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Where e-filing information return forms comes full circle. We support 1099, 1098, W-2, and Affordable Care Act forms.

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Preparing for 2023 Tax Brackets with Inflation Adjustments

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As of late 2022, annual inflation was over 8%, and consumer prices are up more than 9%. Let’s break down how inflation adjustments will affect our 2023 tax brackets. Inflation on the Rise – IRS Response We previously talked about the effects of inflation on business and tax trends earlier this year. And now the IRS is addressing these issues in an adjustment plan that affects more than 60 tax provisions. They recently shared a 28-page document outlining all of the provisions and changes, but we wanted to share some of the highlights with you here as well. The procedures in this provision went into effect on October 18, 2022, and will likely affect many taxpayers’ filings in the 2023 tax season. If you or your employees have salaries that did not keep up with the crazy inflation hikes this year, tax savings could be in your future for the 2022 tax year when it comes time to file your returns. The inflation adjustments are coming from the fact that prices haven’t increased this drastically for more than 40 years! With the price of everything – gas, groceries, homes, and everything in between – going up so quickly, the IRS has made inflation adjustments to the 2023 tax brackets. But what does that mean for you, the taxpayer? Let’s talk about it. 2023 Tax Brackets with New Inflation Adjustments The IRS makes inflation adjustments every year, but this year the adjustments were much more substantial. Some increases range from $400 to $1,000 depending on how the taxpayer files (married jointly, head of household, etc.). And tax year 2023 withholding rates have also been adjusted, which means employees will see slightly larger paychecks even without having received a raise for the year. For the tax year 2023, the standard deduction for those who file as married, filing jointly will increase to $27,700. This is a $1,800 increase from the previous year. For those filing single or married filing separately, the standard deduction will be $13,850 (a $900 …

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Taxpayers Can Now Amend Taxes Electronically

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The Internal Revenue Service (IRS) recently announced a change in the process for amending forms and corrections filing. Here’s the latest on this change and the changes related to it. You Can Now Amend Taxes Electronically Recently, the IRS announced that you can amend taxes electronically for Forms 1040 and 1040-SR for the tax years 2019, 2020, and 2021, as well as Forms 1040-NR and 1040-PR for the tax year 2021. The IRS also shared information that a new checkbox was added to the forms listed above in order for taxpayers to indicate that a superseding return is being filed electronically. Form 1040-X is the one that allows you to amend taxes should you have a need, and you are still able to file a paper copy if you’d like. The IRS just expanded the ability to amend taxes to include electronically, too. When You Should Amend Taxes There are several instances where you should amend taxes. The following situations are all worthy of an effort to amend taxes: You noticed you’ve missed an opportunity to claim a tax deduction or credit – whether the amended refund you get will be substantially or even slightly larger is of no consequence. If the deduction or tax credit is worth it to you, you should do it – and it’s even easier now because you can amend taxes electronically. You chose the wrong tax filing status by mistake. You don’t have to keep the same status year after year, and it’s easy to get into a routine and forget to double-check this information. You have added or removed dependents in your living situation but haven’t reported that change on your tax return. You forgot to claim taxable income on your tax return. It’s easy to forget and lots of people have side hustles. Make sure yours are included, even if they aren’t a huge or majority percentage of your overall yearly earned or passive income. You mistakenly claimed an expense, deduction, or credit that you aren’t actually eligible for at this time. Math or clerical …

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Home Office Deductions for Tax Year 2022

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In 2020, we shared the latest home office deductions information in regard to the shift to remote work caused by the pandemic. Two years later, we wanted to share an update to help you prepare for your 2022 taxes.  What has Changed Since 2020? Who qualifies for a home office deduction has not changed. Only self-employed individuals who work from a home office can take advantage of this deduction. How the deduction is calculated has been the same since 2013.  While this deduction hasn’t changed, it bears repeating how to take advantage of this deduction.  How to Calculate the Home Office Deduction According to the IRS, you have two options to calculate the deduction: the regular method and the simplified method. The Regular Method Using the regular method, you calculate the deduction by determining the percentage of the space that is dedicated solely to business use.  Direct business expenses are fully deductible. This includes updates made only to your home office, such as: Painting  Installing flooring Making repairs  Furniture Fixtures Indirect expenses can be partially deductible. This includes costs associated with your entire home: Property taxes Mortgage interest Rent Casualty losses Utilities Homeowner’s or renter’s Insurance Maintenance and repairs Depreciation The Simplified Method Using the simplified method, you can deduct a flat rate per square foot of the space dedicated to your business. For tax year 2022, that’s $5 per square foot with a maximum of 300 square feet or $1,500.  Remember: Your calculation must focus on the space dedicated to your business, not your entire home. How to Choose Your Deduction Method You can change your deduction method each year to maximize the deduction – and you don’t need a specific reason in order to do so.  It’s best to calculate using both methods and then choosing to use the method that will help you save the most money. Of course, this means …

