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UNIKO Media Group

Take Advantage of These Deductible Business Expenses

As you may know, there are many business expenses that can be deducted from your taxes, whether you are self-employed, or you are owner of your own company. However, there are so many different types of expenses that businesses of any size make as part of their daily operations, that missing some deductions can happen at any time. Therefore, we are bringing an extensive list with plenty of deductible business expenses so that you can take advantage of them and use them to make your business grow and become more successful and profitable.  

Keep in mind that you will come across two different types of business expenses: ordinary and necessary expenses. Ordinary expenses refer to all the expenses that other companies working on your field will make on a regular basis. Necessary expenses are all the payments that are needed in order to keep your operations going. This is a list of the most common fully deductible business expenses, including both ordinary and necessary expenses: 

  • Accounting fees       
  • Advertising      
  • Bank charges        
  • Commissions         
  • Consultation fees     
  • Professional education         
  • Credit and collections       
  • Delivery charges      
  • Employee benefits
  • Equipment rental        
  • Insurance       
  • Interests        
  • Internet services         
  • Legal fees
  • Licenses        
  • Maintenance        
  • Office supplies      
  • Training fees      
  • Rent        
  • Salaries
  • Security          
  • Software        
  • Travel         
  • Utilities

 Car and transportation expenses are also deductible. They consist in the costs of gas and fees, for example, when we you are going to a business appointment or when you are meeting a client. The best way to make sure you are keeping track of our daily expenses is by having a log, whether on paper or using a smartphone app. This way, you will be able to have an accurate record that will come quite handy when it is time to file our taxes. 

Other deductible expenses that you may not be aware of include gifts to customers or clients. Sometimes, a small gift to show appreciation can go a long way, helping us secure a long-lasting relationship with our clients or business partners. However, you must keep in mind that gift expenses are only deductible for up to $25 per person. So, if you are buying $100 gifts, the remaining $75 will be out of your pocket, but if you buy $20 gifts, these would be fully deductible. Gifts to your employees also fall under this category with the same $25 limit still applying. 

Meals and entertainment are other business expenses that can be deducted. These costs are usually deductible up to 50% of what you spend, as long as the meal or entertainment cost was business-related. So, taking a client or our employees to dinner and paying for their meals qualifies for a business expense deduction, and you can even add the tip. 

In order to deduct your business expenses, you must complete and file either Schedule C or Schedule C-EZ so that you can itemize your expenses and calculate how much income will be left after you have taken care of the deductions. If you want to get more information on business expenses and how to deduct them, contact us and we will be glad to provide all the assistance you need. 

 

Tax Identity Theft and Refund Fraud – What You Need to Do

Every year, tax fraudsters attempt to trick unsuspecting taxpayers into sharing their personal information in order to steal it. During the last couple of years, tax identity theft and refund fraud have become a very serious problem, affecting a large number of taxpayers and the IRS alike. Therefore, we must make sure that we do not share our personal information with anyone except our trusted tax advisor. The IRS also recommends filing our returns as soon as possible to avoid this kind of situation. Here is what you need to do if you are a victim of tax identity theft and refund fraud.

Confirm You Are a Victim of Tax Identity Theft

One of the very first steps to take if we think we might have been a victim of tax identity theft is to confirm our suspicion. In order to do this, we need to get in touch with the IRS to research our account. This will help us find out if someone has filed a fraudulent return using our Tax ID. If we confirm that a fraudulent return was filed, we need to then file a paper return for the year. We also need to research previous years’ returns to see if this has happened before or if this has just happened this year.

Document the Identity Theft

Once we have confirmed we were victims of tax identity theft, we need to document and prove the fraud to the IRS. This is done by completing Form 14039 Identity Theft Affidavit, attaching all the documents that are necessary, and sending it to the IRS. This way, they will give us an IP PIN, or identity protection personal identification number, or place a marker on our IRS account.

We should also notify other government agencies, financial institutions, and credit bureaus regarding the identity theft issue. This will help us be more protected in case they used our information to commit other fraudulent transactions.

