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Tax Tips

28 11, 2023

5 Tips for Charitable Gifting

2023-11-27T14:11:21-06:00November 28, 2023|0 Comments

‘Tis the season of giving, so why not get the most out of your giving, not just personally but financially as well? We’re sharing these five tips for charitable gifting to help you, the giver, maximize the benefits. 

Before we get into our helpful tips for charitable giving, let’s quickly state the obvious. Giving to others makes us feel good. But the benefits of giving can go well beyond feelings. In some instances, charitable gifts can actually reduce your taxable income. 

Plan your giving.

For starters, impactful giving takes planning. And knowing who to give to takes thought and research, including understanding which charities and donations qualify for tax deductions. First of all, you have to give to an IRS-approved charity—for nothing in return—to claim a tax deduction.

Enjoy a little tax relief.

In fact, there are many tax-planning opportunities with charitable donations that you can take advantage of for the largest deduction possible. In general, charitable contributions allow you to deduct up to 60 percent of your adjusted gross income. But, depending on the organization and the kind of contribution, you may only be allowed to donate 20 percent, 30 percent or 50 percent of your income.

No matter how many organizations you donate to, the limit applies to all of your donations made during the year.

Cash and household items can be tax-deductible. 

Remember to ask for a receipt or proof of your charitable donation. Typically, any cash donation of $250 or more needs written acknowledgement from the organization stating when the gift was given.

However, smaller donations can be verified with a copy of a bank statement or a receipt from the charity, for example. If you decide to make a charitable donation through a payroll deduction, be sure to keep your pay stub, a W-2 form or some other record from your employer showing the date and amount. 

While certain charities and organizations will accept gently used household items, including clothes, toys and furniture, the rules for non-cash donations are a little stricter. Again, be sure to talk to your accountant for more in-depth information about these guidelines. 

Check to see if volunteer expenses are tax-deductible. 

While volunteers can’t deduct the estimated value of their time or services, they can deduct certain costs of volunteering for an approved organization from their taxes. Examples of direct expenses that could be claimed include mileage. 

The miles you travel to volunteer opportunities and charitable events, as well as the mileage you use to transport goods to donation sites, can be deducted from your tax deduction contributions—just save the receipts. 

Pay attention to the deadline.

Your donation must have been made by the end of that specific tax year for it to be recognized as tax-deductible when you file. For instance, donations that you want to claim on your 2023 tax return, which must be filed by April 2024, must be made by December 31, 2023.

Summary

Last but not least, when it comes to tips for charitable gifting, work with a tax professional you can trust. To find out more about charitable gifts and tax breaks, contact us to schedule a free consultation. For more industry news and tax advice, keep reading our blogs. 

28 09, 2023

Business Entities Defined: Limited Liability Company and Its Benefits

2023-09-28T16:21:16-05:00September 28, 2023|0 Comments

Before you start a business, several decisions must be made, including the business structure. One of the most popular business structures in the U.S. is a limited liability company. So, let’s look at a limited liability company and its benefits more in depth to see if it’s the right setup for your future company.

What is a limited liability company?

For a better understanding of a limited liability company and its benefits, let’s start with the definition of a limited liability company. To summarize, it is a hybrid entity that combines the features of a corporation with those of a partnership or sole proprietorship.

Limited liability companies protect their owners from being held personally liable for the obligations of the company. Similar to a corporation, an LLC offers its owners limited liability in the event that the company fails. However, like a partnership, an LLC “passes through” its profits so that the owners must pay taxes on it as part of their individual income.

In fact, those very traits are two of the main advantages of a limited liability company.

The benefits of LLCs

One of the biggest benefits of a limited liability company is that it is a separate entity. In other words, the personal assets of company owners or members cannot be used to fulfill the company’s debts and other obligations. Therefore, members only risk losing what they invested in the company, not their individual belongings.

The flexibility of how an LLC is to be taxed is another one of the benefits. While LLC’s can be taxed as corporations, partnerships or sole proprietors, the default tax classification is as a sole proprietor if it has one member and as a partnership with two or more members.

In a nutshell, all the companies’ profits can be distributed directly to the owners, which are then taxed as part of their personal income. This prevents “double taxation” of the business and its owners because it’s only taxed once.

Whereas with a corporation, for instance, the profits are taxed first at the company level and then again once the profits are passed on to the business shareholders.