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Business Tax Implications of the Inflation Reduction Act

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Since the Inflation Reduction Act passed on August 16, 2022, businesses of all sizes have asked, “What does this mean for me and my business?” From energy-related tax credits to tax provisions for startups, we’ll dissect the Inflation Reduction Act in simple terms and what it specifically means for your business.  Clean Energy Tax Credits Electric Charging Stations Before January 1, 2022, businesses could install electric charging stations and receive a tax credit. The Inflation Reduction Act of 2022 extends the credit to charging stations installed and put in service before January 1, 2033. Commercial Clean Vehicles The Act also provides a tax credit – covering 30% of purchase costs – for businesses that utilize commercial clean vehicles, such as electric cars and fuel cell vehicles. This tax credit is available for those vehicles placed in service after December 31, 2022. Energy Efficiency Businesses can also take advantage of a tax credit to help them pay for energy efficiency improvements. The tax credit is worth up to $5 per square foot. Solar Power The Inflation Reduction Act offers businesses a tax credit that covers 30% of the cost it takes to switch to solar power. Manufacturing The Act offers tax incentives for manufacturers using U.S.-sourced materials to manufacture clean energy technologies, including solar, wind, clean hydrogen, and carbon capture. This will also help create U.S. jobs with fair wages and stimulate U.S. supply chains. Economies The Inflation Reduction Act establishes a Clean Energy and Sustainability Accelerator to finance state and local clean energy financiers, aiding the implementation of distributed zero-emission systems like heat pumps, community solar, and electric vehicle charging stations. This accelerator was also created with the intention of helping startup clean energy businesses, with a focus on supporting disadvantaged communities. Agriculture The Act expands the Rural Energy for America Program, …

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1099 Write-Offs You Probably Didn’t Know About

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We previously shared common 1099 deductions, so in preparation for tax season, we wanted to share 1099 write-offs you probably didn’t know about. 1099 Write-Offs You Probably Didn’t Know About Business startup and organizational costs If you started your business this year, you can write off many expenses associated with starting your business. In business terms, these are known as startup costs. In tax terms, these are known as investigation costs. Startup costs include:  Advertising Acquiring an existing business Consultant fees Customer surveys Equipment costs Leasing a business property Market research  Product research Site selection costs Wages and salaries for training Similarly, you can also deduct many organizational costs. These are the costs of forming your organization – specifically, a corporation, LLC, or partnership.  Organizational costs include: Accounting fees Legal fees  Organizational meetings Partnership filing or incorporation fees Temporary directors To deduct the costs above, make sure the fees you are writing off are only applicable to forming your organization. Other accounting or legal fees do not apply here. Cell Phone Costs  If you use your cell phone for personal and business purposes, then you can deduct a portion of your cell phone bill costs from your taxes.  To do this, estimate the percentage of your cell phone plan that is used for business purposes, and then write off that percentage. You can review your phone usage for a typical month and then average that for the entire year. Commission and Fees Some commissions and fees can be written off. However, when and how they can be deducted varies. Commissions and fees that are considered capital expenses must be amortized, which means spreading them out over 15 years, which includes these types of commissions and fees: Getting a lease on a business property  Issuing and selling stock or securities …

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Tax Avoidance vs. Tax Evasion

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We want to make sure you’re on the right side of the law when it comes to filing your taxes, so in this article, we explain what tax avoidance and tax evasion are, what the difference is between the two, and a few ways you can minimize your taxes legally. What Is Tax Avoidance? Tax avoidance is structuring your business transactions so you can lower your tax bill. Tax avoidable is legal and wise. A common example of tax avoidance includes maximizing your retirement contributions, such as IRAs and 401(k)s. What Is Tax Evasion? On the other hand, tax evasion is attempting to deceive the IRS in an effort to lower your tax bill. Tax evasion is illegal. Common examples of tax evasion are failing to report all or some of your income, concealing business assets, or pretending personal purchases were made for business purposes. The Difference Between Tax Avoidance and Evasion The primary difference between tax avoidance and evasion is the intent. The intent behind tax avoidance is to only pay what taxes you legally need to pay and not a penny more. The intent behind tax evasion is to commit fraud.   How To Minimize Taxes Legally There are three ways to minimize how much you pay in taxes: Reduce your taxable income – Claiming deductions can lower your taxable income. You can also hire contractors instead of employees, donate to charity, create a retirement account, and more. Maximize tax deductions and credits – Credits reduce your tax bill dollar-for-dollar while deductions reduce your tax bill by a percentage according to your tax bracket.  Time income and deductions appropriately – You may change tax brackets from tax year to tax year, so timing your income and deductions accordingly can help you save money.  What if You Make a Mistake? Mistakes happen. That’s why we offer corrections filing for 1099, 1098, W‑2, and Affordable Care Act forms.  The best course of action is to correct the mistake as soon as possible. If you make a mistake …

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