Even though we have taxes due every year, we always have some questions. The tax code changes frequently, and it’s extremely complex. Here are some of the most common tax and tax season FAQs.
How Can I Lower My Tax Bill?
Far and away, the biggest tax questions are always some variants of “How can I lower my taxes?” and “What deductions am I eligible for?”
Tax deductions and credits are the most common way to reduce your tax obligation, whether you are doing your individual or business taxes. The hard part about this question is that it’s different for everyone. A lot of your tax information comes in the form of Information Returns, the forms like 1099s, 1098s, W-2s, and others that show you what your financial activity looked like throughout the tax year.
These Information Returns help you fill out the tax forms you need in order to take advantage of many of these deductions and tax credits. eFile360’s top-tier e-filing services offer you a great solution for filling out and storing these forms.
What Are This Year’s Tax Changes?
Every year, the IRS makes adjustments to the tax laws, processes, and procedures based on the latest government regulations, technology changes, and overall performance during the last tax season.
This tax question is one that people are worried about all the time. American taxes are like a high-level puzzle: you have to put all the pieces together, solve the equations, and hopefully submit the right answers. But if the rules have changed, you may be making inadvertent mistakes.
The IRS website, specifically their Newsroom, is a great way to stay up-to-date on any and all changes that are coming up during the next tax season.
What’s the Difference: W-2 vs. 1099-NEC?
The 1099-NEC is one of the newest Information Return forms to be (re)instated. These forms are used to calculate non-employee compensation, including freelancer and independent contractor work.
W-2s are given to employees of a business early on during tax season, and it reports wages, tips, and other compensation paid to those people who are considered true employees, but freelancers or contractors.
Another related tax question that seems to always crop up is, “How do I know if a worker is an employee or an independent contractor?” According to the IRS, there are three determining factor categories: behavioral control, financial control, and the relationship of the parties.
Behavioral control is whether the worker has a right to direct or control how they do the work. If they do, they’re an independent contractor. If not, they will be considered an employee.
Financial control is whether the worker has the ability to control or direct the business part of the work including setting prices or pay expectations. If yes, they’re a contractor.
And the relationship of the parties is how the worker and the business perceive the relationship. If the worker is beholden to the business for wages, benefits, workflow, and job description and direction, they’re most likely an employee. If the relationship is more of a partnership that has finite parameters, that worker is more likely an independent contractor.
I Work from Home. Can I Deduct Business Expenses?
Determining whether you are able to deduct home office and other related expenses on your taxes is a popular question, thanks to the last few pandemic-era years when working from home and remote jobs were thrust into the spotlight. And though there are many ways to claim home office deductions, the answer might be surprising for those who work for a business they don’t own and run from their home.
Here are the rules. You must use part of your home:
- Exclusively and regularly as a principal place of business,
- Exclusively and regularly as a place where you meet with potential clients, customers, etc.,
- Or a separate structure not attached to your home exclusively and regularly for your business,
- On a regular basis for storage or product samples if you are selling these items from your home and it is the only fixed location where you store and/or sell from,
- For rental use,
- Or as a daycare location.
Need Help with Your 1099s and More?
eFile360 also has a great FAQs page with answers to common questions about who we are, what we do, and how filing your 1099s and other Information Return forms works. From data imports to our costs, how to get copies of your forms and what to do with data from your accounting software, eFile360 is more than just a digital tool that helps you sort out your 1099, 1098, ACA, and W-2 form needs, we also have a team of experts ready to assist you whenever you need us.
Have questions about your 1099s, 1098s, W-2s, or ACA forms? Sign up for a free eFile360 account today.