Address Every Possible Compliance Issue

When we are victims of identity theft, we might have to take care of several compliance issues. For example, we might have an outstanding tax balance, for which we can ask for a collection hold. We can also be subject to an underreporting notice or an IRS audit. If this is the case, we should get in touch with the IRS and ask them to suspend the notice until we have our identity theft issue taken care of.

Remember to Monitor Your IRS Account

Lastly, if we have been victims of tax identity theft and refund fraud, whether it happened recently or in previous years, we need to constantly monitor our IRS account. First of all, we need to confirm with the IRS that they placed an identity theft marker on our account. Also, we need to remember to use the IP PIN the IRS gave us in order to file our tax returns in a timely manner. Periodically requesting our account transcripts and wage income transcripts will also help us monitor our account and identify any other fraud issues we might have missed.

Tax Preparation Checklist to Get You Ready for This Year’s Returns

We still have several months before our taxes are due on April 15th. Therefore, we still have plenty of time to start working on our income tax returns. Following this tax preparation checklist will help you get ready for this year’s return, ensuring you don’t miss any document or information. This includes having all your personal information ready, having all income records in order, and also having all expense records together. This will ensure your income tax returns get processed in a timely manner.

Personal Information

As surprising as it may sound, there are many taxpayers who do not know their Social Security Number, and that might not even know they need it to file a tax return. For others, this number is so common, it is easy to forget about adding it. Also, it is important to have the SSN of your spouse and any children or dependents, too. This will ensure your returns have all the personal information needed.

Income Records

Another piece of essential information we simply cannot forget as part of this tax preparation checklist is our income information. We need to let the IRS know how much we earned during 2019, including income from our main employer, a temporary job, a side job, or any investments we might have made.

There are two forms we must include in our income tax returns, the W-2, and the 1099. Form W-2 is the one that your employer will give you. 1099 Form is for anyone who might have worked on a freelance basis, making $600 or more. In addition, we will need a record of any other income we might have received during the year coming from:

  • Social Security Income if applicable,
  • Investment Property Income
  • Alimony Payments
  • Debt Cancellations
  • Jury Duty Income
  • Gaming Winnings
  • Virtual Currency Payments

Expense Records

Lastly, we also need to provide the IRS with complete and accurate expense records, since there are many deductions and credits we might qualify for. In order to claim such deductions or credits, we need to show the IRS proof of such expenses. Some of the most common deductions include mortgage interests, property taxes, charitable contributions, and medical expenses. These are some other deductions you might be eligible for:

  • Student Loan Interests
  • Higher Education Expenses
  • Child Care Costs
  • Educator Expenses
  • IRA Contributions
  • HSA Contributions
  • Business Expenses such as equipment, supplies, travel, and home office.

 

In order to make sure you file your income tax returns properly, accurately, and in a timely manner, work with the best tax advisor. Besides, following this tax preparation checklist, you will be able to claim every eligible deduction and receive a tax refund in no time.

Essential Payroll Tips Every Business Owner Should Know

Being able to properly manage our company’s payroll is an important skill that might take time and effort to master. After all, the last thing we want to do is make a mistake that affects our employees and their salaries. The consequences, even when manageable, could have a negative effect on our staff’s morale and motivation. Thus, we have gathered four essential payroll tips every business owner should know to successfully manage their remuneration records.

To begin with, we should always classify our employees properly, whether they are proper employees or contractors. Also, automating our payroll recording system will help us avoid making mistakes or entering the wrong information. Besides, accurately keeping track of our employees’ attendance and punctuality can be an effective way to avoid time theft. Lastly, staying updated in regards to payroll laws and regulations is one of the essential payroll tips we will cover.

Classify Your Employees Properly

One of the most important aspects when it comes to successful payroll management is workers’ classification. So, classifying them as employees or independent contractors is imperative, and we can’t just arbitrarily do this. This is because the wage and tax laws will be different, depending on the worker’s category.

For employees, we are required to collect and pay taxes, follow state and local minimum wage laws, and pay overtime wages if such is the case. Nonetheless, these do not apply for independent contractors, as they take care of their own taxes and negotiate their rates.

Payroll Automation Is Key

Depending on the size of our company, investing in payroll processing software might sound like an appropriate decision. If we have reached a point where the number of employees is enough to create processing complications, we shouldn’t ignore automating the process.

