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Employee Retention Credit: An Essential Guide

The Covid-19 outbreak has disrupted economic activities all over the country. Therefore, the Internal Revenue Service (IRS) has implemented measures to offer financial relief to businesses.

One of those provisions is the Employee Retention Credit (ERC). This initiative aims to help small businesses keep their employees on their payroll.

What Businesses Qualify for the Employee Retention Credit?

The credit is geared towards businesses that have been impacted by the coronavirus outbreak. The qualifying businesses fall into two basic categories:

  • The business is in total or partial suspension by government order due to the coronavirus outbreak during the calendar quarter.
  • The employer’s gross receipts are below 50% of the comparable quarter in 2019.

It’s important to note that once your receipts go above 80% of a comparable quarter in 2019, you no longer qualify for the credit.

How Much Is the Employee Retention Credit Worth?

The amount of the Employee Retention Credit is equal to 50% of qualifying wages paid up to $10,000. Wages paid after March 12, 2020, and before January 1, 2021 are eligible. The wages considered include as well as portion of the cost of employer provided health care.

What Wages Qualify for the ERC?

The qualifying wages are determined considering the size of the business.

  • If the employer had 100 employees or fewer on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not.
  • For employers with more than 100 employees on average in 2019, the credit applies only to wages paid to workers who did not work during the calendar quarter.

How Would I Receive the ERC?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ taxes by the amount of the credit.

If your tax deposits are not enough to cover the credit, then you may receive an advance payment by submitting form 7200 to the IRS

It’s important to know this and other initiatives to navigate the current circumstances. Our knowledgeable experts at JT Tax Services will help you so you can take advantage of all the relief initiatives you are eligible for.

At JT Tax Services we have the experience, the knowledge and the drive to assist you. With our advice, you can file your taxes with the peace of mind that comes with knowing that you are limiting your liability while staying compliant with federal and state tax regulations.

We are located in Oxnard, California. Contact us by email, telephone or through our social media accounts on FacebookTwitter and LinkedIn to learn more about our services.

The 4 Most Frequently Asked Questions about Economic Impact Payments

Economic Impact Payments are already being sent to taxpayers all over the United States, but questions regarding this stimulus still abound.

In this post we’ll answer the most frequently asked questions regarding Economic Impact Payments, so you can determine whether you are eligible, how much you could get, and how to check the status of your payment.

How Much Would I Get?

Individual taxpayers eligible for Economic Impact Payments get $1,200, while couples filing jointly receive 2,400. Additionally, you can receive $500 extra for every qualifying child you claimed on your tax return.

Do I Qualify for an Economic Impact Payment?

People qualify to Economic Impact Payments based upon their Adjusted Gross Income (AGI). You qualify to an Economic Impact Payment if your AGI is up to:

  • $75,000 for individuals
  • $112,500 for head of household filers
  • $150,000 for married couples filing joint returns

If your AGI exceeds these ranges, don’t worry. You can still get a reduced Economic Impact Payment if you have an AGI between:

  • $75,000 and $99,000 if your filing status was single or married filing separately
  • 112,500 and $136,500 for head of household
  • $150,000 and $198,000 if your filing status was married filing jointly

In this case, the amount of the reduced payment will be based upon your specific AGI.

What if I Receive Social Security or Other Benefits?

You don’t have to make a filing to get your Economic Impact Payment if you receive Social Security, railroad retirement, Social Security Disability Insurance (SSDI and SSI) or veteran’s benefits. In that case, you’ll receive your payment the same way you normally receive your benefits.

On the other hand, People who don’t normally file, such as low-income or no income taxpayers, can use Non-Filers: Enter Payment Info tool to give IRS  basic information to get their Economic Impact Payments.

How Can I Check the Status of My Payment?

The IRS launched recently the Get My Payment Tool. The website will allow you to check the status of your Economic Impact Payment. The information is updated every 24 hours, usually overnight, so use the tool only once a day to allow others to check the status of their payment as well.

It’s important to know this and other initiatives to navigate the current circumstances. Our friendly and knowledgeable experts at JT Tax Services will help you so you can take advantage of all the relief initiatives you are eligible for.

At JT Tax Services we have the experience, the knowledge and the drive to assist you. With our advice, you can file your taxes with the peace of mind that comes with knowing that you are limiting your liability while staying compliant with federal and state tax regulations.

We are located in Oxnard, California. Contact us by email, telephone or through our social media accounts on FacebookTwitter and LinkedIn to learn more about our services.

Now You Can Check Your Economic Impact Payment Online

The first round of Economic Impact Payments is about to be sent to taxpayers, who now have an online tool available to track the status of their stimulus.

The Internal Revenue Service (IRS) has unveiled the website Check My Payment to allow taxpayers to check their Economic Impact Payment or communicate their direct deposit information to the IRS, in case the agency doesn’t have it.

The IRS sends Economic Impact Payments using information included in past tax filings. However, if you haven’t filed your taxes for 2019 or 2018, you can use this website to communicate your direct deposit information. In addition, you can use it if you belong to a category that doesn’t require you to file taxes.

It’s advisable to use the Check My Payment website only once a day. This way you will avoid excessive traffic so other users can track their payment as well.

What Are Economic Impact Payments?

Economic Impact Payments are a provision rolled out by the IRS and the Treasury Department. Above all, the aim is to offer financial relief to taxpayers affected by the coronavirus outbreak.

If you qualify for an Economic Impact Payment these are the amounts you could receive.

