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Still Waiting for the IRS to Cash Your Check?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 22, 2020 by Lake Wylie Tax Services StaffSeptember 22, 2020

Still waiting for IRS to cash your checkDuring the COVID-19 pandemic, the IRS has furloughed many of its employees or had them work from home to mitigate the spread of the virus. Many IRS offices remained shuttered for months, and a backlog of millions of pieces of unopened mail accumulated in trailers set up outside IRS facilities.

This includes unopened mail with payment checks, which creates a problem for many e-filed returns with tax due because the IRS computer shows a tax return filed but no payment made. Because the IRS utilizes a significant amount of automation, its computers began automatically spitting out tax-due notices, including to those who had mailed in payments. While most IRS facilities have reopened and IRS employees have returned to work, it will take them weeks, if not months, to get all of the backlogged mail opened and processed.

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Posted in Tax Central | Tagged Covid-19, taxes

Is the Temporary Deferral of Employee Payroll Tax Worth It?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on September 1, 2020 by Lake Wylie Tax Services StaffSeptember 1, 2020

Deferral of Employee Payroll TaxPresident Trump issued a Presidential Memorandum on August 8, 2020, that directs the Treasury Secretary to use his authority to defer the withholding, deposit and payment of employees’ portions of Social Security taxes from September 1 through December 31, 2020. The goal is to put more money in the pockets of workers during the COVID-19 pandemic emergency. The deferral applies to the 6.2% tax on wages or compensation paid for a bi-weekly pay period of less than $4,000 or the equivalent threshold amount for other pay periods. In other words, employees with annual wages up to $104,000 are generally eligible for the deferral.

Just a few days before the start of the deferral period, the IRS has issued guidance explaining that the due date for withholding and paying Social Security taxes has been postponed; they are now due between January 1, 2021 and April 30, 2021. This means that Social Security taxes not withheld in the last 4 months of 2020 are to be ratably withheld from employees’ wages during the first 4 months of 2021, along with the required withholding on the 2021 wages.

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Posted in For Business | Tagged Covid-19, Employee, taxes

The July 15th Deadline Is Fast Approaching, and It Isn’t Just for the 2019 Individual Tax Return

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on June 23, 2020 by Lake Wylie Tax Services StaffJune 23, 2020

July 15 Tax Due Date ReminderDue to the COVID-19 emergency, the IRS provided taxpayers with an automatic three-month extension to July 15 to file their 2019 tax returns and pay the 2019 tax, among other tax actions normally due on April 15. So, with July 15th fast approaching, it is important to understand that the day is more than just the deadline for filing your 2019 tax return. It is also the deadline for other things tax. Here is a rundown.

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Posted in Tax Central | Tagged taxes

Here’s What Could Happen If You Try to Short-Change the IRS

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on June 9, 2020 by Lake Wylie Tax Services StaffJune 9, 2020

Creative Accounting doesn't always workSome refer to it as “creative accounting” or just “a little fudging here and there,” but if your tax return is missing some income that should have been reported or includes overstated deductions, regardless of whether you prepared your own return or had it prepared, you are the one who is ultimately responsible. If you get caught, there can be very unpleasant consequences – including substantial monetary penalties and the possibility of jail time for blatant cases.

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Posted in Tax Central | Tagged Tax Problems, taxes

Do I Have to File a Tax Return?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on January 16, 2020 by Lake Wylie Tax Services StaffJanuary 23, 2020

This is a question many taxpayers ask during this time of year, and the question is far more complicated than people believe. To fully understand, we need to consider that there are times when individuals are REQUIRED to file a tax return, and then there are times when it is to the individuals’ BENEFIT to file a return even if they are not required to file.

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Posted in Tax Central | Tagged 2019 Tax Returns, Tax Planning, taxes

Congress Passes Last-Minute Tax Changes

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on January 2, 2020 by Lake Wylie Tax Services StaffJanuary 23, 2020

Tax-Law-Changes-You-Need-to-Know-AboutCongress, at almost the last minute, has passed a large number of tax changes, including retirement plan issues that will become effective in 2020, as well as extensions through 2020 of a number of tax provisions that had expired or were about to end. The list of changes is quite large, so we have only included those that are most likely to affect individual tax returns. Here is a run-down on some of the new tax provisions.