In addition to limited liability and streamlined taxation, limited liability companies are relatively easy to set up and offer a more flexible management structure than other types of business entities. However, rules and regulations vary state-by-state, so be sure to double-check your state’s requirements.

Summary

Now that we’ve reviewed more about a limited liability company and its benefits, get ready to take the next step with our help! Did you know we offer new business planning services? We do! Contact us to schedule your free consultation. In the meantime, keep reading our blogs for more industry news.

28 07, 2023

The Benefits of Working with an Enrolled Agent

2023-07-24T15:18:44-05:00July 28, 2023|0 Comments

By definition, the word “tax” is straightforward. Simply put, taxes are amounts of money collected by the government to pay for public services. However, in reality, taxes can be anything but simple, which is why the benefits of working with an enrolled agent are good to know.

They are tax experts.

While the benefits of working with an enrolled agent are varied, this is a big one! You are working with a tax expert when working with an enrolled agent.

First of all, specific, strict qualifications must be met to become an enrolled agent, including passing a comprehensive IRS exam. Candidates must demonstrate expertise in individual and business tax return preparation, representation and federal tax planning.

Secondly, to maintain their status, enrolled agents are required to finish 72 hours of continuing education courses focused on tax preparation every three years.

It’s a select group of individuals.

In fact, there are only two ways someone can become an enrolled agent. As mentioned, there is a three-part comprehensive exam.

Or, an individual can become an enrolled agent based on experience gained as a former IRS employee for a minimum of five years.

They can represent clients before the IRS.

In other words, enrolled agents earn the right to represent taxpayers before the IRS. More specifically, enrolled agents have unlimited practice rights, like attorneys and CPAs. CPAs can also represent clients before the IRS.

To clarify, it means an enrolled agent is free to represent any taxpayer. They are qualified to handle any and all types of tax matters. And, finally, there are no restrictions in terms of which IRS office they can represent clients before.

You won’t have to see or deal with the IRS at all.

Another one of the benefits of working with an enrolled agent is your agent can speak directly to the IRS on your behalf. Whether you receive a letter from the IRS or you are being audited, enrolled agents can represent you on any tax matter, no matter who prepared the tax return, for instance. Again, CPAs are also qualified to represent taxpayers before the IRS.

Summary

To summarize, an enrolled agent has earned the highest credentials granted by the IRS. If you are looking for a true tax professional to help handle your taxes, properly prepare your tax returns and more, look no further than an enrolled agent.

At Todd Greene, CPA, PLLC, we currently have two accountants in the process of earning enrolled agent status. We also have two CPAs on staff! Learn more about us, our team and our tax services—and find free tax advice—when you continue to read our blogs.

30 05, 2023

What to Do If You Missed the Tax Deadline

2023-05-22T14:15:31-05:00May 30, 2023|0 Comments

If you missed the April 18th tax deadline, don’t panic! Instead, keep reading to find out what to do if you missed the tax deadline last month.

File as soon as possible.

First of all, when it comes to what to do if you missed the tax deadline without requesting an extension, you should still file as soon as possible to limit interest and penalties.

The good news is that if you are owed a tax refund, you won’t receive any penalties for filing late.

Find out if you automatically qualify for more time.

Certain circumstances mean some taxpayers automatically get extra time to file and pay taxes without penalties or interest.

For example, if you are a disaster victim, in the military, support personnel in combat zones or a U.S. citizen who is working outside the country, you could qualify for an automatic extension. Find out more here.

File and pay what you can now.

If you didn’t file by the April 18th deadline and you owe taxes, you could be hit with at least two penalties. First, there is a failure-to-file penalty. Next, there is a failure-to-pay penalty.

Even if you do have penalties, don’t put filing and paying what you can off any longer. In fact, when you file and pay what you can, you can then request a payment plan from the IRS to help.

Use e-file with direct deposit.

If you know you owe taxes to the IRS, you can pay promptly and securely through several options, including Direct Pay, for instance.

Even if you don’t meet the IRS income threshold for filing taxes, file anyway.

Did you know you could be missing out on potential refundable tax credits by not filing? It’s true. Even if your taxable income is less than the IRS income threshold for filing, you should still file a tax return.

You may be eligible for tax credits such as the Earned Income Tax Credit.

Work with tax professionals.

