Accurate Finance & Tax Preparations

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06/14/2022

Here’s what businesses need to know about the enhanced business meal deduction

The IRS encourages businesses to begin planning now to take advantage of tax benefits available to them when they file their 2022 federal income tax return. This includes the enhanced business meal deduction.

For 2021 and 2022 only, businesses can generally deduct the full cost of business-related food and beverages purchased from a restaurant. Otherwise, the limit is usually 50% of the cost of the meal.

To qualify for the enhanced deduction:
The business owner or an employee of the business must be present when food or beverages are provided.
Meals must be from restaurants, which includes businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption.
Payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023.
The expense cannot be lavish or extravagant.
Grocery stores, convenience stores and other businesses that mostly sell pre-packaged goods not for immediate consumption, do not qualify as restaurants. ¬

Employers may not treat certain employer-operated eating facilities as restaurants, even if they operate under contract by a third party.

Here’s what business owners need to know about certain costs:
The cost of the meal can include taxes and tips.
The cost of transportation to and from the meal isn’t part of the cost of a business meal.
Entertainment events
Business owners may be able to deduct the costs of meals and beverages provided during an entertainment event if either of these apply:

the purchase of the food and beverages occurs separately from the entertainment
the cost of the food and beverages is separate from the cost of the entertainment on one or more bills, invoices, or receipts.

02/17/2022

Individuals who did not qualify for, or did not receive, the full amount of the third Economic Impact Payment may be eligible to claim the 2021 Recovery Rebate Credit based on their 2021 tax year information. Individuals may have received their third Economic Impact Payment through initial and “plus-up” payments in 2021.

Note: Third Economic Impact Payments are different than the monthly advance Child Tax Credit payments that the IRS disbursed from July through December 2021.

Most eligible people already received their Economic Impact Payments and won’t include any information about their payment when they file. However, people who are missing stimulus payments should review the information on the Recovery Rebate Credit page to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2021.

To claim any remaining credit for 2021, eligible people must file a 2021 tax return, even if they usually do not file taxes. Also, people who did not receive all of their first and second Economic Impact Payments in 2020 can receive those amounts only by filing a 2020 tax return (or amending a previously filed return) and claiming the 2020 Recovery Rebate Credit. They should review the Recovery Rebate Credit page to determine their eligibility.

The 2021 Recovery Rebate Credit can reduce any taxes owed or be included in the tax refund for the 2021 tax year. Filers must ensure to not mix information from their 2020 and 2021 tax years. In particular, filers should take care to NOT include any information regarding the first and second Economic Impact Payments received in 2020, or the 2020 Recovery Rebate Credit, on their 2021 return. They will need the total of the third payment received to accurately calculate the 2021 Recovery Rebate Credit when they file their 2021 federal tax return in 2022.

02/17/2022

IRS: 16.7 Million Returns Received
Friday, Feb 11 2022
The Internal Revenue Service received 16,685,000 returns through February 4, the IRS reported in its first weekly filing statistics for 2022. Because the season opened two weeks earlier than last year, there are no comparative figures for last year.


The IRS has processed 12,992,000 returns, 77.8 percent of the total. The industry will be watching processing rates given the millions of returns backlogged from 2021.

The early season figures are skewed heavily towards self-prepared returns received. With 15,990,000 e-files received, there were 10,747,000 self-prepared returns received, 67.2 percent of the total. Tax professionals submitted 5,243,000 e-files.

There were 4,330,000 refunds issued with the average refund coming in at $2,201.

02/17/2022

IRS Suspends Balance Due Notices
Wednesday, Feb 09 2022
The Internal Revenue Service has suspended the mailing of balance due and unfiled tax return notices. These were among more than a dozen letters the IRS added to its list of suspended notices.


The agency noted it entered the 2022 filing season with several million original and amended returns that have not been processed because of issues stemming from the COVID-19 pandemic. The IRS said it will assess the inventory of prior-year returns to determine when resuming the sending of notices is appropriate.

Some taxpayers and tax professionals may still receive notices over the next few weeks, but they do not need to respond to them. The IRS cannot stop all notices as many are legally required to be issued within a certain timeframe.

Also suspended in the sending of automated collection notices normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a tax return.

The suspended notices include,tCP80, Unfiled Tax Return; CP59 and CP 759 (Spanish), Unfiled Tax Return(s)-1st Notice; CP516 and CP616 (Spanish), Unfiled Tax Returns–2nd Notice; CP518 and CP618 (Spanish), Final Notice–Return Delinquency’ CP501, Balance Due–1st Notice; CP503, Balance Due–2nd Notice; CP504 Final Balance Due Notice–3rd Notice, Intent to Levy; 2802C, Withholding Compliance letter; CP259 and CP959 (Spanish), Return Delinquency; and CP518 and CP618 (Spanish), Final Notice­­—Return Delinquency.

02/09/2022

IRS reminds taxpayers their Social Security benefits may be taxable

A new tax season has arrived. The IRS reminds taxpayers receiving Social Security benefits that they may have to pay federal income tax on a portion of those benefits.

Social Security benefits include monthly retirement, survivor and disability benefits. They don't include supplemental security income payments, which aren't taxable.

The portion of benefits that are taxable depends on the taxpayer's income and filing status.

To determine if their benefits are taxable, taxpayers should take half of the Social Security money they collected during the year and add it to their other income. Other income includes pensions, wages, interest, dividends and capital gains.

