Small Business Financials

There are very few tax breaks available for low-income adults who don’t have children. Thankfully, some important changes were made to the Earned Income Tax Credit (EITC) last year, making this vital tax benefit available to many more Americans. Wondering if you might qualify to claim this fully refundable tax credit in 2021? Read on to find out! What is the Earned Income Tax Credit? The EITC is a refundable tax credit for individuals and families with low to moderate incomes. Beginning in tax year 2021, this credit has expanded to working adults age 19 or older (including seniors 65 and older), regardless of whether or not they have children. Previously, this tax credit was available to individuals aged 25-64 without dependents. The new rules for tax year 2021 allow more childless people to qualify for the credit. How much is the EITC? The Earned Income Credit amount was temporarily expanded for 2021, allowing qualified childless taxpayers to claim a credit of up to $1,502 on...

Both taxpayers and the IRS will face some unique challenges when filing and processing federal tax returns for tax year 2021. To help you out, here are five tips that will help you avoid delays and ensure a smoother tax filing process for both sides. 1. Collect all tax documents before filing To file the most accurate federal income tax return and avoid discrepancies, ensure you have received all the tax forms you need beforehand. You don’t want to omit a vital form accidentally! Make sure you’ve collected all the W-2s, Form 1099s, and any other tax documents detailing your income from last year before you file. For tax season 2021, this tip is especially important for those who received stimulus payments or advance Child Tax Credit payments last year. If you did, you’d be receiving letters from the IRS detailing what amounts you received. You will need to input exact amounts when filing your return this year, so make sure you have these tax documents on hand when you file. Enter...

We know it’s tempting, but don’t put off filing your taxes! Taxpayers must stay on top of tax deadlines to avoid possible penalties and interest charges for late filing. Falling behind on your tax filing obligations can be stressful. It’s better to file taxes early or on time so you can stop worrying about your taxes and move on to other (more fun) activities. But if you didn’t file your tax return on time this year, it’s not the end of the world. The worst that can happen in the short term is that you could now owe penalties and interest to the IRS — and even those may not be as bad as you think. In fact, there may be no penalty for filers at all in some cases. If you didn’t file your return on time this tax year, here’s what you need to do. If you didn’t file an automatic extension If you didn’t file an  extension , don’t assume it doesn’t matter how long you wait to file now that you’ve missed the deadline. If you owe tax with your return, you will owe a hefty late filin...

You may have heard about new tax reporting rules for businesses using third-party payment apps such as PayPal, Cash App, Venmo, Zelle, etc. This has caused some confusion for app users, but we’re here to help you understand how it will (or won’t) affect your taxes next year. What’s changed? Until this year, payment platforms were not required to report business transactions to the IRS unless you made at least 200 separate transactions totaling at least $20,000 in a calendar year. Beginning Jan. 1, 2022, these thresholds dropped drastically — as a new tax rule, payment apps now must report business transactions totaling $600 or more in a year, regardless of the number of transactions you made. You’ll receive Form 1099-K from the payment app if you meet this threshold. This form is an informational tax document detailing the gross amount of all your reportable transactions. Why did this change happen? The new tax reporting requirement is part of a provision in the American Rescu...

Some people never received or didn’t get their full stimulus payment amount in 2021. If this applies to you, or if you gained any dependents in 2021, you might be able to claim the 2021 Recovery Rebate Credit — even if you don’t usually file taxes. Check out our FAQs below for general information on who is eligible for this important tax relief and how to claim the credit on your return this tax year. What is the Recovery Rebate Credit? The third Economic Impact Payment (stimulus payment) was an advance payment of the 2021 Recovery Rebate Credit given to eligible individuals. While most people received their third stimulus check in 2021, some Americans only received a partial payment or never received their entitled stimulus payment due to the IRS not knowing their updated tax situation. If you are missing all or part of your third stimulus payment, you can claim the amount as a Recovery Rebate Credit on your 2021 income tax return. How is the 2021 Recovery Rebate Credit differ...