Finally, work with tax professionals like the ones you will find at Todd Greene, CPA, PLLC, to help you take the next steps, like properly preparing your tax return.

Summary

Now that you know what to do if you missed the tax deadline recently, contact us to get started. For more helpful tax tips and other financial news, continue to read our blogs.

28 04, 2023

The Benefits of Year-Round Tax Planning for Business Owners

2023-04-21T11:40:06-05:00April 28, 2023|0 Comments

We know you just filed your 2022 taxes, but that doesn’t mean you should stop thinking about them! Taxes should be a part of your business’ strategy year-round in order to maximize your gains and minimize your losses. Let’s take a quick look at the benefits of year-round tax planning for business owners.

Helps mitigate your liabilities.

Creating a tax plan is essential for business owners in order to mitigate their liabilities, largely for those transactions that are taxed. By doing this and giving yourself time to prepare for taxes, you will see many benefits, including:

  • Avoiding common mistakes
  • Maximizing tax relief
  • Reducing your payable taxes by deducting your expenses from earned income
  • Having greater control over when you pay your taxes

An example of poor tax planning is taking in a large amount of revenue before the end of the year that could potentially move your business into the next tax bracket. Instead of paying more taxes because of the increased revenue, good tax planning would have your business receive that money at the start of the new year.

Keeps you up to date on tax laws.

Having a tax plan also helps you stay updated on tax laws and any changes. Since the pandemic, tax requirements and deadlines are constantly changing for businesses. A tax plan allows you to understand what’s changed and lets you reassess your strategy.

When you have a good understanding of current tax laws, you won’t risk infringement with new or updated regulations. You will also be able to minimize the number of errors on your return. By doing this, you won’t have as much worry about an audited return or owing more money.

Enables growth.

The benefits of year-round tax planning for business owners don’t just stop there. Strategic tax planning also allows you to understand your business and its financial health. That means you can make sound financial projections and investments.

With the help of proper tax planning, you can maximize the deductions your business is eligible for. In turn, your business can save money and fund future business ventures.

Summary

Now that you know these major benefits of year-round tax planning for business owners, are you ready to get started with your business tax plan? Then contact the Todd Greene team to learn how to build wealth and grow your business with confidence.

Finally, continue reading our blogs for more financial tips and industry news.

28 03, 2023

6 Strategies to Survive a Cash Flow Crisis

2023-03-22T16:27:53-05:00March 28, 2023|0 Comments

Sometimes there are ups and downs in business, just like in life. However, knowing what to do in a cash crunch can make or break you. These six strategies to survive a cash flow crisis will help you better manage the highs and lows.

What is cash flow?

Before we look at strategies to survive a cash flow crisis, let’s review what cash flow actually is. In a nutshell, cash flow shows how much money is coming in and how much money is going out.

You have a positive cash flow when you have more money coming in than going out. If you are struggling to cover your business expenses, your cash flow is negative.

That’s why planning for the expected and unexpected is good business practice. But even the best planning can go awry at times, which is why these strategies to survive a cash flow crisis may be useful.

Six strategies to survive a cash flow crisis

There are several tactics small business owners can apply before and during a cash flow shortage to help.

Assess your cash flow.

For starters, take a close look at your cash inflow and cash outflow to get a clear picture of your current financials.

Save your cash.

Review your fixed expenses closely. See where you can cut costs and conserve money, including rent, utilities, insurance and wages.

Negotiate lower prices or extended payment terms with suppliers and vendors, if applicable.

Create a cash flow budget.

Creating a budget is a must for managing your cash flow. Not only will it help you track your income, but it will also help you spot potential issues before they arise.

Manage your inventory.

Be mindful of your inventory. What is selling well? What isn’t? Consider offering specials and discounts to help move products that sit around longer.

Find new sources for cash flow.

Government grants, low-interest loans and financial investors are all possible sources of new cash flow.

Adjust your payment terms.

If you depend on customers’ payments for your cash flow, don’t wait around to send out invoices. It may help to offer incentives for early payments or let customers pay in installments if needed.

Summary

Finally, proper bookkeeping is a good way to avoid cash flow problems up front. Accurate cash flow reports and projections can give you enough time to make needed corrections before cash runs low. Looking for someone to help create your initial budgets and more? Contact us for a free consultation. For more industry news, keep reading our blogs.

17 02, 2023

Update: How to File the Employee Retention Credit with 2022 Returns

2023-02-17T20:11:50-06:00February 17, 2023|0 Comments

Did you know you can still claim the Employee Retention Credit if certain qualifications are met? But there is a limited window to save. If you are a small business owner, this overview of how to file the Employee Retention Credit with 2022 returns is a must-read.

What is the Employee Retention Credit?

Before we talk about how to file the Employee Retention Credit with 2022 returns, let’s first review what that is. The credit applies to wages and benefits distributed between March 13, 2020, and September 30, 2021.

To summarize, eligible businesses must meet specific qualifications. For instance, did your business have to partially or fully shut down due to the COVID-19 pandemic? Did your business experience a major decline in gross receipts in 2020 or the first three quarters of 2021?

Other qualifications could include that your supply and vendor chains were affected by the pandemic, the number of services you could provide were limited, business travel and on-site client visits were limited, or your business hours were altered.

What can your business claim?

Looking back, your business can retroactively claim up to 50 percent of the wages paid to full-time employees in 2020 and 70 percent in 2021.

As a tax credit, it is deducted from taxes owed and is refundable.

How to claim the Employee Retention Credit

Qualified business owners should file an amended payroll tax return to claim the credit. The filing must be completed within three years of the initial filing date. To clarify, you can claim 2020 expenses until April 15, 2024. The deadline to claim 2021 expenses is April 15, 2025.

The tax credit needs to be filed using Form 941-X. It can be submitted the month after each fiscal quarter. Or, it can be added as an amendment for under or over reporting estimates on your federal returns.

Summary

Another good way to find out how to file the Employee Retention Credit with 2022 returns is by working with a trusted tax professional like Todd Greene. Eliminate the guesswork and confusion by working closely with professionals who can help guide you through the process. Contact us to schedule a free consultation. In the meantime, continue reading our blogs for more industry news and tax prep tips!

27 01, 2023

5 Tax Season Preparation Tips

2023-01-23T22:15:02-06:00January 27, 2023|0 Comments

It’s that time of year again—tax time. Whether you’re doing it yourself or hiring a tax planning professional, like Todd Greene, tax prep can help make the process smoother. Here are five tax season preparation tips to help you get through this season with ease.

2023 tax season filing dates

First, it is important to know all the key filing season dates. Here are the 2023 dates to keep in mind this tax season.

  • January 13: IRS Free File opens.
  • January 17: Due date for tax year 2022 fourth quarter estimated tax payment.
  • January 23: IRS begins the 2023 tax season and starts accepting and processing 2022 tax returns.
  • January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people-including the option to use prior-year income to qualify.
  • April 18: National due date to file a 2022 tax return, request an extension and pay tax owed.
  • October 16: Due date to file for those who requested an extension on their 2022 tax returns.

Organize your tax paperwork

Currently, we are at the beginning of tax season. Businesses quickly began receiving and distributing essential tax documents during this time.

Making sure you have all your paperwork gathered and organized before filing will help you avoid surprises or delays later. A tax planning professional can help you categorize your documents and make sure everything is in place.

Understand the deductions and credits you qualify for

Tax deductions and credits are a vital part of the filing process. Deductions can reduce the amount of your income before you calculate the tax you owe, while credits can reduce the amount of tax you owe or increase your tax refund.

Get a better understanding of tax deductions versus tax credits by reading our blog about it.

For businesses, there are several business tax credits and deductions available. Be sure to check or ask your tax preparer before filing, and check out our blog, 4 Often-Missed Business Deductions at Tax Time.

Itemize business expenses

Another one of our tax season preparation tips includes itemizing your business expenses. Having your expenses itemized and categorized before tax day can save you time.

When working with an accounting team, they can help you claim the maximum benefit from your expenses. Check out the business expenses explainer from the IRS to learn more about what expenses can be claimed.

Know your state’s tax issues

Knowing your state’s tax issues is a key part of filing taxes for your business. Some states take out loans from the federal government to meet their unemployment benefit liabilities. If your state has taken out loans but not repaid them, there will be a reduction in the credit against the Federal Unemployment Tax Act rate.

This means that employers in those states have to pay more. There are a number of states affected by this, including North Carolina.

Having a tax planning professional helps during this time. They will prepare your state return as well as your federal return.

