Online learning opportunity for small business owners

The Small Business Virtual Tax Workshop can help business owners learn how to navigate their federal tax responsibilities. This workshop is an easy and convenient way for both new and experienced small business owners to learn or review topics relevant to their business. Online at IRS.gov, it’s free and available 24/7.

People can watch the video lessons in any order. The topics include:

Each lesson links to more specific topics within that lesson. Viewers can pick and choose among the lessons to find the one they need. They can also pause and bookmark lessons so they can review information later.

In addition to English, the workshop is also available in Spanish, Chinese Traditional, Chinese Simplified, Korean, Russian, Vietnamese and Haitian Creole by clicking on the language menu below the presentation. Transcripts and closed caption options are also available.

Missed the Tax Day deadline? Here’s what taxpayers should do

Taxpayers who missed the recent April filing and payment deadline should know their obligations and the possible consequences if they don’t file or have an overdue tax bill.

Taxpayers who owe tax

Tax owed and not paid by April 18, 2023, is subject to penalties and interest. Anyone who didn’t file and owes tax should file a return as soon as they can and pay as much as they can to reduce penalties and interest. Electronic filing options, including IRS Free File, are still available on IRS.gov through October 16, 2023, to prepare and file returns electronically.

Filing soon is very important because the late-filing and late-payment penalties and interest on unpaid taxes add up quickly. Some taxpayers filing after the deadline may qualify for penalty relief. For those charged a penalty, they may contact the IRS by calling the number on their notice and explain why they couldn’t file and pay on time.

Taxpayers who have a history of filing and paying on time often qualify for administrative penalty relief. A taxpayer usually qualifies if they have filed and paid promptly for the past three years and meet other requirements. For details, taxpayers should visit the first-time penalty abatement page on IRS.gov.

If taxpayers find that they owe taxes, they can review their available payment options. The IRS has options for taxpayers who can’t pay taxes they owe. Information on reducing the amount of interest owed is on the interest abatement page of IRS.gov.

Military personnel can still use MilTax

The military community can also file their taxes using MilTax, a free tax resource offered through the Department of Defense. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

Some taxpayers have extra time

Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victimstaxpayers living overseas, certain military service members and eligible support personnel in combat zones.

Taxpayers who weren’t required to file

Some people may choose not to file a tax return because they didn’t earn enough money to be required to file. Generally, they won’t receive a penalty if they are owed a refund, but they risk missing out on their refund.

Key points to keep in mind when filing 2022 tax returns

WASHINGTON — To help taxpayers navigate the beginning of the tax filing season, the Internal Revenue Service today offered a checklist of reminders for people as they prepare to file their 2022 tax returns.

From gathering paperwork to filing a tax return, these easy steps will make tax preparation smoother in 2023:

1. Gather tax paperwork and records for accuracy to avoid missing a deduction or credit.

Taxpayers should have all their important and necessary documents before preparing their return. This helps people file a complete and accurate tax return. Errors and omissions slow down tax processing, including refund times.

Some information taxpayers need before they begin includes:

  • Social Security numbers for everyone listed on the tax return,
  • Bank account and routing numbers,
  • Various tax forms such as W-2s, 1099s, 1098s and other income documents or records of digital asset transactions,
  • Form 1095-A, Health Insurance Marketplace statement,
  • Any IRS letters citing an amount received for a certain tax deduction or credit.

​​​​​​​2. Remember to report all types of income on the tax return.

This is important to avoid receiving a notice or a bill from the IRS. Don’t forget to include income from:

  • Goods created and sold on online platforms,
  • Investment income,
  • Part-time or seasonal work,
  • Self-employment or other business activities,
  • Services provided through mobile apps.

3. File electronically with direct deposit to avoid delays in receiving a refund.

Avoid paper returns. Tax software helps individuals avoid mistakes by doing the math. It guides people through each section of their tax return using a question-and-answer format.

For those waiting on their 2021 tax return to be processed, here’s a special tip to ensure their 2022 tax return is accepted by the IRS for processing. Make sure to enter $0 (zero dollars) for last year’s adjusted gross income (AGI) on the 2022 tax return. Everyone else should enter their prior year’s AGI from last year’s return.

4. Free resources are available to help eligible taxpayers file online. Free help may also be available to qualified taxpayers.