Raising kids is expensive. Thankfully, becoming a parent comes with some valuable tax breaks — most notably, the Child Tax Credit (CTC). What is the Child Tax Credit? The CTC is a tax credit for parents of dependent children designed to help offset the cost of raising kids. For tax year 2021, the CTC is fully refundable, meaning you can claim this tax credit even if you do not owe any taxes or didn’t earn any income last year. On your 2021 return, you can claim the CTC for any children ages 17 or under (in prior years, you could only claim the credit for children under 17). How does the Child Tax Credit work? In 2021, many families received advance Child Tax Credit payments monthly from July through December. If you received these monthly payments, you will be able to claim the rest of your Child Tax Credit when you file this year. Like other tax credits, the CTC is valuable because it reduces your tax bill on a dollar-for-dollar basis. For example, if your adjusted gross incom...

The Internal Revenue Service has started sending letters to taxpayers who received advance Child Tax Credit (CTC) payments or the third round of stimulus checks. If you received both or either of these payments, keep an eye on your mailbox and hold onto these IRS letters! They will help you file an accurate income tax return this filing season. Letter 6419 for advance CTC recipients The IRS began sending Letter 6419 to advance CTC payment recipients in late December and will continue mailing these letters into January. What is Letter 6419? If you received any advance Child Tax Credit payments during 2021, Letter 6419 will tell you the total CTC amount you received and how many qualifying children were used to determine the payments. If you received too much or not enough CTC payments, Letter 6419 will help you rectify any inaccurate amounts when filing your 2021 return. If you were overpaid, you may need to repay the excess CTC funds; if you weren’t paid enough, you will be able...

New to small business taxes and all they entail? In this article, we’ll cover some of the most frequently asked small business tax questions, such as what you can and can’t deduct on your tax return, how to save for retirement, and more. Let’s dive right in! What small business expenses can I deduct? As a new small business owner, this is one of the first questions you might be asking as you prepare to file your small business taxes. To help you figure out what you can and can’t deduct on your small business income tax return, check out our ultimate list of small business tax credits and deductions you should know about this tax season. From deducting your business startup costs to writing off your vehicle expenses, this list covers 16 tax-deductible business expenses you may be able to take advantage of this year. How do I calculate travel expenses when using my personal car for my business? If you use your personal car for business purposes, you can still deduct vehicle and ...

Curious about the business tax deadlines that you should mark on your calendar this tax season? Here’s what small business owners need to know. Deadlines for filing small business tax returns There are different filing deadlines to be aware of depending on what type of business you have. Below are the key tax calendar dates to watch for in 2022. Jan. 31, 2022 : Deadline for any employees or independent contractors you hired last year to receive their W-2, 1099-NEC, or 1099-MISC tax forms. March 15, 2022 : Deadline to file business tax returns for partnerships, S corporations, or LLCs that are taxed as partnerships (Note that this is the deadline for calendar year filers. While most taxpayers fall under this category, there are special exceptions for fiscal-year taxpayers. If your tax year doesn’t start on Jan. 1, you will instead follow the IRS fiscal year due date Deadline to file Form 2553 to switch your business election to an S corporation (S corp) for tax year 2022. If y...

Ever since the U.S. first introduced the Child Tax Credit (CTC) in 1997, Puerto Rican residents with taxable income have been eligible to claim payments for their children — but there was a catch. In previous years, families in Puerto Rico also needed to have at least three children to qualify for the credit. This restriction made only approximately 11 percent of the population in Puerto Rico eligible to claim the CTC in years past. But, thanks to the American Rescue Plan introduced in March of last year, those requirements have been lifted for 2021. Here’s what Puerto Rican families need to know about claiming the Child Tax Credit this year. Who qualifies for the CTC in Puerto Rico in 2021? All Puerto Rican residents with at least one qualifying child who lived in Puerto Rico for at least half the year in 2021 can claim the Child Tax Credit this year. The credit is fully refundable, which means Puerto Rican families do not need taxable income to claim the payment. Many residen...

If you received advance Child Tax Credit (CTC) monthly payments last year, you should be getting Letter 6419 from the IRS. This letter details the total advance payments you received last year and lets you know how much of the credit you can still expect to claim when filing your 2021 tax return. However, the IRS recently announced that some letters might be inaccurate. While this only seems to impact a small group of people, incorrect letters could lead parents to claim a bigger credit amount than they qualify for. Here’s what you need to know. Who is receiving inaccurate CTC letters and why? The IRS has said the people most likely to receive inaccurate Child Tax Credit letters could fall into one of the following categories: You moved in December 2021 You changed bank accounts in December 2021 Due to either of the circumstances above, your last monthly CTC payment may have been undeliverable, or your direct deposit may have bounced from your old bank account, causing your l...