There are many advantages that come from investing in payroll software. Firstly, it will help us avoid human errors like typing in the wrong number, recording in the wrong spot, and even forgetting about someone. Besides, these programs can help us calculate and even pay payroll taxes.

Keep Track of Attendance and Punctuality

Keeping track of our employees’ attendance and punctuality is another one of the essential payroll tips we should always follow. This is particularly true for employees who work under an hourly wage and that can earn overtime wages by the hour. By doing so, we make sure we are not paying them less for the time they worked. Besides, it can help with bonuses, if we offer such benefits, of course.

Just like with payroll automation, using time tracking software is a great alternative that tends to be cost effective. Online software, for example, offers affordability and accessibility, which is quite beneficial if we work with remote employees.

Stay on Top of Payroll Updates

Last but not least, we need to make sure we are staying on top of any update regarding payroll laws and regulations. Local and state governments are constantly revising, modifying, and updating these laws, at least once a year. We want to make sure our company remains compliant with such laws, as violations could have severe consequences.

If we are payroll software users, the provider should update the programs whenever payroll tax laws change. However, the best way to stay on top of our payroll recording, regulations, and practices is by hiring a professional consultant. This will save us a lot of time and money, and help us remain compliant and informed.

 

These Are the 4 Tax Mistakes to Avoid in 2020

We are less than two weeks apart from the start of this tax season, and we must start preparing to file our income tax return accurately and in a timely manner. However, it is common for people to feel overwhelmed by this process. If we feel stressed when we think about our taxes, these are 4 tax mistakes we should avoid in 2020. These mistakes include not adjusting our tax withholding and not keeping an accurate record of business expenses. Not including taxes for side and temporary jobs as well as not hiring a professional tax preparer on time are also examples of mistakes to avoid this year.

Not Adjusting Your Tax Withholding Properly

As a result of the 2018 new tax law, we saw a large number of taxpayers receiving bigger paychecks during the year by lowering most individuals’ tax brackets. Another change is that the IRS issued new withholding tables that allowed employers to know how much tax to withhold from the earnings of their workers. However, one of the tax mistakes to avoid in 2020 is not adjusting our tax withholding properly. If we make this mistake, we should expect the unpleasant surprise of owing money to the IRS.

Not Keeping an Accurate Record of Business Expenses

Business expenses represent an important and quite useful tax deduction that many taxpayers can take advantage of. In order to qualify and obtain this deduction, it is important that we track all our business-related expenses. Therefore, one of the most important tax mistakes to avoid in 2020 is not keeping an accurate record of these expenses. If we deduct less than what we spent, we won’t be fully taking advantage of this. If we deduct more, we might be subject to an IRS audit.

Not Including Taxes for Side and Temporary Jobs

In today’s economy, getting side and temporary jobs can be a great way to get additional income. Nonetheless, if we opted for one of these two options, we must remember to include all our earnings as part of our income when we file our tax returns. Working as a freelancer and self-employed means we are responsible for giving the IRS their part from what we earn. Failing to do so can result in costly penalties and audits in the long run.

Not Hiring a Professional Tax Preparer on Time

Lastly, one of the biggest tax mistakes to avoid in 2020 is not hiring a professional tax preparer on time. We might think we have a clear understanding of tax law and feel familiar with the income return process. Yet, having the help of a professional tax preparer can come with many benefits. They can help us fill out every form properly, maximize our savings and returns, and reduce our tax bill.

6 Frustrating IRS Challenges Taxpayers Might Face this Year

Every year, millions of taxpayers get ready to file their income tax return, a process that is feared by many, but that we all need to take care of. Having to collect and document our expenses can be a daunting task, especially when we don’t have the proper guidance. However, there are other situations that can be frustrating to taxpayers, including the IRS challenges we are likely to face. From customer service and insufficient staffing, to aging technology, delayed refunds, dissatisfying software, inexperienced preparers, and language limitations, these are 6 frustrating IRS challenges taxpayers might have to face this year.