IRS Free File provides a free online alternative to filing a paper tax return. IRS Free File is available to any individual or family who earned $73,000 or less in 2022.

With IRS Free File, leading tax software providers make their online products available for free as part of a 21-year partnership with the IRS. This year, there are seven products in English and one in Spanish. Taxpayers must access these products through the IRS website.

People who make over $73,000 can use the IRS’ Free File Fillable Forms. These are the electronic version of IRS paper forms. This product is best for people who are comfortable preparing their own taxes.

Qualified taxpayers can also find free one-on-one tax preparation help around the nation through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

5. Choose a tax professional carefully.

Most tax return preparers are professional, honest and provide excellent service to their clients. However, dishonest tax return preparers who file false income tax returns do exist. The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications and more on choosing a tax pro on IRS.gov.

6. Avoid phone delays; use online resources before calling the IRS.

To avoid waiting on hold, the IRS urges people to use IRS.gov to get answers to tax questions, check a refund status or pay taxes. There’s no wait time or appointment needed — online tools and resources are available 24 hours a day. The IRS’ Interactive Tax Assistant tool and Let Us Help You resources are especially helpful.

Additionally, the IRS suggests taxpayers stay up to date on important tax information online by:

Filing Season 2023 has begun: Employer January 31 wage statement deadline almost here

WASHINGTON — The Internal Revenue Service today urged employers to be aware of the January deadline to file Forms W-2 and other wage statements. Filing these documents timely prevents late-filing penalties for employers, helps employees file their income tax returns and prevents tax fraud.

Employers must file copies of their 2022 Form W-2, Wage and Tax Statements, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31, 2023. This deadline applies for all Forms W-2 and W-3, whether filing by paper forms or electronically.

Employers must also provide copies B, C and 2 of Form W-2 to their employees by January 31, 2023. For more information on filing Form W-2, see General Instructions for Forms W-2 and W-3.

Use same employer identification number on all forms

Employers need to make sure the employer identification number (EIN) on their wage and tax statements (Forms W-2, W-3, etc.) and their payroll tax returns (Forms 941, 943, 944, etc.) match the EIN the IRS assigned to their business.

Do not use a Social Security number (SSN) or Individual Taxpayer Identification number (ITIN) on forms that ask for an EIN. Do not truncate the employer’s EIN or the employee’s SSN on any of the forms.

If an employer used an EIN (including a prior owner’s EIN) on their payroll tax returns that’s different from the EIN reported on their W-3, they should review General Instructions for Forms W-2 and W-3, Specific Instructions for Form W-3, Box h—Other EIN used this year.

Filing wage and tax statements and payroll tax returns with inconsistent EINs or using another business’s EIN may result in penalties and delays in processing an employer’s returns. Even if an employer uses a third-party payer (such as a Certified Professional Employer Organization, Professional Employer Organization, or other third party) or a different entity within their business to file these documents, the name and EIN on all statements and forms filed must be consistent and exactly match the EIN the IRS assigned to their business.

For more information on third-party arrangements, see Publication 15, (Circular E), Employer’s Tax Guide.

Extensions

Employers may request a 30-day extension to file Forms W-2 with SSA by submitting a Form 8809, Application for Extension of Time to File Information Returns, by January 31. However, they must meet one of the criteria on Line 7 of Form 8809 to be granted an extension. For detailed information, see Form 8809 and General Instructions for Forms W-2 and W-3.

Filing Form 8809 does not extend the due date for furnishing wage statements to employees. Filing a separate extension of time to furnish Forms W-2 to employees must occur by January 31. Detailed information and instructions on how to file an extension of time to furnish Forms W-2 to employees is in the General Instructions for Forms W-2 and W-3.

Electronic filing

The IRS and SSA encourage all employers to e-file. It is the quickest, most accurate and convenient way to file these forms. E-filing is mandatory if an employer is filing 250 or more information returns.

For more information about e-filing Forms W-2 visit the SSA’s Business Services Online, and Employer W-2 Filing Instructions & Information.

The benefits of having a tax refund direct deposited

Receiving a tax refund is happy news to any taxpayer; getting it quickly is even better. Direct deposit is the safest and most convenient way to receive a tax refund. The IRS encourages taxpayers to file when they are ready and choose direct deposit to receive any refund they may be owed.