Summary 

Searching for a professional to help with your business tax prep? Contact Todd Greene! Please take note of our tax season preparation tips. These helpful reminders are sure to help make filing day a breeze.

Finally, continue reading our blogs to stay informed and up-to-date on more financial news.

28 12, 2022

7 End of Year Tax Planning Tips for Small Businesses

2022-12-28T15:17:20-06:00December 28, 2022|0 Comments

Put down the gifts. Let’s get ready to wrap up another year in business. These seven end-of-year tax planning tips for small businesses will help you finish strong and set you up for future success!

Get organized now.

Don’t wait until the last minute to organize your records. One way or another, planning ahead and getting prepared before filing time will pay off.

Make time in your schedule throughout the next few days this December to ensure your year-end tax planning is handled.

Review your statements.

Part of your year-end review should include looking over your financial statements.

Not sure what statements we’re referring to? Don’t panic! Read our blog, 3 Financial Reports Every Business Owner Should Know and Understand, to get started.

Make necessary purchases.

The end of the year is a good time to make certain tax-deductible purchases. Consider stocking up on necessary office supplies, equipment, or a company vehicle, for instance.

Know your tax deductions and tax credits.

Do you understand the difference between a tax deduction and a tax credit? Find out here and determine how they apply to your business.

Be sure to check out our blog, 4 Often-Missed Business Deductions at Tax Time, for more helpful tax deduction tips.

Re-evaluate your retirement plan.

This is one of the end-of-year tax planning tips for small businesses that may come as a surprise. However, it’s a good time to consider your options for establishing a retirement plan if your company currently does offer one.

Or, look over your retirement plan and make sure you are headed in the right direction.

Evaluate your accounting processes.

Again, the end of the year is the perfect time to review. This time, we’re referring to your accounting practices.

How you are managing your records? Do you manually enter information on a spreadsheet? Are you using accounting software, working with an accountant, or both?

No matter what your recordkeeping methods are, closely examining them to see if they are working in your best interest is a good idea. Then you can make any needed adjustments for next year.

Work with a tax professional.

There are several benefits to working with a tax professional. Higher tax refunds, lower liabilities, more profitability, more time, and peace of mind are just a few examples.

Not sure where to begin? Talking to an expert (like us!) is a good place to start your tax planning journey!

Summary

Last but not least, when it comes to end-of-year tax planning tips for small businesses, stay proactive. Keep your records organized. Book your free consultation with us. Those are just a few ways to start 2023 off with a bang! For more tax tips, keep reading our blogs. Wishing you all a happy, healthy, and prosperous new year!

28 09, 2022

The Qualified Business Income Deduction: Is Your Business Eligible?

2022-09-28T19:41:48-05:00September 28, 2022|0 Comments

You might remember the 2017 tax reform called the Tax Cuts and Jobs Act. Part of that legislation includes the qualified business income deduction, which applies to certain businesses and self-employed people.

What is the qualified business income deduction?

In a nutshell, it allows eligible businesses to deduct up to 20 percent of their total taxable income.

In general, qualified businesses include those with pass-through income. Pass-through income refers to business income that is reported on an individual’s personal tax return.

This includes partnerships, S corporations, sole proprietorships and limited liability companies, for example. It does not include C corporations or money earned as an employee.

How is it calculated?

Typically, the qualified business income deduction is the smaller amount between one of two options.

First, it’s 20 percent of your qualified business income plus 20 percent of other income such as real estate investment dividends or publicly traded partnership income.

Or, it’s 20 percent of your total taxable income minus net capital gains.

Of course, figuring out if your business qualifies isn’t always so cut and dry. There are certain limitations that could affect if, or how much, you can claim.

What are the limitations?

For starters, there is the income threshold. To qualify for the full 20 percent deduction for 2022, for instance, your taxable income must be under $170,050 for a single filer. That figure jumps to $340,100 for joint filers.

However, once you pass the limit, the qualified business income deduction begins to decrease or possibly disappear altogether. At this point, things also get more complicated due to other factors.

So, it might be a good idea to work with a tax professional if your qualified business income is higher than the initial limit.

Summary

If you want to find out if your business is eligible for the qualified business income deduction, request your free consultation with us today. We can talk about topics like this and much more. Meanwhile, find additional business accounting tips and other news by reading our blogs.

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