IRS Relief for Small Business

tax-tips

The IRS (Internal Revenue Service) is offering penalty relief for any employer that fails to deposit employment taxes with the IRS by the correct date.

In Notice 2021-24, the IRS intensified prior guidance from 2020. The new notice offers relief for employers who are required to pay eligible sick leave wages and qualified family leave wages, along with qualified health plan expenses that can be allocated to those wages, as mandated by the Families First Coronavirus Response Act, which was amended by the COVID-related Tax Relief Act of 2020, along with the American Rescue Plan Act of 2021.

The IRS guidance targets to help businesses who were hurt by the COVID-19 pandemic through the coronavirus relief packages passed by Congress since last year, including the CARES Act, the Consolidated Appropriations Act, and most recently the American Rescue Plan Act. The guidance helps employers benefit from some of the tax credits available to them under those laws — such as for paid sick leave, family leave, and the Employee Retention Credit — while they continue to pay employees during the pandemic with some of the payroll taxes they otherwise would have needed to deposit with the IRS.

The notice also offers relief for some employers for whom COBRA continuation coverage premiums weren’t paid by former employees who were eligible for assistance with coverage under the American Rescue Plan Act.

In a statement from the IRS, “This relief ensures that such employers may pay qualified sick leave wages and qualified family leaves wages, qualified wages, and COBRA continuation coverage premiums using Employment Taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty.”

The assistance also provides some relief for employers who experienced a full or partial closure order due to COVID-19 or who suffered a decline in business.

Overall, many businesses will experience a plethora of benefits from the IRS’s new guidance and the various coronavirus relief packages passed by Congress.

As always feel free to reach out to us so that we can make sure you are the best positioned on all of the above. Feel free to reach out to us and let’s set up a time for a review – call us at SWVA Tax & Accounting at 540-250-3198.

Three 2021 Tax Season Differences

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Tax season is around the corner, as a taxpayer you need to know what changes affect you this tax season. Since 2020 wasn’t exactly a “normal” year, you should not expect tax season to be either. SWVA Tax & Accounting wants to share information relevant to accounting and taxes to stay current. Here are three changes this tax season you need to know:

  1. The IRS recently announced it will start accepting 2020 tax returns on Friday, February 12, 2021. Typically, tax season starts in January but has been pushed back to February. The IRS is testing and programing a new system that follows new tax law changes made by Consolidated Appropriations Act, 2021 (CAA 2021), P.L 116-260, which was made into law on December 27, 2020. These changes also take into consideration the second 2020 stimulus payments made to taxpayers. It’s estimated the IRS will process more than 150 million tax returns this year. Make sure you have the needed documents to file as:
  • 2020 return
  • Year-end Forms W-2
  • Forms 1099
  • Forms 1095-A
  • Any other tax information your accountant may need

SWVA Tax & Accounting is here to help you with all your tax needs click here to get started today!

  1. Knowing the exact amounts of your 2020 stimulus payments is information your accountant needs. The two stimulus payments you received in 2020 are not considered taxable income by the IRS. But for example, if you owe back payments in child support, your stimulus payments may go towards back payments. Or you have a negative bank balance, the bank can use part of your stimulus payments to satisfy the negative balance. Tell your accountant how much your stimulus payment was and if it went towards paying any debts. Regardless, concealing how much you received in stimulus money from your accountant could delay refund payments or get you in trouble with the IRS.
  2. A celebrated part of 2021 is the COVID -19 vaccine is available and people are getting vaccinated. The not-so-good part is only a small fraction of the population has received the COVID-19 vaccine. What does this mean for you and SWVA Tax & Accounting? We must leverage technology so we can minimize personal contact while operating a business. At SWVA Tax & Accounting you can upload all your tax documents necessary for your 2020 tax filing. All you need to do is click here it’s a safe and simple process. We recommended you create a profile to make it easier for you. You can always send SWVA Tax & Accounting a message if you have questions regarding your tax preparation. Be sure your contact information is current so SWVA Tax & Accounting can reach you. If you have to submit your paper tax forms please call 540-250-3198 to let them know.

Continue to stay healthy and safe so you can be your best this year. SWVA Tax & Accounting is here to help you with all your tax needs. From bookkeeping to filing your taxes, trust us to get the job done right the first time. Call us at 540-250-3198 to schedule an appointment or book online. You run the business, we’ll run the numbers.

Tax Myths That Simply Aren’t True

 Let’s admit when it comes to taxes it’s a complicated subject. There are myths concerning tax laws that are commonly accepted. Busting a few of these myths can help better understand how the tax system works and how it affects you as a taxpayer. Knowing more about taxes can make the system work in your favor. Having a tax plan and working with a tax professional like SWVA Tax & Accounting can help you. Here are a few tax myths that aren’t true.

Myth #1 Taxes Are Not Due Until the Due Date

Some business owners believe you have to pay taxes in full at the due date. What is more efficient is to have a year-round tax payment strategy. By paying taxes throughout the year you can set up a payment plan that makes things easier. A year-round tax payment strategy will help you with budgeting and influence decision making how money is spent. Having a year-round tax strategy will help you focus and keep your business in better financial health.

Myth #2 If You Have a Side Hustle You Don’t Need to Pay Taxes

You already have a main business that brings in income. Why not start something on the side for additional income? This is a great idea and showcases your entrepreneurial abilities. However, your money-making side hustle may not go unnoticed by the IRS. If your side hustle earns more than $12,000 a year, you’ll have to pay income taxes. Be careful of the amount of income your side hustle brings in.

Myth #3 The IRS Will Email You if You Are Owed a Refund

This myth is so untrue it’s almost funny. Almost. The IRS will never email you saying you will be owed a refund due to an error. This is likely a phishing scam targeted at getting you to send personal information like your bank account number or social security number. If you get a suspicious email concerning the IRS do not open any attachments or click any links. What is recommended is to forward the email to phishing@irs.gov and delete the email. Always safeguard your personal information so you won’t be a victim of identity theft.

Myth #4 You Don’t Need a Receipt

If you are a small business owner, always keep your receipts of anything you bought. The main reason for keeping physical or digital receipts is, it makes preparing your taxes easier at the end of the year. Another smart reason to keep all your receipts is if you get audited, you can prove what you bought. Better to have a receipt than no receipt at all.

Myth #5 Buying Bookkeeping Software Later When You Start A Business

You started a business and things in the bookkeeping department are a bit slow. Managing your taxes is not a simple task and the last thing you need to do is fall behind in bookkeeping. QuickBooks is a great tool to help you with all tasks related to bookkeeping. Staying organized from the very start will help you hit the ground running successfully.

Myth #6 A Home Office Can Be Written Off an Expense

If you are a small business owner you may have a “home office” you work out of. Use caution when trying to write it off as an expense. You can write off your home office as an expense if it’s a dedicated workspace. Sorry, your dining room table does not count as a home office. It has to be an actual workspace, where everything related to the business is done. This means 100% of the work is done related to the business.

Busting a few myths about taxes helps you be better informed. To get the latest tax information make an appointment with SWVA Tax & Accounting. Call 540-250-3198 to make an appointment or book online at www.swvatax.com/Contact to get a tax consultation today. Don’t delay call SWVA Tax & Accounting today. We’ll run the numbers, while you run the business.