Benefits of choosing IRS direct deposit:

  • It’s fast. The fastest way for taxpayers to get their refund is to file electronically and choose direct deposit. Visit IRS.gov for details about IRS Free FileFree File Fillable Formsfree tax return preparation and more. Taxpayers who file a paper return can also choose direct deposit, but it will take longer to process the return and get a refund.
  • It’s secure. Since refunds are electronically deposited, there’s no risk of having a paper check stolen or lost in the mail.
  • It’s easy. Taxpayers can simply follow the instructions when selecting direct deposit as a refund method and enter their account information as directed. They must enter the correct account and routing numbers when they file.
  • It provides options. Taxpayers can split a refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. They should use IRS Form 8888, Allocation of Refund, Including Savings Bond Purchases to deposit a refund in up to three accounts. This form cannot be used to designate part of a refund to pay tax preparers.

Taxpayers should deposit refunds into U.S. bank accounts in their own name, their spouse’s name or both. They should avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a tax refund from a joint return. Taxpayers should check with their bank for direct deposit rules.

Get a bank account

Taxpayers who don’t have a bank account can visit the FDIC website for information on banks that let them open an account online and how to choose the right account. Veterans can use the Veterans Benefits Banking Program for access to financial services at participating banks.

Mobile apps may be an option

Some mobile apps and prepaid debit cards allow for direct deposit of tax refunds. They must have routing and account numbers associated with them that can be entered on a tax return. Taxpayers should check with the mobile app provider or financial institution to confirm which numbers to use.

Taxpayers must have their routing and account numbers for direct deposit available when they are ready to file. The IRS can’t accept this information after a return is filed.

There is a limit of three direct deposit refunds made into a single financial account or prepaid debit card.

More information:

The first step of good tax planning is good recordkeeping

Year-round tax planning is for everyone. An important part of that is recordkeeping. Gathering tax documents throughout the year and having an organized recordkeeping system can make it easier when it comes to filing a tax return or understanding a letter from the IRS.

Good records help:

  • Identify sources of income. Taxpayers may receive money or property from a variety of sources. The records can identify the sources of income and help separate business from nonbusiness income and taxable from nontaxable income.
  • Keep track of expenses. Taxpayers can use records to identify expenses for which they can claim a deduction. This will help determine whether to itemize deductions at filing. It may also help them discover potentially overlooked deductions or credits.
  • Prepare tax returns. Good records help taxpayers file their tax return quickly and accurately. Throughout the year, they should add tax records to their files as they receive them to make preparing a tax return easier.
  • Support items reported on tax returns. Well-organized records make it easier to prepare a tax return and help provide answers if the return is selected for examination or if the taxpayer receives an IRS notice.

In general, the IRS suggests that taxpayers keep records for three years from the date they filed the tax return. Taxpayers should develop a system that keeps all their important information together. They can use a software program for electronic recordkeeping. They could also store paper documents in labeled folders.

Records to keep include:

  • Tax-related records. This includes wage and earning statements from all employers or payers, interest and dividend statements from banks, certain government payments like unemployment compensation, other income documents and records of virtual currency transactions. Taxpayers should also keep receipts, canceled checks, and other documents – electronic or paper – that support income, a deduction, or a credit reported on their tax return.
  • IRS letters, notices and prior year tax returns. Taxpayers should keep copies of prior year tax returns and notices or letters they receive from the IRS. These include adjustment notices when an action is taken on the taxpayer’s account, Economic Impact Payment notices, and letters about advance payments of the 2021 child tax credit. Taxpayers who receive 2021 advance child tax credit payments will receive a letter early next year that provides the amount of payments they received in 2021. Taxpayers should refer to this letter when filing their 2021 tax return in 2022.
  • Property records. Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.
  • Business income and expenses. For business taxpayers, there’s no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.
  • Health insurance. Taxpayers should keep records of their own and their family members’ health care insurance coverage. If they’re claiming the premium tax credit, they’ll need information about any advance credit payments received through the Health Insurance Marketplace and the premiums they paid.