  • Up to $1,200 for eligible individuals
  • Up to $2,400 for eligible married couples
  • Up to $500 for each qualifying child for eligible individuals

Taxpayers qualify to Economic Impact Payments based upon their Adjusted Gross Income, as follows:

  • Up to $75,000 for individuals
  • Up to $112,500 for head of household filers and
  • Up to $150,000 for married couples filing joint returns

The government’s response to COVID-19 is fluid. Therefore, the relief initiatives in force may change to better adjust them to future circumstances. Check constantly this blog and the IRS’ website to stay up-to-date as the situation evolves.

It’s important to know this and other initiatives to navigate the current circumstances. Our knowledgeable experts at JT Tax Services will help you so you can take advantage of all the relief initiatives you are eligible for.

At JT Tax Services we have the experience, the knowledge and the drive to assist you. With our advice, you can file your taxes with the peace of mind that comes with knowing that you are limiting your liability while staying compliant with federal and state tax regulations.

We are located in Oxnard, California. Contact us by email, telephone or through our social media accounts on FacebookTwitter and LinkedIn to learn more about our services.

 

Don’t Fall for Coronavirus Tax Scams

The world is going through unprecedented circumstances due to the outbreak of coronavirus. However, scammers and fraudsters are still trying to take advantage of people, tricking them into sharing their personal information.

Scammers target retirees in particular. The fraudsters send false communications related to Economic Impact Payments announced by the Internal Revenue Service (IRS) and the Treasury.

The fraudulent strategy being used is called phishing. This consists in using text, phone calls or social media to send false messages supposedly from trusted institutions to deceive the unknowing recipients.

How to Identify Phising Attempts

  • The term Economic Impact Payment is not used in the message. Instead, they use the terms “Stimulus Check” or “Stimulus Payment.”
  • A fake check with an odd amount is mailed, and you are ordered to call a number or verify information online to cash it
  • You’re asked to check your Economic Impact Payment to someone else.
  • You’re asked by phone, email or social media to verify your information in order to receive or speed up your payment.

The Truth About Economic Impact Payments

These payments are government stimulus to help taxpayers who have been negatively affected by the outbreak of coronavirus.

Those eligible are tax filers with adjusted gross income up to $75,000 for individuals or up to $150,000 for couples filing jointly. If your income is above these amounts, the payment will be reduced by $5 for each $100 above the threshold.

Single filers with adjusted gross income of more than $99,000 or $198,000 for joint filers are not eligible for Economic Impact Payments.

The IRS will deposit your payment directly using the details included in your 2019 tax return (or 2018 if you haven’t filed yet). If they don’t have your direct deposit information, don’t worry: An official website will be online within a few weeks, so you can safely communicate this information.

What to Do?

If you believe you have suffered a phishing or fraud attempt, don’t engage the sender of the message. Report the attempt to the IRS (phishing@irs.gov)

The government’s response to the outbreak of coronavirus is fluid, and fraudsters adapt their strategies accordingly. Check constantly this blog and the IRS’ website to stay updated as the situation evolves.

It’s important to know this and other pitfalls to successfully navigate the current circumstances. Our knowledgeable experts at JT Tax Services will assist you so you can take advantage of all the relief initiatives you are eligible for.

We are located in Oxnard, California. Contact us by email, telephone or through our social media accounts on FacebookTwitter and LinkedIn to learn more about our services.

IRS Launches People First Initiative as a Response to COVID-19

The internal Revenue Service (IRS) has launched its People First initiative to offer relief to those having trouble paying their taxes due to the outbreak of COVID-19.

The project starts April 1 2020 and runs until July 15 2020. During this period certain payments related to installment agreements will be postponed and enforcement actions will be limited. Also, the IRS will avoid person-to-person interactions, although it will continue to protect all applicable statutes of limitations.

Key Actions

If you have an installment plan in place, you can breathe easy, since the payments due between April 1 and July 15 will be suspended, although interest will continue to accrue on unpaid balances.

The agency will suspend field collection activities during this period as well. New delinquent accounts will not be forwarded to private collection companies, but the IRS will continue to purse high-income non-filers. If you haven’t filed taxes before 2019, it’s advisable to seek the assistance of a tax expert to file your delinquent returns.

Offers in Compromise (OIC) and Tax Day

Taxpayers experiencing problems to pay their taxes can apply for a Payment Plan through the IRS’ official website. This way, the will be able to pay their balance over time, if they are eligible.

There are several provisions regarding Offers in Compromise (OIC). This is an agreement between the IRS and a taxpayer to settle the taxpayer’s tax liabilities for less than the full amount they owe. The agency will allow taxpayers until July 15 to provide additional information for a pending OIC and it will not close any pending OIC request before that date without the taxpayer’s consent.

It’s important to note that as part of the IRS’ relief efforts, the federal Tax Day has been moved from April 15 to July 15. You don’t have to take any further actions to take advantage of this extension. It will apply automatically to all taxpayers. However, keep in mind that there are different regulations regarding state taxes. Therefore, make sure to check them in order to stay compliant.

A Fluid Response

The government’s response to COVID-19 is fluid. In fact, the People First Initiative may change to better adjust it to future circumstances. Check constantly this blog and the IRS’ website to stay up-to-date as the situation evolves.

It’s important to know this and other initiatives to navigate the current circumstances. Our knowledgeable experts at JT Tax Services will assist you so you can take advantage of all the relief initiatives you are eligible for.

We are located in Oxnard, California. Contact us by email, telephone or through our social media accounts on Facebook, Twitter and LinkedIn to learn more about our services.

Tax Day Is Now 15 July

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.

5 Tax Tips for Gig Workers

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.

5 Tips Veterans Should Consider When Filing Their Taxes

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.

 

 

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.

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