If they are single and that total comes to more than $25,000, then part of their Social Security benefits may be taxable.
If they are married filing jointly, they should take half of their Social Security, plus half of their spouse's Social Security, and add that to all their combined income. If that total is more than $32,000, then part of their Social Security may be taxable.
Fifty percent of a taxpayer's benefits may be taxable if they are:

Filing single, head of household or qualifying widow or widower with $25,000 to $34,000 income.
Married filing separately and lived apart from their spouse for all of 2020 with $25,000 to $34,000 income.
Married filing jointly with $32,000 to $44,000 income.
Up to 85% of a taxpayer's benefits may be taxable if they are:

Filing single, head of household or qualifying widow or widower with more than $34,000 income.
Married filing jointly with more than $44,000 income.
Married filing separately and lived apart from their spouse for all of 2021 with more than $34,000 income.
Married filing separately and lived with their spouse at any time during 2021.

12/07/2021

Economic Impact Payments and claiming the Recovery Rebate Credit
Individuals who didn't qualify for the third Economic Impact Payment or did not receive the full amount may be eligible for the Recovery Rebate Credit based on their 2021 tax information. They’ll need to file a 2021 tax return, even if they don't usually file, to claim the credit.

Individuals will also need the amount of their third Economic Impact Payment and any Plus-Up Payments received to calculate their correct 2021 Recovery Rebate Credit amount when they file their tax return. Ensuring they use the correct payment amounts will help them avoid a processing delay that may slow their refund.

In early 2022, the IRS will send Letter 6475 that contains the total amount of the third Economic Impact Payment and any Plus-Up Payments received. People should keep this and any other IRS letters about their stimulus payments with other tax records. Individuals can also log in to their IRS.gov Online Account to securely access their Economic Impact Payment amounts.

12/07/2021

Families who received advance payments will need to compare the advance Child Tax Credit payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their 2021 tax return.

Taxpayers who received less than the amount for which they're eligible will claim a credit for the remaining amount of Child Tax Credit on their 2021 tax return. Taxpayers who received more than the amount for which they're eligible may need to repay some or all of the excess payment when they file.

In January 2022, the IRS will send Letter 6419 with the total amount of advance Child Tax Credit payments taxpayers received in 2021. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.

11/09/2021

Here’s how businesses can deduct startup costs from their federal taxes

When starting a business, owners should treat all eligible costs incurred before beginning to operate the business as capital expenditures that are part of their basis in the business. Generally, the business can recover costs for assets through depreciation deductions.



For costs paid or incurred after September 8, 2008, the business can deduct a limited amount of start-up and organizational costs. They can recover the costs they cannot deduct currently over a 180-month period. This recovery period starts with the month the business begins to operate active trade or as a business.

Business start-up costs

Start-up costs are amounts the business paid or incurred for creating an active trade or business, or investigating the creation or acquisition of an active trade or business. Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit, and to produce income in anticipation of the activity becoming an active trade or business.

Qualifying costs

A start-up cost is recoverable if it meets both of the following requirements:

It’s a cost a business could deduct if they paid or incurred it to operate an existing active trade or business, in the same field as the one the business entered into.
It’s a cost a business pays or incurs before the day their active trade or business begins.
Start-up costs include amounts paid for the following:

An analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
Advertisements for the opening of the business.
Salaries and wages for employees who are being trained and their instructors.
Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
Salaries and fees for executives and consultants, or for similar professional services.
Nonqualifying costs
Start-up costs don't include deductible interest, taxes, or research and experimental costs.

Purchasing an active trade or business
Recoverable start-up costs for purchasing an active trade or business include only investigative costs incurred during a general search for or preliminary investigation of the business. These are costs that help in deciding whether to purchase a business. Costs incurred to purchase a specific business are capital expenses that can't be amortized.



More information:
Publication 535, Business Expenses
Deducting Business Expenses
Operating a Business
Small Business Federal Tax Responsibilities
A Guide to Starting a Small Business

05/24/2021

Those expecting a refund from their original return should not file an amended return before the original return has been processed.

Currently, it is taking the IRS longer to process mailed documents including paper tax returns and all tax return related correspondence. It is taking the agency more than 21 days to issue refunds for some 2020 tax returns that require review including incorrect recovery rebate credit amounts or returns that used 2019 income to figure the earned income tax credit and additional child tax credit.

02/22/2021

RS extends April 15 and other upcoming deadlines, provides other tax relief for victims of Texas winter storms

WASHINGTON – Victims of this month’s winter storms in Texas will have until June 15, 2021, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

Following The recent disaster declaration issued by the Federal Emergency Management Agency (FEMA), the IRS is providing this relief to the entire state of Texas. But taxpayers in other states impacted by these winter storms that receive similar FEMA disaster declarations will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Feb. 11. As a result, affected individuals and businesses will have until June 15, 2021, to file returns and pay any taxes that were originally due during this period. This includes 2020 individual and business returns normally due on April 15, as well as various 2020 business returns due on March 15. Among other things, this also means that affected taxpayers will have until June 15 to make 2020 IRA contributions.

The June 15 deadline also applies to quarterly estimated income tax payments due on April 15 and the quarterly payroll and excise tax returns normally due on April 30. It also applies to tax-exempt organizations, operating on a calendar-year basis, that have a 2020 return due on May 17.

In addition, penalties on payroll and excise tax deposits due on or after Feb. 11 and before Feb. 26 will be abated as long as the deposits are made by Feb. 26.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year. This means that taxpayers can, if they choose, claim these losses on the 2020 return they are filling out this tax season. Be sure to write the FEMA declaration number – 4586 − on any return claiming a loss. See Publication 547 for details.

02/09/2021

Irs goes live February 12th. Make sure you have all your documents before filing so your refund doesn't get held.

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