Questions about Economic Impact Payments

The IRS is issuing Economic Impact Payments. These payments are being issued automatically for most individuals. However, some people who don’t usually file a tax return will need to submit basic information to the IRS to receive their payment.

Questions? The IRS is regularly updating the Economic Impact Payment and the Get My Payment tool frequently asked questions pages on IRS.gov as more information becomes available. Here are answers to some of the most common questions.

How are payments calculated and where will they be sent?

If taxpayers have already filed their 2019 tax return and requested direct deposit of their refund, the IRS will use this information to calculate and send their payment. Those who didn’t provide 2019 direct deposit information or owed tax, can use the Get My Payment tool to provide account information or a payment will be mailed. For those who haven’t filed their 2019 return, the IRS will use their 2018 tax return to calculate the payment.

Payments will also be automatic for those who receive Social Security, railroad retirement or Social Security Disability Insurance (SSDI and SSI) and veteran’s benefits who don’t normally file a tax return.

However, to add the $500 per eligible child amount to these payments, the IRS needs the dependent information before the payments are issued. Otherwise, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020.

What if the IRS doesn’t have the taxpayer’s direct deposit information?

If the IRS has not processed the taxpayer’s payment, the taxpayer may be able to use the Get My Payment tool to provide their banking information to the agency so their payments can be directly deposited. If no banking information is provided, IRS will mail a check to the taxpayer’s address on record. The direct debit account information used to make payments to the IRS cannot be used as the account information for the direct deposit of your payment.

Can taxpayers who aren’t required to file a tax return receive a payment?

Yes. People who don’t normally file can use Non-Filers: Enter Payment Info Here tool to give IRS basic information to get their Economic Impact Payments. This includes low-income or no income taxpayers.

Can taxpayers who haven’t filed a tax return for 2018 or 2019 still receive a payment?

Yes. Anyone who is required to file a tax return and has not filed a tax return for 2018 or 2019 should file their 2019 return do so as soon as possible to receive a payment. They should include direct deposit banking information on their return.

I received an additional $500 in 2020 for my qualifying child. However, he just turned 17. Will I have to pay back the $500 next year when I file my 2020 tax return?

No, there is no provision in the law requiring repayment of an Economic Impact Payment. When you file next year, you can claim additional credits on your 2020 tax return if you are able to eligible for them, for example if your child is born in 2020. But you won’t be required to repay any Payment when filing your 2020 tax return even if your qualifying child turns 17 in 2020 or your adjusted gross income increases in 2020 above the thresholds listed above.

Taxpayers should be aware of Coronavirus-related scams

Taxpayers should be on the lookout for IRS impersonation calls, texts and email phishing attempts about the coronavirus or COVID-19 Economic Impact Payments. These scams can lead to tax-related fraud and identity theft.

Here’s what taxpayers should know:

  • The IRS will not call, email or text you to verify or request your financial, banking or personal information.
  • Watch out for websites and social media attempts to request money or personal information. The official website is IRS.gov.
  • Don’t open surprise emails that look like they’re coming from the IRS or click on attachments or links.
  • Taxpayers should not provide personal or financial information or engage with potential scammers online or over the phone.
  • Forward suspicious emails to phishing@irs.gov, then delete.
  • Go to IRS.gov for the most up-to-date information.

Here’s what people should know about the Economic Impact Payments:

  • The IRS will automatically deposit Economic Impact Payments into the bank account taxpayers provided on their 2019 or 2018 tax return for a direct deposit of their tax refund.
  • Those without a direct deposit account on file may be able to provide their banking information online through a new secure tool, Get My Payment..
  • Anyone who is eligible for an Economic Impact Payment and doesn’t provide direct deposit information will receive a payment mailed to the last address the IRS has on file.
  • The IRS does not charge a fee to issue the payment.

Scammers may:

  • Ask an individual to sign over their Economic Impact Payment check to them.
  • Ask for verification of personal or banking information.
  • Suggest that they can get someone a tax refund or Economic Impact Payment faster by working on their behalf.
  • Issue a bogus check, often in an odd amount, then tell a person to call a number or verify information online in order to cash it.

Official IRS information about the COVID-19 pandemic and Economic Impact Payments can be found on the Coronavirus Tax Relief page on IRS.gov. The IRS encourages people to share this information with family and friends. Many people who normally don’t normally file a tax return may not realize they’re eligible for an Economic Impact Payment.