Customer Service and Insufficient Staffing

One of the main IRS challenges taxpayers are likely to face is the quality of customer service provided. Last year, the IRS received around 100 million telephone calls, and only 29% were answered. This may be due to the insufficient staffing situation this federal agency is going through. The IRS is one of the lowest-performing agencies when it comes to customer experience, and its shrinking budget isn’t helping.

Aging and Outdated Technology

Another challenge that the tax agency and taxpayers alike are facing is the issue with aging and outdated technology. As we mentioned above, the IRS budget has been shrinking, which makes technological updates and infrastructure improvements quite difficult. In order to improve the systems it has, this federal agency needs around $2.5 billion.

Financial Hardship Due to Delayed Refunds

Refund fraud is one of the most common IRS challenges the agency must deal with every year. In order to prevent this, they have designed several filters that usually work well. However, these filters can also end up delaying legitimately filed returns, which could cause financial hardship to some taxpayers.

Dissatisfaction with Free File Software

Free File is a free federal tax preparation software that taxpayers can access through the IRS.gov website. However, the vast majority of taxpayers who filed their returns electronically prefer suing other software products. Only 2% of e-filing taxpayers actually use Free File software. The other 98% chose other options mainly due to dissatisfaction with the platform.

Inexperienced Preparers Entering the Business

It is always a good idea to hire a tax preparer that can help us file our income tax report. However, we should always make sure we hire well-trained and experienced professionals to do the job. One of the most concerning IRS challenges is the fact that it is now easier for untrained prepares to enter the business. This jeopardizes the information and the finances of taxpayers altogether.

Serious Lack of Multilingual Notices

As a federal agency, the IRS is required to implement a system that allows people with limited English proficiency to have access to the services it provides. However, one of the biggest IRS challenges is the lack of multilingual notices taxpayers the agency offers. The agency only translates some important notices into Spanish, but with more than 300 languages spoken in the US, more options are in order.

Five Expenses Not to Deduct from Your Taxes

When it comes to tax deductions, the IRS has strict rules and regulations regarding the type of expenses we can deduct and those that we cannot. With tax season being only a couple of weeks away, we might want to make sure we are not requesting a deduction we do not qualify for. Therefore, we have gathered five common expenses not to deduct from our income tax returns. These expenses include those for over-the-counter medicine, commuting and transportation, family pets, volunteer work, and plastic surgeries. Just remember that there may be some exceptions that could make these expenses eligible to be deducted from your tax bill.

Over-the-Counter Medicine Expenses

We know that deducting medical expenses is an important part of our tax return, however, we need to be careful when taking this deduction. Medicine for headaches and cold remedies we buy at pharmacies are not tax-deductible when they qualify as an over-the-counter medicine. The only medicine the IRS considers deductible is medicine prescribed by a doctor. Also, kits for pregnancy tests and blood sugar levels, breast-feeding pumps, and bottles can be deducted.

Commuting and Transportation Expenses

Despite popular belief, commuting and transportation costs of getting to and from work are not tax-deductible. Whether we take the bus, train, taxi, or drive our own car, these are an example of personal expenses not to deduct from your taxes. The only case on which you could get these costs deducted is if you have to work at two places on the same day. This applies regardless of working for the same employer or not. Also, we can deduct commuting expenses when we move to and from a temporary job, which shouldn’t last for more than one year.

Family Pet Expenses

Having a family pet can become quite expensive, especially when they get sick and we need to get them specialized care. These are expenses you shouldn’t deduct from your taxes since they still qualify as personal expenses. However, we can deduct the expenses of buying, training, and maintaining a service animal, like a guide dog. These expenses include food, grooming, and veterinary care that enable the service animal to perform properly.

Volunteer Work Monetary Value

If we do volunteer work for a non-profit organization, we might think that we would be able to claim the monetary value of the hours we spend with them. Yet, these expenses aren’t deductible, and we shouldn’t add them to our list of deductions for our tax returns. Nonetheless, we can deduct the miles we drive while doing charity work, as long as we use the rate of 14 cents per mile. Therefore, we need to make sure we keep an accurate record of the miles we drive for charity work.

