The outbreak of COVID-15 is forcing people to make changes all around the world, and taxes couldn’t be an exception. That’s why the Internal Revenue Service determined to extend the filing deadline and federal tax payments from April 15 to July 15, 2020.

This measure aims to offer relief to American taxpayers that may have been affected by the outbreak, and may be experiencing difficulties filing their taxes.

An Automatic Measure

You don’t have to contact the IRS send any new forms, or take any additional action to take advantage of this extension. The new date will be automatically applied to all taxpayers, including individuals, trusts, estates, corporations, and other non-corporate tax filers as well as those who pay self-employment tax.

The IRS encourages tax payers who are owned a refund to file as soon as possible, as refunds are issued within 21 days. IRS Commissioner Chuck Rettig advises that filing electronically and with direct deposit is the quickest way to get your refund.

As part of this relief package, taxpayers will also be able to defer federal income tax payments to July 15, 2020, without penalties or interests regardless of the amount owed. Remember that these measures apply to federal taxes, so it’s advisable to check with a tax expert to know more about deadlines and possible extensions for state taxes.

If you would like to request an extension to file your taxes after July 15, you should use Form 4868 with the assistance of a tax professional or using tax software. Companies looking for an extension should use Form 7004.

Get More Information

The situation and measures related to COVID-19 in the United Stated are fluid. The IRS has created a website with specific information about this topic. You can check it here to read the most recent updates and information about relief measures for taxpayers. If you wish to obtain more general information regarding COVID-19, check this official page from the United States government where you’ll find information, resources as well as the latest official news.

Our friendly experts at JT Tax Services are able to offer assistance so you can take advantage of the IRS tax relief measures related to the outbreak of COVID-19.

At JT Tax Services we are committed to providing solutions tailored to your unique needs. Contact us today by email, telephone (805-984-8890) or through our social media accounts on Facebook, Twitter and LinkedIn to get more information or to learn more about our services.

If you don’t know what the gig economy is, you probably have been part of it already if you have taken an Uber ride recently.

The gig economy, or shared economy, is defined as an activity where people earn income providing on-demand work, services or goods. Often, this happens through a digital platform such as apps or websites.

Some examples of gig work include driving a car for booked rides or deliveries, renting out property or part of it, selling goods online and providing creative or professional services.

Create a Separate Business Account

It’s advisable that you create a business bank account that’s separate from your personal account. This way it will be easier to track your income and it will also be useful when you make a deduction. Use your business account for job-related purchases and payments. Make sure to take advantage of all the features provided with your account, which may include alerts, and other tools to manage your income.

Track Earnings From All Your Jobs

Unlike people with a full-time employment, gig workers don’t receive a W-2 form from an employer. Therefore, they must keep records of income earned from all their jobs throughout the year. This is important to consider, as people may have more than one gig job.

Use the Right Forms

You should use the 1099-MISC form to report income other than a traditional salary. If you worked different gig jobs during the year, make sure you receive a 1099-MISC from any company that paid you more than $600. On the other hand, form 1099-K is for tracking income earned by third-party transactions through providers such as PayPal.

Track and Take Advantage of Write-offs

Those who take part in the gig economy can deduct many costs. From gas expenses, wear and tear on your vehicle, materials, and meals, there are many write-offs you must make sure to track throughout the year. You should try to keep your paper receipts, but if you lose one, bank statements are also considered a valid proof of any transaction.

Get Advice From an Expert

If you are a gig economy wage earner, a tax expert can help you lower your tax burden and offer guidance on all your financial needs. With their help, you can identify the write-offs you may have and file your taxes using all the right forms.

At JT Tax Services we are committed to provide solutions tailored to your unique needs. Contact us today by email or telephone (805-984-8890) to schedule an appointment or to learn more about our services.

Due to the nature of their work, veterans often face unique fiscal situations. Therefore, it’s extremely important to stay abreast of the most recent developments on this topic, that may change drastically from year to year.

The following tips provide a general guide to gain a better understanding of the benefits you may qualify for and the resources that the Internal Revenue Service (IRS) puts at your disposal as a veteran.

Keep Your Records in a Safe Place

Changes of residence may represent a risk for your documents. Make sure to keep them in a dry, safe place and to make multiple copies that you can store in separate locations. Some of the most important documents include your Social Security Number, a copy of a government-issued ID and digital copies of forms DD214, DD257 and NGB22.

Some Benefits Are Taxable

When filing your taxes, keep in mind that some of the benefits you receive as a veteran are taxable, for example retirement pay, severance and healthcare. Healthcare represents a special case, since veterans can opt to stick with their VA coverage, or purchase their own. Consider that if you decide to keep your VA coverage you may not be eligible for premium tax credits.

Benefits Change on a State-to-state Basis

Don’t forget that benefits for veterans may change depending on your location, since every estate has its own Veteran Affairs office. These benefits include income and property tax exemptions as well as retirement pay exemptions.

Also, keep in mind that benefits may change from year to year, so it’s important to contact a tax expert or your local VA office to get information specific to your individual situation.

Take Advantage of the Resources at your Disposal

The IRS offers many resources you can use when filing your taxes as a veteran. Many of them are available online for your convenience. From education benefits to filing deadlines, this comprehensive list provides information of interest for current and former members of the military.

You May Be Eligible for Earned Income Tax Credit

This refundable federal income tax credit is geared towards low- to moderate-income workers and their families, and it may allow you to keep more of the money you have earned. That extra amount can be very important for veterans, since they can use it to create an emergency fund to face unexpected occurrences.

As with all matters regarding taxes, the best is to seek advice from the professionals. Get in touch with our experts at JT Tax Services to take advantage of their know-how. Don’t hesitate to contact us by email, telephone (805-984-8890) or through our accounts on Facebook, Twitter and LinkedIn.

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. 

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.

We still have several months before our taxes are due on April 15^th. 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.

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.

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.

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.

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.