Damselfly Accounting and Tax Services

01/20/2025

Another tax season is here!! Who needs help with taxes or bookkeeping? Hit us up before it gets too crazy!

05/02/2024

Are you a small business owner juggling multiple hats and drowning in paperwork? Let us lighten your load! At Damselfly Accounting, we specialize in providing comprehensive accounting services tailored to the unique needs of small businesses like yours.

Why choose us?

Expertise You Can Trust: Our team consists of experienced accountants who understand the ins and outs of small business finance. We stay up-to-date with the latest regulations and tax laws so you can focus on growing your business with peace of mind.
Personalized Solutions: We don't believe in one-size-fits-all solutions. Whether you need help with bookkeeping, tax preparation, payroll processing, or all of the above, we'll work closely with you to develop a customized plan that fits your business goals and budget.
Save Time and Money: Outsourcing your accounting tasks to us means you'll have more time to focus on what you do best – running your business. Plus, our efficient processes and competitive rates can help you save money in the long run.
Reliable Support: We're more than just your accountants – we're your partners in success. Count on us to be there for you whenever you have questions or need assistance, providing reliable support every step of the way.
Ready to streamline your finances and take your business to the next level? Contact us today to schedule a consultation and see how Damselfly Accounting can help you achieve your financial goals!

04/09/2024

Check out our new business cards, with that handsome fella right there on the front.

03/29/2024

Be sure to check out our ad in the Suncoast News!

03/20/2024

Seven warning signs of incorrect Employee Retention Credit claims for businesses to review as key March 22 deadline approaches

WASHINGTON — To counter promoters that marketed misleading information about the Employee Retention Credit (ERC), the Internal Revenue Service urged businesses to review seven suspicious signs of a bad claim and see if the agency’s special programs can help them avoid future compliance issues.

To combat a wave of dubious ERC claims, the IRS has sharply increased compliance action through audits and criminal investigations – with more activity planned in the future. To help those businesses that were misled, the IRS has created special programs to help, including a limited-time offer through March 22 for employers to correct improper ERC claims at a sharp discount.

Employers who improperly claimed ERC can avoid penalties and interest – and even get a discount on repayments if they apply by March 22, 2024, to the ERC Voluntary Disclosure Program. The IRS also offers a special claim withdrawal process for businesses whose claim is still pending. Taking steps now to resolve these issues can help businesses get right and avoid future IRS action, and the agency urged businesses to immediately seek the help of a trusted tax professional to get help.

“Time is running out to take advantage of special IRS programs designed to help businesses misled into making questionable Employee Retention Credit claims,” said IRS Commissioner Danny Werfel. “We have set up a special program that allows repayment of bad claims at a steep discount, and we’re also offering those with pending claims to withdraw with no strings attached. Good people have gotten caught up in the frenzy around this credit, and the IRS wants to help those who want to get right through these special, limited-time programs. There are seven important red flags that businesses should review to determine if their claim is questionable.”

Seven suspicious signs an ERC claim could be incorrect
Too many quarters being claimed
Some promoters urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon. Employers should carefully review their eligibility for each quarter.

Government orders that don’t qualify
Some promoters told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily. This is false. To claim the ERC under government order rules:

Government orders must have been in effect and the employer’s operations must have been fully or partially suspended by the government order during the period for which they’re claiming the credit.
The government order must be due to the COVID-19 pandemic.
The order must be a government order, not guidance, a recommendation or a statement.
Some promoters suggest that an employer qualifies based on communications from the Occupational Safety and Health Administration (OSHA). This is generally not true. See the ERC FAQ about OSHA communications and the 2023 legal memo on OSHA communicationsPDF for details and examples.

The frequently asked questions about ERC – Qualifying Government Orders section of IRS.gov has helpful examples. Employers should make sure they have documentation of the government order related to COVID-19 and how and when it suspended their operations. Employers should avoid a promoter that supplies a generic narrative about a government order.

Too many employees and wrong calculations
Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period. Employers should review all calculations to avoid overclaiming the credit. They should not use the same credit amount across multiple tax periods for each employee. For details on credit amounts, see the ERC 2020 vs 2021 Comparison Chart.

Business citing supply chain issues
Qualifying for ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for ERC. An employer needs to ensure that their supplier’s government order meets the requirements. Employers should carefully review the rules on supply chain issues and examples in the 2023 legal memo on supply chain disruptionsPDF.

Business claiming ERC for too much of a tax period
It's possible, but uncommon, for an employer to qualify for ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter. A business in this situation can claim ERC only for wages paid during the suspension period, not the whole quarter. Businesses should check their claim for overstated qualifying wages and should keep payroll records that support their claim.

Business didn’t pay wages or didn’t exist during eligibility period
Employers can only claim ERC for tax periods when they paid wages to employees. Some taxpayers claimed the ERC but records available to the IRS show they didn’t have any employees. Others have claimed ERC for tax periods before they even had an employer identification number with the IRS, meaning the business didn’t exist during the eligibility period. The IRS has started disallowing these claims, and more work continues in this area as well as other aspects of ERC.

Promoter says there’s nothing to lose
Businesses should be on high alert with any ERC promoter who urged them to claim ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment, penalties, interest, audit and other expenses.

The IRS has an interactive ERC Eligibility Checklist that tax professionals and taxpayers can use to check potential eligibility for ERC. It’s also available as a printable guidePDF. The IRS’s frequently asked questions on ERC also include links to additional resources and some helpful examples.

More details on ERC Voluntary Disclosure Program, special withdrawal option
The IRS has two programs to voluntarily resolve improper claims and reduce costs and follow-up steps for businesses who fell for misinformation and aggressive marketing about the ERC.

The ERC Voluntary Disclosure Program, available through March 22, 2024, is for employers who need to repay ERC they received by Dec. 21, 2023, either as a refund or as a credit on a tax return. This option lets a taxpayer repay the incorrect ERC, minus 20%, for any tax period they weren’t eligible for ERC. Generally, businesses who enter this program don’t have to amend other returns affected by the incorrect ERC and don’t have to repay interest they received from the IRS on an ERC refund.
Businesses should quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet. Taxpayers who received an ERC check but haven’t cashed or deposited it can also use this process to withdraw the claim and return the check. The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply.

03/04/2024

Now offering notary services.

02/28/2024

Introducing Damselfly Accounting and Tax Services - Your Trusted Partner for Financial Success!

Are you a small business in need of reliable bookkeeping and tax services? Look no further! Damselfly Accounting and Tax Services is here to support you every step of the way.

With our personalized attention and expertise, we are committed to providing you with the assurance that your financial matters are in capable hands. Our dedication to excellence is reflected in our investment in professional development, cutting-edge technology, and strong business partnerships. We stay current and equipped with the latest tools and knowledge to best serve our clients.

At Damselfly Accounting and Tax Services, we believe in building lasting relationships with our clients. We see each engagement as a partnership where your success is intertwined with ours. Our collaborative approach ensures that we develop a customized strategy specifically designed to meet your unique needs.

Here are the services we offer:
* Tax Services: Personal and Corporate Tax Returns, Personal Tax Planning
* Payroll Services: Calculating Withholdings, