Small Business Financials

Wondering what’s changed in the tax world from last year? We put together the top six 2022 federal tax changes that taxpayers like you should know about before filing your income tax return in 2023. Tax year 2021 saw major tax changes due to the coronavirus pandemic, but many of those changes went away in 2022. Let’s look at the main events and how they might impact your tax refund this year. 1. Temporary Child Tax Credit increase from last year has expired The Child Tax Credit (CTC) saw some enhancements last year, including half the credit amount paid to parents in advance monthly payments and an increase to the credit amount itself. These changes were temporary and have not been extended through tax year 2022. Take a look at the table below to compare last year’s enhanced CTC with this year’s. Requirements 2021 CTC 2022 CTC Amount Up to $3,600 (depending on age) $2,000 Dependent’s age Children ages 5 and younger qualify for up to $3,600 Children ages 6-17 quali...

Being your own boss comes with a variety of perks. But it also forces you to handle work typically taken care of by a human resource or finance department. For example, you must find your own healthcare plan and deduct taxes from your paycheck. And, when it comes to saving for retirement, it’s your responsibility to start a savings fund. Here are a few things to keep in mind as you plan to retire while self-employed. You’re in charge of your future. As the boss, getting distracted from your financial needs is easy. You’re often too busy concentrating on the business’s success to remember to save for life down the road. Or, maybe you put too much trust in the idea that you’ll eventually make it big and become incredibly wealthy. In which case, you forget about saving for retirement now. In either scenario, it’s always wise to have an alternative plan in place. You know the saying — better safe than sorry! Save 40 percent of your paychecks. ...

Due to changes in what companies are required to report to the IRS this tax year, more taxpayers will receive Form 1099-K than in previous years. For some, the arrival of this unexpected tax form may be confusing and stressful — but don’t panic. We’re here to help you report this correctly on your income tax return. What is Form 1099-K? Form 1099-K records transactions from credit cards and third-party payment networks like PayPal, Venmo, or Square. Once you hit a certain threshold in payments received from these platforms, the third-party app is required to send you a 1099-K. They will also send copies of this 1099-K to the IRS and the state. Why did I receive a 1099-K? If you received a 1099-K this year, it means you had at least $600 in payment transactions through one of these third-party apps. This means you could receive more than one 1099-K — for example, if you hit the $600 threshold on both Venmo and Cash App, you’d receive a 1099-K from both companies. This $600 thresh...

With the holidays just around the corner and the end of 2022 approaching fast, you might be wondering: Should I sell my stocks before the end of the year? Maybe you’re looking for a little extra cash to help cover all the money you spent on holiday gifts, or perhaps you simply want to give yourself the gift of a potential tax deduction next year. Whatever the reason, you’re wondering how selling investments might affect your taxes. Don’t panic! We’ve compiled some useful information to help you decide what course of action to take. Paying taxes on your capital gains If you sell your investments for more than they’re worth because they’ve appreciated in the time you’ve owned them, you’ll report what’s called a capital gain. You can make capital gains from investments like stocks, bonds, and real estate. The amount of tax you are going to pay for capital gains depends upon whether you had a short-term or long-term capital gain. Short-term gains are for less than one year, and long...

The Earned Income Tax Credit (EITC) is a refundable tax credit designed in part to reduce the tax burden on low-income individuals and families both with and without children. As a fully refundable credit, if the amount of tax you owe is less than the credit amount you qualify for, you will be able to receive the difference as a tax refund. For tax year 2022, the maximum credit is $6,935. Your final credit amount is determined by your filing status, income, and the number of qualifying children a taxpayer claims on their tax return. Earned income includes all taxable income and generally includes wages, tips, and net earnings from self-employment. Earned Income Tax Credit calculator instructions Step 1:  Select your tax year Step 2:  Select your tax filing status Step 3:  Enter your income Step 4:  Select your qualifying children Step 5:  Select your age at the end of the last tax year Note: For tax year 2021, you can elect to use your 2019 earned in...

