For Businesses:
Tax Season 2022
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The IRS will not be accepting returns before January 31st; it may even delay the acceptance for a week or two after that. We can file your returns as soon as you get your W2s and other paperwork but they will sit in the queue until the IRS opens its floodgates.
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If you received advance child tax credit payments, you will receive a letter (6419) showing how much you received. It is important that you bring this letter with you.
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If you did not receive the $1400 stimulus payment, the third one of 2021, this will be entered on your return and it will be included in your refund.
Schedule an appointment for more information and guidance.
IRS Acceptance Agents
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The Eight-Cent Nickel is certified as an IRS Acceptance Agent.
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Individuals can obtain an Independent Taxpayer Identification Number from the Internal Revenue Service. (ITIN)
For Individuals
What to Bring to an Appointment
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1099
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W2
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1040
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Schedule C
Other Ways Eight-cent Nickel Can Help You
IRS Penalties:
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The IRS can penalize you for owing too much tax at the end of the year. As your business grows and profits increase, a tax professional should be able to tell you if you are paying in enough taxes to avoid triggering these penalties.
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Sometimes you can accomplish this by adjusting your W4 to have more money withheld or you may want to consider making “estimated tax payments” to avoid this situation.
Determining Allowable Expenses for Deduction:
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Every business has expenses. Keeping good records of all expenses ensures you are not paying in any more taxes than you have to!
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The seasoned tax professionals of ECN can help you understand the nuances of following expense categories, how it can relate to your business, and what the IRS may consider unallowable.
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Product Inventories
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Office Supplies
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Travel: Meals and Incidentals
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Home Office Expenses
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Internet Services and Computer Products
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Cellular and Landline Services
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Items for Depreciation
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Gifts, Packaging, Postage/Shipping
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Advertising
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Incurred Sales Tax
For Sole Proprietors
Important guiding principles for the self-employed taxpayer:
#1 - Keep your receipts
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The IRS can disallow anything you cannot prove during an audit. Be prepared and keep track of business expenses that are both ordinary and necessary.
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An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.
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If you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.
#2 - Stay Organized
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Keep a written record of all business related expenses and income in a simple ledger as you work through the year. It is easier and more accurate to do this than it is to try and recall income/expenses when you begin to prepare to have your taxes done.
Understanding Tax Liability
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All tax computation begins with calculating your income. Your income minus your expenses will determine your profit. The profit for your business is what you will be taxed on.
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Self-employed profit is reported on the IRS Schedule C, which is then carried over to your Form 1040 and will be added to any other taxable income you may have (think W2 income), and that total will be taxed based on the tax bracket your income falls into.
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Because this is self-employment income, you may owe “self-employment” tax for Medicare and Social Security. As an employee, this tax is split between you and your employer. Each paystub will show your share of FICA, the money coming out of your paycheck to pay this tax (usually 7.65% of your taxable income). Your boss pays the other half for you (also, 7.65%).
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When you are self-employed you are responsible for paying both halves. (Yep, 15.3%!) The IRS will allow you to deduct one-half of the self-employment tax you have to pay (1040, line 27).
We know this can seem daunting, but we are here to help!
Please call or email us!