Cosmetic/Plastic Surgery Expenses

Lastly, cosmetic and plastic surgery costs are also expenses you shouldn’t deduct from your taxes. This includes liposuctions, face-lifts, electrolysis, and other cosmetic procedures we might get to enhance our appearance. We can only deduct this type of expense when our doctor says we need plastic surgery if it’s necessary to improve a deformity from a congenital abnormality, an injury from an accident, trauma, or a disfiguring disease.

 

5 Tips for Tax Season 2020 You Should Consider Following

The year is almost over, and we should start preparing to file our income tax return if we haven’t already. This can be a very daunting task for many of us, especially when we are still not very familiar with the process. Thus, we have decided to share with you five tips for tax season 2020 that you should consider following. This way, you will make sure you are making the most out of the process, taking advantage of different benefits and deductions.

Make Contributions to Your Retirement Account

One of the best ways to take advantage of tax benefits is by making contributions to our retirement accounts. So, if we haven’t started a retirement account, we should consider opening one before April 15, 2020. These contributions come with many tax advantages, as deductible contributions can help us lower our tax bill. Besides, all the contributions we make will compound tax-deferred, which is an opportunity hard to pass on. Just remember that for 2019, the maximum IRA contribution is of $6,000, or $7,000 if you are 50 or older by the end of the year.

Consider Making an Estimated Tax Payment

One common scenario we might be facing is not having paid enough to the IRS during the year, which means we may have a large tax bill waiting. There are several reasons why this could happen, such as withholding on our paycheck not have been enough or having received a large gain from selling stock. In order to avoid owing any underpayment penalty, we must cover 100% of last year’s tax bill or 90% of this year’s. When you calculate your estimated tax payment, try not to pay too much, as the IRS might take long to issue the corresponding refund.

Take Advantage of Home Office Tax Deduction

Taking advantage of home office tax deductions is one of the most underrated but useful tips for tax season 2020. Whether we are self-employed, remote workers, or simply have the option of working from home, requesting this deduction is easier than we think. Writing off expenses linked to the portion of your house that is used exclusively for doing business can be quite simple. These expenses include rent, utilities, and insurance, for example. Before applying for this deduction, make sure you are eligible for it, as it tends to be considered as a red flag for an audit if we don’t legitimately qualify for it.

File Your Taxes Electronically

Many taxpayers prefer to send their income tax reports by mail out of tradition, but filing electronically might be more convenient. This is particularly true for the taxpayers who are expecting to receive a refund next year. When we file our taxes electronically, the IRS processes return faster than those sent by regular mail. Also, we are more likely to file an accurate return, since the IRS will check to make sure the documents are complete. Lastly, if you file your taxes electronically, you will get a confirmation where the IRS acknowledges they received your return, which doesn’t happen when we send paper returns.

Think About Getting Professional Help

If we want to make sure we follow these and other useful tips for tax season 2020, we should consider getting professional help. Hiring a tax advisor can help us file our returns accurately and in a timely manner. Besides, they can inform us of other deductions we might be eligible to request, and ensure we apply for them correctly. When looking for a tax advisor, make sure you do a bit of research before hiring someone. Asking for qualifications, credentials, and expertise is important to avoid hiring the wrong advisor.

 

This Is When You Can Expect your 2020 Tax Refund

t is the holiday season, and many already have started preparing for the coming tax season. One of the most common questions taxpayers have is when exactly will they receive their 2020 tax refund. First, we need to remember that there are several aspects that will have an effect on when we receive our refund.

Also, it is important to keep in mind that the tax reform law that took effect in 2018 can also have an impact on this date.  Lastly, if we are applying for the Earned Income Tax Credit (EITC) or the Child Tax Credit (CTC), we might see a slight delay on our 2020 tax refund.

As we mentioned above, there are several factors that can come into play when determining the date on which we will receive our tax refund. To begin with, the date on which we file our taxes will play an important role. Also, whether or not we are claiming certain credits can make the process last a bit longer.

Another reason that will determine our refund date is whether we file our tax electronically or by mail. Lastly, if we have existing debts to the federal government can also affect the date on which we receive our refund.

This is because the IRS will take more time to finish the process, depending on how many of the scenarios above apply to us. If we filed credits, they will make sure we are eligible to receive them. Sending our tax return by mail may sound like a safer idea, but the IRS will take longer to receive it and process it. And if we have existing debts, the IRS will try to determine the best way for us to settle such debt.

