It’s February! Time to be Tax Smart!
Happy Lunar New Year!
As we anticipate spring, we celebrate the promise of new life, new beginnings, and maybe not so much, a new tax season. Which is why now is the time to be tax smart.
We encourage you to start now to do everything you can to make this tax season smooth, painless, and maybe even rewarding.
In this edition of the Moskowitz LLP Newsletter, you’ll see that there’s a lot you can do starting now to be ready for your filing. As always, feel free to reach out to us with any questions or comments.
Steve Moskowitz, Esq.
Please call if you would like to discuss how this information could impact your situation. If you know someone who could benefit from this newsletter, feel free to send it to them.
- February 14
– Valentine’s Day
- February 21
– President’s Day
- March 15
– S-Corp and Partnership Tax Returns due
- April 15
– Individual Tax Returns due
In This Issue
- Create Your Online Accounts for Faster, Better Services
– Internal Revenue Service
– California Franchise Tax Board (FTB)
- Tax Preparation: Be on the Lookout for These 4 Letters
- Business Tax News: March 15th Deadline Approaching
- Maximizing Employee Benefits Provides Tremendous Value
- Upcoming Webinar on New Market Tax Credits
- The Moskowitz ‘Practical Tax’ Podcast Returns!
- Steve’s Recent Appearances
Create your Online Accounts with IRS and, if applicable, California Franchise Tax Board (FTB)
Moskowitz LLP STRONGLY urges you to set up your online accounts with the IRS and your State tax agency.
By registering, you will be able to see real-time account activity, retrieve important tax documents & ID PINS, make payments, and importantly, allow us to work together more quickly as your tax representatives.
It is simple to do and if you run into any problems, we are here to help.
For Internal Revenue Service:
First, go to IRS.gov
- Select: ID.Me ‘Create New Account’
- Pass secure access authentication:
– Have your Driver’s License handy
– Have a Smart Phone handy (for confirmation codes and pictures)
– Create a Profile
- Let us know you created an account so we can utilize this new technology
For California Franchise Tax Board:
- Create: My FTB Account
Individuals/ Businesses: You will need your recent California Tax return information
- Wait for PIN
You should receive your PIN by U.S.
- Activate Account
Log in and enter your PIN within 21 days.
- Let us know!
2022 Tax Preparation
With tax season now officially underway, here are several tax documents that may be easy to miss in your mailbox or inbox:
1. Child Tax Credit Letter
From July through December 2021, the IRS paid out 50% of projected child tax credit payments to qualified households. The IRS is sending out a recap of these advance payments in Letter 6419 that you can use to correctly account for these payments on your tax return. This letter should have arrived in your mailbox by late January.
2. Stimulus Payment Letter
The IRS issued millions of economic impact payments in 2021. The IRS is mailing a summary of these payments you received in Letter 6475. As with the child tax credit letter, you can use this letter to accurately report your economic impact payments on your tax return. This letter also should have arrived in your mailbox by late January.
3. Identification PIN
The IRS may have assigned you an Identity Protection PIN (IP PIN) to help protect your identity. An IP PIN is a six-digit number that prevents someone else from filing a tax return using your Social Security number or Individual Taxpayer Identification Number. This IP PIN is known only to you and the IRS. If you are a confirmed victim of tax-related identity theft and the IRS has resolved your tax account issues, the IRS will mail you a CP01A Notice with your new IP PIN each year.
4. Corrected Tax Forms
If an error is discovered on a tax form you’ve already received, a corrected version will be created, then mailed to both you and the IRS. You can also request a corrected tax form if you believe you found an error. Here are some of the forms you might see with corrections:
- Form W-2 from your employer that shows corrected wages, salary and taxes withheld
- form 1099-INT or Form 1099-DIV from your investment broker that shows a revision in interest and dividend income
- Form 1099-NEC from a client to whom you provide services
- Form 1098 that shows how much mortgage or student loan interest you’ve paid
You may not be aware you were issued a corrected tax form until it shows up in your mailbox (or inbox). If you do receive a corrected form, don’t throw the old version away! Save both the original version and corrected version in case either are needed for future reference.