Leasing vs. Buying a Car

Car made of 100 dollar billsKnowing the tricks makes you a better decision-maker

There are many reasons for you to lease a car versus buy a car, but too often it is the auto dealer’s profit motive that determines which method you use rather than what’s best for your budget and lifestyle. To help you make an informed decision, here are some things to consider:

When to lease
  • You want a car with lower down payments and monthly costs.
  • You don’t like making your own vehicle repairs.
  • You prefer a new car every couple of years.
  • You don’t drive many miles each year.
  • You are not hard on your vehicle.
When to buy
  • You plan to have the vehicle for many years.
  • You are willing to drive a used car.
  • You drive more miles than a lease allows.
  • You are worried about keeping the car in excellent condition.
  • You want to work on or modify the car.
Tips to know if you decide to lease

If you think leasing a vehicle is an option for you, here are some tips to ensure you are making the best deal:

  • Negotiate before revealing your intentions. Negotiate the price before telling the dealer you wish to lease. The purchase price you negotiate should be the price the dealer uses in calculating the lease payments as well as an outright purchase. If it is not, this technique forces the dealer to disclose this fact.
  • Ask about the annual percentage rate (APR). Ask the dealer to disclose the effective APR built into the lease. If the dealer gives you a lease factor instead of an interest rate, multiply the lease factor by 2,400 to get a general interest rate. For example, a lease factor of 0.0025 multiplied by 2,400 returns an interest rate of 6 percent.
  • Question the residual value. Ask what the projected residual value of the car is at the end of the lease. This value is often overstated by the dealer to artificially lower your lease payment, but can impact your ability to purchase your vehicle at the end of the lease. Future residual value is an estimate and can often be negotiated with the dealer.
  • Compare with a loan. Use the negotiated purchase price to calculate your loan payments. Use this information to compare your monthly lease payment with your car loan payment.
  • Read the lease agreement! If ever there is a time to read the fine print, leasing a car is one of them. Pay special attention to early termination clauses and cost for excess miles. These two factors can dramatically impact your lease versus buy decision.

Tax Day is Here!

Tax and Question Marks

The individual tax deadline of April 15 is fast approaching. Do you have all your tax arrangements in order? Here are five important questions that people are asking.

  1. What happens if I don’t file on time?There’s no penalty for filing a late tax return after the deadline if you are set to receive a refund. However, penalties and interest are due if taxes are not filed on time or a tax extension is not requested AND you owe tax.

    To avoid this problem, file your taxes as soon as you can because the penalties can pile up pretty quickly. The failure-to-file penalty is 5 percent of the unpaid tax added for each month (or part of a month) that a tax return is late.

  2. Can I file for an extension?
    If you are not on track to complete your tax return by April 15, you can file an extension to give you until Oct. 15 to file your tax return. Be aware that it is only an extension of time to file — not an extension of time to pay taxes you owe. You still need to pay all taxes by April 15 to avoid penalties and interest.

    So even if you plan to file an extension, a preliminary review of your tax documents is necessary to determine whether or not you need to make a payment when the extension is filed.

  3. What are my tax payment options?
    You have many options to pay your income tax. You can mail a check, pay directly from a bank account with IRS direct pay, pay with a debit or credit card (for a fee), or apply online for an IRS payment plan.

    No matter how you pay your tax bill, finalize tax payment arrangements by the end of the day on April 15.

  4. When will I get my refund?
    According to the IRS, 90 percent of refunds for e-filed returns are processed in less than 21 days. Paper filed returns will take longer.

    24 hours after you receive your e-file confirmation (or 4 weeks after you mail a paper tax return), you can use the Where’s My Refund? feature on the IRS website to see the status of your refund.

  5. Oops, I forgot a tax document. Now what?
    The first thing to do is determine the impact the new information has on your filed return. For example, if you claim the standard deduction and then receive a mortgage interest statement that does not bring your expenses above the deduction threshold, there’s nothing more you need to do. Simply file the statement with your other tax documents.

    If, on the other hand, you receive something like a Form 1099 with additional income, you will need to amend the tax return to claim the income. In cases like this, please call in order to review your situation and the timing of the correction.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

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