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Posted in Tax Central, Tax Deductions | Tagged 2019 Tax Returns, Tax Planning, taxes

Tax Changes For 2019

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on November 1, 2019 by Lake Wylie Tax Services StaffJanuary 23, 2020

2019-Tax-Changes that impact tax returns for 2019As the end of the year approaches, now is a good time to review the various changes that impact 2019 tax returns. Some of the changes are likely to apply to your tax situation. In addition, be aware that various tax-related bills currently in Congress may or may not pass this year. If any of them do pass, we will quickly get the details to you.

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Posted in Tax Central | Tagged 2019 Tax Changes, taxes

Are You Subject to Self-Employment Tax?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on October 3, 2019 by Lake Wylie Tax Services StaffJanuary 23, 2020

self employment taxSelf-employed individuals, unlike employees, don’t have someone withholding Social Security or Medicare (FICA) taxes along with pre-payments toward their federal (and state, where applicable) income tax from their wages during the year.

They are not being paid a wage; instead, a self-employed individual must keep a set of books showing income and expenses associated with their self-employed business that will allow them to determine their taxable profits (or losses). While an employer and an employee each pay half of the FICA taxes due on an employee’s wages, a self-employed person pays 100% of these taxes, termed the self-employment tax or SE tax for short, on his or her self-employment profit. If the individual has more than one self-employment activity, the net profits and losses from all of the self-employment activities are combined to determine the amount of the SE tax. However, two spouses have self-employment income, the couple cannot combine their SE incomes when figuring their individual SE tax.

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Posted in Employment, For Business | Tagged Employee, taxes

Hobby or Business? It Makes a Difference for Taxes – Now More than Ever

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on June 19, 2019 by Lake Wylie Tax Services StaffJanuary 23, 2020

Taxpayers are often confused by the differences in tax treatment between businesses that are entered into for profit and those that are not, commonly referred to as hobbies. Recent tax law changes have added to the confusion. The differences are:

Businesses Entered Into for Profit – For businesses entered into for profit, the profits are taxable, and losses are generally deductible against other income. The income and expenses are commonly reported on a Schedule C, and the profit or loss—after subtracting expenses from the business income—is carried over to the taxpayer’s 1040 tax return. (An exception to deducting the business loss may apply if the activity is considered a “passive” activity, but most Schedule C proprietors actively participate in their business, so the details of the passive loss rules aren’t included in this article.)

Hobbies – Hobbies, on the other hand, are not entered into for profit, and the government currently does not permit a taxpayer to deduct their hobby expenses but does require the income from the activity to be declared. (Prior to the changes included in the Tax Cuts and Jobs Act of 2017, hobbyists were allowed to deduct expenses up to the amount of their hobby income as a miscellaneous itemized deduction on Schedule A. Being able to take this deduction is suspended for years 2018 through 2025.) Thus, hobby income is reported on Schedule 1 of their 1040 and no expenses are deductible.

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Posted in Tax Central | Tagged Tax Reform, taxes

So, You’ve Made a Mistake on Your Tax Return. What Happens Now?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on April 23, 2019 by Lake Wylie Tax Services StaffJanuary 23, 2020

frustrated over tax returnGenerally speaking, tax return mistakes are a lot more common than you probably realize. Taxes are naturally complicated, and the paperwork required to file them properly is often convoluted. This is especially true if you’re filing your taxes yourself — and all of this is in reference to a fairly normal year as far as the IRS is concerned.

The 2018 tax year, however, certainly does not qualify as a “normal year.”

With the passage of the Tax Cuts and Jobs Act, even seasoned financial professionals are having a hard time digesting all of the changes that they and their clients are now dealing with. All of this is to say that if you’ve just discovered that you’ve made a BIG mistake on your tax return this year, the first thing you should do is stop and take a deep breath. It happens. It’s understandable. There ARE steps that you can take to correct the situation quickly — you just have to keep a few key things in mind.

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Posted in Tax Problems | Tagged Tax Problems, taxes

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