11/24/2020
What should you be asking your tax preparer now!
1. Are my estimated tax payments correct?
Estimates were based on last years tax return. Since this year has been an unusual year you may have made a lot less. Or maybe you had a better year than usual. It’s very possible that the taxes you’re paying in this year need adjusted so when your preparer does your return there are no surprises. So visit with your preparer and make adjustments in the last quarter.
2. What’s impact does the government stimulus have on my taxes?
If you took advantage of the Paycheck Protection Program, good for you. If your loans get forgiven, you won’t be taxed on that. But the bad news is - as of now, the expenses you incurred that are eligible for forgiveness aren’t deductible either, which can create a large tax liability. That’s because if your revenues this year were close to last year’s, your income will be higher. Also, If you paid employees for time off under the Families First Coronavirus Relief Act, then you’re entitled to a tax credit after the year is over. Or you might have taken advantage of the Employee Retention Tax Credit. If you deferred payroll taxes, you will still owe them next year. All of these things will impact your tax liability and need to be addressed with your tax preparer.
3. What about my retirement?
If you’ve been building up some savings, it’s a great opportunity to make more contributions to your 401(k) or IRA. So be sure to check your limits with your tax preparer
4. Should I invest capital in equipment?
Many of my clients are using cash or taking advantage of low interest rates to grab up deals on needed equipment, furniture, technology and other capital items at steep discounts. Often these purchases qualify for accelerated depreciation under the Section 179 deduction, which means a huge tax savings. Check with your tax consultant for advise.
5. What’s the tax impact of working from home?
You may be able to deduct more for your home office. But then again, you may owe more payroll taxes for employees who are working out of state. Make sure you understand any potential liabilities — or benefits to your particular situation.
2020 has been an unprecedented year and taxes are one of your largest expenses. Combine those two and in order to make sure you’re not facing an unexpected liability, you should be talking to your tax consultant now.