College athletes scored a win in 2021 when the NCAA changed its policy, granting student-athletes the right to profit from their name, image, and likeness (NIL). But can you still be claimed as a dependent if you earn NIL compensation? We’ve gathered some basic questions about NIL and how it could affect your taxes and dependency status below. Do I need to file a tax return if I earn NIL income? Yes, you must file a tax return if you earn at least $400 in NIL compensation. If you’re earning compensation from NIL deals, the IRS considers you an independent contractor, meaning you are self-employed. Any NIL compensation you receive will be reported to you on Form 1099-NEC or Form 1099-K. When you file your federal income tax return, you’ll report any self-employment income and losses on Schedule C. For more detailed info on what counts as taxable NIL income and how to appropriately file your taxes, check out Tax Tips for College Athletes and The Tax Reality of NIL Income . Can m...

Your tax return evolves with your career and financial situation — so what does tax filing look like for student-athletes earning (or not earning) NIL after graduation? Let’s look at a few scenarios to help you know what to expect once you graduate. Earning NIL after college Profiting from your name, image, and likeness (NIL) doesn’t have to end once you graduate — even if your professional career is outside the sporting world. Scenario 1: The NIL side gig You don’t have to say goodbye to earning NIL compensation if you decide to leave athletics behind after graduation. If it’s an option for you, NIL money could make a good side hustle. Back in college, you probably got used to disclosing the details of your NIL contracts to your school and the NCAA for approval. For instance, maybe you’re working a typical 9-5 job after graduation, but a local business reaches out wanting you to help promote their product. You agree, and suddenly you’re back to making NIL compensation. In the...

Thinking of switching online tax prep providers this year? Look no further. E-filing with TaxAct ® gives you the tools and expert support you need to ensure you get your maximum refund * . After all, your tax refund is money you’ve already earned — we want to help you get it all back! 1. Pay up to 20 percent less to file federal At TaxAct, we don’t believe you should have to pay a premium price to file your taxes. That’s why the cost to file a 2022 federal return with us is up to 20 percent less than TurboTax. 1 File for less and get more this tax season by choosing a DIY e-file solution that is easier on your pocketbook  and  helps you uncover tax advantages to get your maximum refund! 2. File confidently with a $100k Accuracy Guarantee Any tax software provider can promise to help you get your biggest refund possible. At TaxAct, we go one step further by creating a guarantee that stands above the rest. Choosing to file with any of our TaxAct consumer online pr...

It’s time to review some important tax basics before the upcoming tax season. Here are seven things to remember when e-filing your federal income tax return this year — and how each could impact your refund amount. 1.       Life events As you go through the e-filing process, TaxAct ® provides a sneak peek of your estimated Federal Refund . This number will fluctuate as you input more of your tax information. Before you begin filling out your federal return, we’ll ask you basic questions about your marital status, whether you have kids, or if you had any significant life events happen this tax year. One of the best things you can do to get an accurate refund estimate is to fill out your Basic Info before you start inputting any of your tax forms. While it might be tempting to skip this step and jump right into your W-2s and other income, not so fast! Your answers to the Basic Info questions help us guide you to which tax credits and deductions you ...

You’ve heard about the new IRS reporting thresholds for Form 1099-K that went into effect this year, but you may have some follow-up questions about how it applies to you. Let’s look at some common concerns we see from online sellers and how to handle some unique situations, like selling inherited items. You only owe income tax on the net profits you make from a sale. To determine your profits, you need to keep track of each item’s sale price and any other expenses related to the sale. How to calculate your taxable income from an online sale If you are a casual seller and you sell a personal item for more than you originally paid, the profit you make is considered a capital gain. Capital gains are taxable income and must be reported on your tax return using Schedule D. To determine your taxable gains when selling personal assets, you will need this formula: Sale Price (what you sold the item for) – Cost Basis (what you paid for the product + any fees associated with the sale o...