Tax Blog

Marketplace insurance, also known as health insurance marketplace or Obamacare, refers to a type of health insurance that is sold through the federal or state-run online health insurance exchanges. These exchanges were created under the Affordable Care Act (ACA) to provide a one-stop shop for individuals and small businesses to compare and purchase health insurance plans. Marketplace insurance plans are required to meet certain standards of coverage, including coverage for essential health benefits such as preventative care, prescription drugs, and hospitalization. The plans are also required to be offered on a tiered system, with bronze, silver, gold, and platinum levels, which offer varying levels of cost-sharing. Individuals who purchase marketplace insurance may be eligible for financial assistance to help them pay for premiums and out-of-pocket costs, based on their income and family size. Open enrollment for marketplace insurance typically occurs annually, although individuals may be able to enroll outside of this period if they experience a qualifying life event, such as losing their job or getting married.

Deduction for business expenses: Small business owners can deduct a wide range of business expenses, including the cost of goods sold, supplies, utilities, rent, and wages. Small Business Health Care Tax Credit: Small business owners who provide health insurance to their employees may be eligible for a tax credit to help offset the cost of health insurance. New tax credits under the Biden administration: The Biden administration has proposed several new tax credits to support small businesses, including a new child care tax credit and a new credit for sick and family leave. Section 179 expensing: Small business owners can expense, rather than depreciate, certain property and equipment, such as computer software and vehicles, under Section 179 of the tax code. Home office expenses: Small business owners who use a portion of their home for business purposes can deduct home office expenses, such as rent, utilities, and repairs. Depreciation deductions: Small business owners can depreciate the cost of certain assets, such as buildings, equipment, and machinery, over a period of years. Retirement plan contributions: Small business owners can establish tax-advantaged retirement plans, such as a Simplified Employee Pension (SEP) or a Savings Incentive Match Plan for Employees (SIMPLE), and make contributions on behalf of themselves and their employees. Self-employment tax savings: Small business owners who are self-employed can save on self-employment taxes by taking advantage of deductions for self-employed health insurance and retirement plan contributions. Interest expense deductions: Small business owners can deduct the interest they pay on business loans, including mortgages and lines of credit. Research and development tax credits: Small business owners who engage in research and development activities may be eligible for a tax credit to offset the costs of these activities.

Failing to report all income: Reporting all income, including freelance and gig work, is essential for avoiding tax mistakes. Claiming incorrect deductions: Double-check that you are claiming the correct deductions and that you have proper documentation for all deductions. Miscalculating estimated taxes: If you are self-employed or receive income that is not subject to withholding, it is important to accurately calculate and pay estimated taxes to avoid underpayment penalties. Failing to keep records: Keeping accurate records of all income and expenses is essential for avoiding tax mistakes and being able to prove your deductions if audited. Filing incorrect tax forms: Make sure to use the correct tax form for your filing status and type of income. Improperly reporting rental income: Rental income and expenses must be reported accurately on your tax return. Failing to report foreign income: If you have foreign income, make sure to report it on your tax return and be aware of any foreign tax credits or exclusions that may be available. Not taking advantage of tax credits: Tax credits can significantly reduce your tax bill, so make sure to research and claim all credits for which you are eligible. Failing to file a tax return: If you are required to file a tax return, it is important to file on time to avoid penalties and interest. Neglecting to sign and date your return: Make sure to sign and date your tax return before submitting it, as a return that is not signed is considered invalid.

Accurate financial records: Bookkeepers can help ensure that financial records are accurate and up-to-date, which is critical for making informed business decisions and complying with tax laws. Time-saving: Bookkeeping can be time-consuming and tedious, but with a bookkeeper, the small business owner can focus on running the business and leave the bookkeeping tasks to a professional. Improved cash flow management: Bookkeepers can help small business owners track their cash flow and make sure they have enough money to cover expenses and make investments. Better budgeting and forecasting: With accurate financial records, bookkeepers can help small business owners create a budget and forecast future financial performance, which can inform important business decisions. Compliance with tax laws: Bookkeepers can help small business owners stay compliant with tax laws and avoid costly penalties and fines. Peace of mind: Hiring a bookkeeper can give small business owners peace of mind, knowing that their financial records are in good hands and that they have accurate information to make informed business decisions. Overall, a small business hiring a bookkeeper can lead to better financial management, improved decision-making, and increased peace of mind for the business owner.