Often the ease of filing your tax return is dependent on having the correct information, so remember to look for everything, including these often overlooked forms.
Business Tax News
Deadline: March 15, 2022 deadline to file for an extension for S corp and partnership tax returns and make certain elections.
To-Do: Get your 2021 Books and Records in Order, Closeout Books, and get your 2021 financial statements finalize.
Important Notice: The Internal Revenue Service plans to hire up to 200 more attorneys to combat abusive tax schemes. The Office of Chief Counsel this week said they will help combat syndicated conservation easements, abusive micro-captive insurance arrangements, and other tax schemes.
Maximizing Employee Benefits Provides Tremendous Value
Great ideas to lower taxes and create happier employees
A tax deduction for your business, a financial benefit for your employees. What could be better than that? As you get prepared to file your 2021 tax return, here’s a reminder of the many employee benefits that are tax deductible.
- Retirement plans. Contributions you make to your employees’ retirement plans are usually tax deductible. If your business currently doesn’t offer a retirement plan, the Retirement Plans Startup Costs Tax Credit offers a credit of up to $5,000, for three years, to offset the costs of starting a SEP, SIMPLE, or other qualified retirement plan such as a 401(k).
- Cafeteria plans. Also known as a Section 125 plan, a cafeteria plan offers employees a choice between receiving compensation in cash or as part of an employee benefit. Employee payments for a cafeteria plan benefit are made pre-tax, resulting a lower taxable income for the employee. Your business also sees a tax cut, saving 7.65% in payroll taxes on each dollar that an employee’s taxable income decreases.
- Health care premiums for your employees. Premium contributions by a business for employees and the employee’s spouse and qualified dependents are 100% deductible as a business expense.
- Health reimbursement accounts. Reimbursements provided by employers for medical expenses and health care coverage of employees are treated similarly to employer-provided premium contributions as long as certain rules and documentation requirements are met.
- Tuition reimbursement. Businesses can deduct up to $5,250 per employee per year for money spent on tuition or education reimbursement.
- Publications and other resources. Professional and other continuing education publications purchased for employees are tax deductible by your business, as are uniforms and tools.
- Food and beverages. The entire cost of a meal purchased by employees as part of a per diem allowance can be deducted by businesses through the end of 2022.
What you need to do
- Stay organized. Lots of worthwhile employee benefits can mean lots of paperwork. Some benefit programs, such as retirement plans, have anti-discriminatory guidelines that must be followed. So stay organized and call for help if you have compliance-related questions.
- Stay in touch with employees. Let your employees know about all the benefits that your company offers. Consider reviewing the value of the benefits during salary actions or as part of developing W-2s. This makes the cost of your benefits more visible to your employees.
- Review annually. Annually revisit your existing benefits to make any necessary changes, including deciding whether to expand your current benefits offering. Always be on the lookout for new ideas for benefits that could either be implemented immediately or in the near future.
These are just some of the employee benefits that you can deduct on your business’s tax return. So remember to take advantage of them and develop a plan for next year.
Stay Tuned for Our Upcoming Webinar on New Market Tax Credits
Moskowitz LLP strives to bring you cutting edge tax solutions all year-round.
This February Moskowitz LLP will be releasing our webinar on New Market Tax Credits. Be sure to tune in and find out how you can save!
Moskowitz LLP offers extensive experience in all aspects of the new market tax credit (NMTC), with extensive technical knowledge and experience. Moskowitz LLP can help guide you through tax structuring and business issues, while focusing on your business objectives.
To watch and listen to our previous webinars, and to find more helpful tax content, please visit our Tax Resources Library.
The ‘Practical Tax’ Podcast Returns!
We are excited to report that we have re-launched our podcast!
Beginning February 2022 you can expect a weekly episode of ‘Practical Tax’ hosted by Steve Moskowitz for more practical tax tips and issues near and dear to his heart. Feel free to email us with any suggested topics you’d like to learn more about.
In The News:
Steve was recently quoted in NBC news on: Declaring illegal income on your tax returns.