and file your tax return, we look at every possible way to save you money, while also ensuring that everything is done correctly and on-time. The more information you can give us — and the sooner you can do so — will ensure the best possible outcome.

We have begun processing 2021 federal and state tax returns. When you’re ready, you may drop off your paperwork at our office during regular business hours. We also have an after-hours dropbox out front to make it even more convenient. If you have an unusual situation or questions, please don’t hesitate to contact us at 706-632-7850 or email our office manager, Kimberly Mortimer, at kimberly@premiercpaservices.com.

We ask that you use our 2021 Tax Preparation Checklists (Personal and/or Business) to help make sure you’ve gathered all the necessary documents. Just click here to download:

Do You Know Your Correct Filing Status?

Your tax-filing status typically depends on whether you are considered married or unmarried on December 31, 2021. But more than one filing status may apply, so you can typically choose the one that allows you to owe the least amount of tax.

Five Tax-Filing Statuses

Your filing status affects whether you must file a federal tax return, your standard deduction amount, various tax credits and more. Familiarize yourself with each of these five options to choose your correct filing status.

  • Single. This applies if you are unmarried, divorced or legally separated.
  • Married filing jointly. If you are married, you can file a joint tax return with your spouse. If your spouse died in 2021, you can still use married filing jointly as your filing status for 2021 in most cases.
  • Married filing separately. If you are married, you can choose to file a separate tax return from your spouse. Choose this if you want to be responsible only for your own tax, or if it results in less tax than filing a joint return.
  • Head of household. If you are unmarried, you may be able to file using this status in certain circumstances. For example, you must have paid more than half the cost of keeping up a home for yourself and a qualifying person living in your home for at least half the year.
  • Qualifying widow or widower with dependent child. This status applies if your spouse died in 2019 or 2020, you didn’t remarry before the end of 2021, and you have a dependent child. Other conditions may also apply.

We can help you determine the correct — and most tax-advantageous — filing status for your situation. If you have any questions or are unsure of your status, contact us today. You can also use the IRS Interactive Tax Assistant to help determine your filing status.

Money Minute: New Child Bonus

Do you have a new baby? If you are a parent or guardian who added a child to your family last year, you may be eligible to receive up to $1,400 by claiming the Recovery Rebate Credit. This applies if you did not receive a third-round Economic Impact Payment for that child.

Money Minute: Adoption Tax Credit

If you adopted or started the adoption process last year, you may qualify for the Adoption Tax Credit. This applies to international, domestic, private, and public foster care adoption. (It does not apply if you adopt your spouse’s child.) The maximum credit is $14,440 per eligible child, depending on your income. An eligible child must be younger than 18, or physically unable to take care of themselves if older than 18.

IRS Video Tax Tip

Families may be eligible for various tax credits, such as the Earned Income Tax Credit, the Child Tax Credit, and the Child and Dependent Care Credit.

2021 Tax Preparation Checklists Now Available

2021 Tax Preparation Checklists Now Available

Help yourself (and us!) make tax preparation easier by using these handy Checklists to pull together your tax materials for 2021. With another year of tax law changes and new programs, these Checklists will ensure you’ve got everything you need to file.

Please click on the Checklist name below to download a copy of the checklist. If you prefer, we can email it to you (just call or email Kimberly at kimberly@premiercpaservices.com to request your copy). You can also download both forms here.
Remember: We’re back open on Fridays now for the busy tax preparation season. Please contact us with any questions or concerns you may have.

Venmo, PayPal and Cash App to Begin Reporting Payments of $600+

If you rely on payment apps like Venmo, PayPal and Cash App for your business, you should be aware of a new tax law that took effect this year. Third-party payment processors will now report your business transactions to the IRS if they exceed $600 for the year — and send you a Form 1099-K with this information. (Previously they were required to send you Form 1099-K if your gross income exceeded $20,000 or you had 200 separate transactions within a calendar year.)

The new rule applies to payments for goods and services transactions — NOT for personal payments to your roommate for rent, for example, or to a friend when splitting dinner costs.

Note that you should already be reporting income over $600 to the IRS on your 1040, whether or not you receive a Form 1099-K. This new rule just means the IRS will be able to cross-reference the amounts beginning with your 2022 tax return.

 

Use ID.me for Easy IRS Access

The IRS is now using ID.me to help ensure the privacy and confidentiality of your information when using IRS tools, including:

If you already have an IRS user name, you may continue to use your existing credentials to sign-in — but you will be prompted to create an ID.me account for future access. To verify your identity with ID.me, you’ll need to provide a photo of an identity document, such as your driver’s license, state ID or passport. You’ll also need to take a selfie with a smartphone or a computer webcam. Once your identity is verified, you can securely and easily access IRS online services.

Tax Filing Begins Jan. 24

The IRS will begin accepting and processing 2021 tax year returns beginning next Monday, January 24. The IRS urges you to file electronically to speed processing and refunds — most people receive their refund within 21 days when they use direct deposit.

Note that the tax filing deadline will be April 18 — for both federal and Georgia income taxes. The due date is April 18 instead of April 15 because of the Emancipation Day holiday in the District of Columbia. If you request an extension, you will have until Monday, October 17, 2022, to file.

Money Brief: Report Virtual Currency Transactions

If you received, sold, exchanged or otherwise disposed of any financial interest in virtual currency — like Bitcoin — you’ll need to provide us with that information so it can be included on your Form 1040.

Money Brief: UGA Business Webinars

UGA’s Small Business Development Center offers a wide variety of online training programs to help new business owners, such as “Writing a Business Plan,” “QuickBooks” and “Hiring to Win.” Register today to learn more about operating your small business.