Home office expenses: Remote workers may be able to deduct home office expenses, such as the cost of a home office space and supplies, if they meet the criteria for a regular and exclusive home office. State tax implications: Remote workers may be subject to taxes in both their home state and the state where their employer is located, creating a potential for double taxation. Unemployment benefits: Unemployment benefits received during the pandemic may be taxable income. Remote workers as independent contractors: Companies may classify remote workers as independent contractors, leading to potential tax implications for both the company and the worker. Health insurance: Remote workers may have difficulty accessing employer-sponsored health insurance, leading to the need to obtain individual health insurance and the related tax implications. Retirement benefits: Remote workers may face challenges in participating in employer-sponsored retirement plans, potentially leading to the need to establish individual retirement accounts and the related tax implications. Travel expenses: Remote workers may incur travel expenses related to their work, such as business-related travel or travel to visit clients. These expenses may be tax-deductible. Employee benefits: Remote workers may be excluded from certain employee benefits, such as commuter benefits, that are provided to in-person employees. International tax implications: Remote workers who are U.S. citizens or resident aliens working abroad may face additional tax implications, such as the need to file U.S. taxes and comply with foreign tax laws. Record-keeping requirements: Remote workers must keep accurate records of their home office expenses, travel expenses, and other related expenses to claim deductions and credits.

Determine your business structure: This will affect how you are taxed, so it’s important to understand the tax implications of sole proprietorship, partnership, limited liability company (LLC), corporation, etc. Get an Employer Identification Number (EIN): An EIN is a unique tax ID number assigned by the IRS to identify your business for tax purposes. Keep accurate records: This will help you keep track of expenses, income, and other financial transactions, which will make tax time much easier. Know your tax obligations: You may need to pay federal and state income tax, self-employment tax, sales tax, property tax, etc. Take advantage of tax deductions: There are many tax deductions available to small business owners, such as the cost of goods sold, business equipment, home office expenses, etc. Hire a professional: If you need help navigating the tax requirements and regulations for your business, consider hiring a tax professional, accountant, or attorney.

As a business owner or entrepreneur, keeping track of your finances and taxes can be a challenging task. One of the most important forms you will need to file each year is the 1099, which reports non-employee compensation, such as payments made to independent contractors and other businesses. While you may be tempted to handle your 1099s on your own, there are several compelling reasons why it’s in your best interest to let a  tax professional handle this important task. In conclusion, hiring Tax Pros to handle your 1099s is a smart choice for business owners and entrepreneurs. By working with experts in the field, you can ensure that your forms are filed accurately and on time, and avoid the headaches and stress that come with preparing them yourself. So, don’t wait – contact our office  today and let us handle this important task for you!

Medical expenses can be tax-deductible if they exceed a certain percentage of your adjusted gross income (AGI). For tax years 2021 and 2022, the threshold is 7.5% of your AGI. This means that only the amount of your medical expenses that exceeds 7.5% of your AGI can be deducted on your tax return. To claim a deduction for medical expenses, you will need to itemize your deductions on Schedule A of your tax return. You will also need to keep records of your medical expenses, including receipts, bills, and any other documentation that shows the nature and amount of the expenses. Eligible medical expenses include: Doctor and dentist visits Hospital stays Prescription drugs Medical equipment and supplies Transportation costs for medical care (including mileage) It’s important to note that medical expenses for cosmetic procedures are not tax-deductible unless they are medically necessary, such as a reconstructive surgery following an injury or illness. Consult a tax professional or the Internal Revenue Service (IRS) for more information on the specific requirements for deducting medical expenses on your taxes.

Maximize contributions to tax-advantaged retirement accounts such as 401(k) or IRA. Claim all eligible tax deductions, such as mortgage interest, charitable contributions, and medical expenses. Take advantage of tax credits, such as the Earned Income Tax Credit (EITC) or the Child Tax Credit. Keep accurate and organized records of all income and expenses. Use tax software or hire a tax professional to ensure that you’re taking advantage of all available tax benefits. Consider bunching miscellaneous deductions in a single year to reach the floor threshold. Plan ahead for investment gains and losses to minimize capital gains tax. Look into tax-free ways to invest in real estate, such as 1031 exchanges. Track expenses related to a home office if you are eligible to claim it as a deduction. Consider timing income and expenses to reduce your taxable income in the current year.

Form 1040: The individual income tax return form used by U.S. taxpayers to report their federal income tax liability. Form W-2: The form used by employers to report wages, salaries, tips, and other taxable compensation paid to employees. Form 1099: The form used by self-employed individuals, businesses, and other entities to report miscellaneous income, such as rental income, interest, and dividends. Form W-4: The form used by employees to claim exemptions from federal income tax withholding. Form 1098: The form used to report mortgage interest paid by a homeowner to their lender. Form 2441: The form used by taxpayers to claim the child and dependent care tax credit. Form 8888: The form used to split a tax refund between multiple bank accounts or to direct the IRS to issue a refund in the form of U.S. savings bonds. Form 1095-A: The form used by individuals enrolled in a Marketplace insurance plan to report their health insurance coverage for the year. Form 8949: The form used to report sales and other dispositions of capital assets, such as stocks, bonds, and mutual funds. Form 941: The form used by employers to report their quarterly payroll taxes, including federal income tax, Social Security, and Medicare taxes withheld from employees’ paychecks