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.

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

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.

One of the most important responsibilities no business owner can ignore is complying with the corresponding tax duties we are required. In order to make sure our company remains compliant with IRS laws and regulations, we need to hire a business tax advisor that helps us with these duties. However, many business owners tend to make the mistake of either hiring the cheapest advisor they find or hiring one only during tax season. These are some of the most common mistakes we can make when we hire a business tax advisor for our company, and unfortunately, not the only ones.

Don’t Hire the Cheapest Option You Find

They say that we get what we pay for, and when we look to hire a business tax advisor, this is very close to reality. Hiring the cheapest option we can find might seem quite appealing, especially when we have a tight budget. This doesn’t mean that a “good” tax advisor will necessarily be the best one, either. However, choosing a tax preparer solely based on the price can be a poor decision for our company. Instead, we should look for credentials, qualifications, experience, and of course, the reputation of a tax advisor.

Don’t Hire an Advisor Only for Tax Season

A very common mistake we see business owners make repeatedly is that they hire a business tax advisor only for tax season. In the case of many corporations, this means hiring a temporary advisor three or four times a year, and only for periods shorter than a week. Nevertheless, we should make sure we find a long-term advisor, as they will become a valuable asset to our company. Their experience with our company and their guidance throughout the year will help us make smarter tax-related decisions all year round.

Don’t Hire Someone Who Lacks Credentials

We cannot stress this enough, but it is important to pay attention to the word “professional” when we are looking to hire a business tax advisor for our company. Nowadays, this word has pretty much become meaningless, as anybody can call themselves professionals of their field. This means that we have to find someone with the proper credentials, with the right qualifications, knowledge, and expertise in the field. Besides, finding positive reviews and recommendations from our business partners can also be included in what we are looking for.

Don’t Hire an Advisor Who Ignores the Big Picture

As we mentioned above, hiring a business tax advisor for our company can become a very valuable asset. Therefore, we should look for a professional who is willing to collaborate with us in the long run. This includes looking at the big picture, developing strategies that will give us both short-term and long-term results. If our current advisor only works on fixing immediate problems but doesn’t provide long-lasting solutions, we might want to look for someone else.

This year is coming to an end, and taking advantage of the time we have before tax season begins is one of the smartest decisions we can take. One of the most common questions we get is regarding the tax brackets, since many taxpayers may be confused about which one applies to them. Now, understanding the tax brackets set by the IRS can be a bit tricky, especially if we are filing our income tax report on our own. That’s why we decided to share with you the tax brackets that will apply for 2020. This way, you will be able to find which one you’re at, and what part of your income qualifies to a given tax rate depending on your filing status.

Tax Brackets for Filing Single

Tax Brackets for Filing as Head of Household

Tax Brackets for Married Filing Jointly

Tax Brackets for Married Filing Separately

For many workers, tips are an important part of their income, as many companies and businesses rely on them in order to cover the wages for their staff. If we count on tips as part of our income, we need to report them to the IRS, as we need to cover our corresponding taxes for Social Security and Medicare based on tip income we receive. In order to help you take care of this process, we have put together a short list of steps and tips you need to follow when claiming tips on your tax return. These include keeping a monthly record, documenting shared tips, checking for tax withholding balances, and filing a form for unreported income.

Keep a Monthly Record on Your Tip Income

One of the most important aspects you need to keep in mind when claiming tips on your tax return is that the IRS requires you to report your total tip earnings to your employer on the 10^th of every month. Most employers have a specific process to follow for reporting tip income, but if yours doesn’t, you can do it by filing Form 4070. This way, your employer will be able to cover income withholding from your tip income. Remember that if you fail to report this income, you can be subject to a penalty equal to 50% of the Social Security and Medicare taxes you are not paying.

Document How Much Tip You Share with Other Employees

In many places, it is common for employees to share or pool tips with other employees, and we must remember to document this when claiming tips on your tax return. This is because it can help you reduce the amount of tip income you need to report. Since every company might work with different processes of tipping structures, we need to keep a very detailed record of how much we got and how much we shared. For example, if we received a total of $200 in tips, but need to share $50 with another staff member, we should only report $150 as tip income.

Check Your Tax Withholding on Your W-2 Form

When it comes to claiming tips on your tax return, we must pay a lot of attention to tax withholding. In most cases, your employer will be in charge of taking your tax withholding share and reporting it to the IRS. However, you might not have earned enough in tips and wages to cover your withholding. If this were the case, you will be able to find the balance you owe in your W-2 Form. If it shows a significant balance, you might be subject to several tax penalties after submitting your returns.