Another aspect we should keep in mind is that, during recent years, the start of the tax season has been delayed from January to early February. This is in part a result of significant changes and updates in different tax laws and regulations.

In addition, the IRS also delays the processing of our income tax returns when we file for the Earned Income Tax Credit or the Child Tax Credit. Both the EITC and CTC have often been misused and abused, so the IRS takes longer processing them in order to prove their validity.

Now, the most important factor that will help us know when we can expect our 2020 tax refund is the date on which we submit our tax returns. You can find a chart below with IRS Acceptance dates and expected refund dates. If the IRS accepts your tax return between the dates on the left, you can expect them to send a Direct Deposit or to send a check on the corresponding dates listed on the right.

1/20/20- 1/24/20                             Friday 1/31/20

1/27/20- 1/31/ 20                            Friday 2/7/20

2/3/20- 2/7/20                                  Friday 2/14/20

2/10/20- 2/14/20                              Friday 2/21/20

2/17/20- 2/21/20                              Friday 2/28/20

2/24/20- 2/28/20                              Friday 3/6/20

3/2/20- 3/6/20                                  Friday 3/20/20

3/9/20- 3/13/20                                Friday 3/27/20

3/16/20- 3/20/20                              Friday 4/3/20

3/23/20- 3/27/20                              Friday 4/10/20

3/29/20- 4/3/20                                Friday 4/17/20

4/6/20- 4/10/20                                Friday 4/24/20

4/13/20- 4/12/20                              Friday 5/1/20

4/20/20- 4/24/20                              Friday 5/8/20

4/27/20- 5/1/20                                Friday 5/15/20

5/4/20- 5/8/20                                  Friday 5/22/20

5/11/20- 5/15/20                              Friday 5/29/20

5/18/20- 5/22/20                              Friday 6/5/20

5/25/20- 5/29/20                              Friday 6/12/20

6/1/20- 6/5/20                                  Friday 6/19/20

 

This Tax Season, Watch Out for Gift Card Fraudsters

Every tax season, fraudsters and scammers work their way into taking advantage of unsuspecting taxpayers who are worried about staying compliant with the IRS. That’s why the Internal Revenue Service is always sharing safety tips and information that we can use to protect ourselves from scams.

Nonetheless, fraudsters keep finding ways to trick us into paying fake tax bills, so we need to make sure we remain alert to any suspicious phone call, letter, or email we might receive.

The most recent tax fraud consists of fraudsters and scammers contacting taxpayers and pretending to be IRS agents. Imposters call demanding gift cards as payment for fake tax bills, tricking taxpayers into buying gift cards from different stores and giving sharing the cards’ access numbers.

This type of tax scam has become so popular, that the IRS is taking measures to prevent more people from falling victims to this modus operandi.

The IRS is also warning taxpayers about a different version of the scam that gift card fraudsters are using. This consists of imposters calling taxpayers and telling them they are being victims of identity fraud theft.

In order to convince their victims, fraudsters tell them that the stolen identity is being used to open fake, suspicious bank accounts. As a result, victims feel a sense of urgency and worry about any potential damage to their data, which is why they end up buying gift cards that fraudsters eventually use.

One of the most effective ways to know if we are being targeted by a fraudster is because they will be demanding immediate payment and specify the method of such payment. Needless to say, the payment method of choice this season seems to be through stores’ gift cards.

Another way to identify potential scams is by getting information about how exactly IRS agents contact taxpayers. If the callers are threatening to send local police, immigration officers, or any other law-enforcement to our location, we are surely dealing with a fraudster. The IRS cannot have us arrested for having unpaid tax bills, neither can they claim they will revoke our driver’s license, business license, or our immigration status.

Even when this and other types of scams are more frequent during the end of the year and tax season, the IRS urges taxpayers to stay alert throughout the year. They also urge taxpayers who might think a fraudster has targeted them to report such calls by phone, to 800-366-4484, or by contacting the Treasury Inspector General for Tax Administration. You can also alert the Federal Trade Commission through their online complaint assistant, adding “IRS Telephone Scam” in the notes.