Include Unreported Tip Income on Form 4137

If there were some months on which we didn’t receive more than $20 in tips, or if we received non-cash tips, we need to fill out Form 4137. This form will allow us to include any unreported tip income and wages we didn’t have the chance to report during the year. Also, the form comes with instructions that will help you calculate the amount of Social Security and Medicare tax you must cover on your unreported tip income reports.

As business owners, traveling outside our city to meet with existing and potential clients is an important part of our company’s success, as it allows us to expand the reach of our brand and build strong relationships with our partners. However, this can represent a significant portion of our budget, as we need to cover several travel expenses, such as transportation, meals, and accommodations. Luckily for us, there are many business-related expenses we can deduct from these trips, and these apply for both domestic and international expenses. This is how you can deduct your international business expenses and the limitations you might need to know.

Eligibility Rules for Business Travel Expenses

The very first thing we need to know regarding deducting our business travel expenses is that the IRS divides these into two different categories, having ordinary and necessary business expenses incurred for travel away from home. According to the IRS, ordinary expenses correspond to those that are common and accepted in your trade or business, and necessary expenses are those considered helpful and appropriate for your work. When it comes to international travel, the expenses incurred away from home during trips that are longer than an ordinary day’s work and that require us to rest or sleep are eligible.

Business Travel Expenses We Can Usually Deduct

If this is the first year we will be deducting business travel expenses, we should become familiar with the types of expenses that tend to be eligible for deductions. The most common types of expenses include transportation expenses, whether we go by plane, train, or automobile; shipping and baggage of any props or materials we need for work purposes; and accommodations if our trip is overnight and we need to stay in a hotel while away from home. We can also deduct half the costs of our meals as long as they are not lavish or extravagant, as well as our communications, dry cleaning, and laundry expenses when away from home on work purposes.

Expenses We Can Deduct from International Business Trips

Deducting international business expenses can get a bit trickier, as the IRS sets expenses into two different categories you must meet in order to be eligible for these deductions. These categories of expenses are from trips that were entirely for business or considered entirely for business. Expenses for international travel entirely for business can be deducted if you spent virtually all waking hours of your trip on business activities. On the other hand, an international trip is considered entirely for business can still qualify for expenses deductions if you didn’t have substantial control in arranging the trip if you spent no more than a week outside of the US, and if you spent at least 76% of your time on business-related activities.

What Limits the Deductions for International Business Expenses

Once you have figured out which of your expenses qualify for international business expenses and which ones do not, you still need to consider the limits of these deductions. If you don’t meet one or more of these conditions, and if your business trip was not entirely work-related, you don’t have to worry. You can still deduct a portion of these expenses, as long as you determine the percentage of business days from your trip. This way, the IRS will have a more accurate and acceptable idea of just how many days you spent on work-related activities, being able to grant the deductions for the expenses on those days only.

Dealing with taxes as an independent business owner can get tricky when we don’t have all the information and guidance we need. This can get even more confusing when we have just started to invest in real estate property. However, there are several tax tips we should keep in mind in order to make the most out of our investments, especially when it comes to property taxes and other taxes involved. That’s why we decided to share some useful tax tips that any real estate investor can follow to make tax season easier for them.

Take Advantage of Business Deductions

Something that every real estate investor needs to remember is that they qualify as a business, so they are entitled to submit business expense deductions just like any other company can. This means that, by the end of the year, you can write off several of your expenses, as long as they are related to running your investments and your properties. Some of these expenses include mileage from driving to and from properties, home office expenses like rent and electricity, mortgage interests and premiums, professional services, and depreciation of your property.

Don’t Sell your Property Before the First Year

One mistake we might be likely to make when we begin to invest in real estate is selling a property before the first year of ownership. When we have owned a property for less than 365 days and then we sell it, we will be subject to a short-term capital gains tax. Instead, we should hold properties for more than a year, so that, when we sell them, the profit ends up being subject to a long-term capital gains tax.

Learn About the Power of 1031 Exchanges

Another quite useful strategy any real estate investor must learn about is 1031 exchanges, also known as like-kind exchanges. This allows us to defer the taxes generated by selling a property when we use it to buy another property. As a result, we are able to buy/sell properties in order to increase our portfolio without having to worry about paying taxes on each sale. However, 1031 exchanges might be tricky at times, so it is important that we do extensive research or consult with a professional tax advisor before we choose to take advantage of them.

Opt for Tax-Free Refinances

Refinancing a property tends to be a common scenario any real estate investor will likely face. Even when we might think that refinancing a property means another transaction being subject to taxes, this is actually not the case. Therefore, we are able to pull equity out of a property we own through a cash-out refinance plan without being subject to any taxes for that transaction. Since we are not really making money from this, the IRS won’t consider it as taxable income. This way, real estate investors can take money to invest in new properties without being subject to taxes, and having the opportunity to report loan interests as a business expense, qualifying for a deduction.

Working as an independent contractor can come with many benefits, such as being able to choose the projects we work on, the clients we network with, and the rates we set for our work. However, all of this comes with many responsibilities, including paying more attention to our income tax return. Whether we decide to do this part of the job ourselves or hire a tax professional to guide us through each part of the process, we must make sure we stay on top of our tax obligations. That’s why we have gathered these four useful tax tips for independent contractors to keep in mind.

Always Remember to Report All Your Income

To begin with our list of tax tips for independent contractors, we must remember that we always should report all of our income, including that from each job and project we got during the year, regardless of the amount of what we got paid. Whenever we work on a job that included a payment of more than $600, we will get a 1099-MISC Form. This should happen with most of our projects. However, if we did a job with a payment of $599.99 or less, we won’t see this form. No matter how tempted we are, we should include this part of our income when we file our tax returns.

Pay Your Estimated Taxes and Include SE Taxes, Too

When we work as independent contractors, we need to remember that we are responsible for paying our income tax on the earnings we made as estimated taxes. Unlike our income tax return, our estimated taxes are due four times a month. The due dates we need to pay attention to are April 15, June 15, September 15, and January 15. Whenever we pay our estimated taxes, we need to add our SE (self-employed) taxes, too. Otherwise, we will be subject to different interests and penalties when we cover our final tax return.

Keep All Your Receipts Stored and Registered

Every taxpayer should be aware of the importance that keeping all your receipts stored and registered represents when filing their income tax return. This is particularly true for independent contractors since much of what qualifies as a business expense can be deductible. In order to get a lower tax bill, storing our receipts is essential. This way, we will be able to list and justify the expenses we made for a particular job, allowing us to request a deduction to the IRS.

Determine Which Schedule You Should File

The last thing we need to check when working as independent contractors is determining which schedule we will use to file our taxes. Many contractors decide to file Schedule C, adding it to their annual Form 1040 tax return. However, filing under Schedule C-EZ might be more convenient for some contractors, especially when:

• they had business expenses for less than $5,000
• used the cash method of accounting
• didn’t have an inventory during the tax year
• didn’t hired an employee
• didn’t claim home office business expenses, or
• didn’t carry over any passive activity losses from a previous year.

Whenever we decide to start our own business, one of the first questions we should ask ourselves which business structure we’ll choose, LLC or S Corp? Each will come with different benefits regarding structure, organization, and taxation, depending on which we choose. Every business will differ, and there is no fool-proof method to know which option better suits our situation. Therefore, we must always consult with a professional before making a decision.

One of the first aspects to consider is trying to fully understand what an LLC is, and what an S Corp is. This way, we’ll be able to make a more informed decision, one that will benefit our business. Learning the differences in structure and taxations will make the decision easier to take. Again, we should hire a professional tax advisor to help us make the best choice.

A Limited Liability Company, also known as LLC is a type of business structure that legally separates it from its business owners. This means that the members of your company would receive protection from personal liability. In other words, if members of an LLC were subject to legal action, only their business assets would be on the line, not personal ones.

When it comes to taxes, the IRS doesn’t recognize LLCs for taxes purposes; LLCs are not taxing entities. Therefore, an LLC might be taxed as either a corporation, a partnership, or as part of the owner’s tax return. If we have a partnership or multi-member LLC, the IRS would not tax the business, but each member instead. If we want to file taxes as an S Corp, though, we must request the tax form 2243.

There is the common misconception that the term S Corp refers to “small corporations”. However, the name comes from the Subchapter S of the IRS code. In order for our business to choose this structure, it must meet several IRS requirements. First of all, it must be a domestic corporation, with no foreign owners. It must also have no more than 100 approved members, unlike an LLC, which can have as many members as they consider.

One of the benefits S Corps have is that they include lower taxes, from both income tax and self-employment tax. Also, shareholders of an S Corp report its flow-through of income and losses on their personal taxes. This way, S Corps are able to avoid being subject to double taxation on their corporate incomes. To see the full filing requirements to become an S Corporation, you can go to the IRS website.

Like we mentioned above, every company is different. Choosing between an LLC or S Corp structure will require a thorough analysis. That’s why every business owner or entrepreneur should consider getting the assistance of a professional tax advisor. This way, they will be able to balance the pros and cons of each structure, LLC or S Corp, and make a decision that will benefit them the most.

Even when it might sound like a long and daunting process, sitting down with your accountant or advisor is a must. Don’t be afraid to express what your goals and objectives are. Also, think about the total income you are expecting to make. All this will help you make an informed decision, and your company will see the results.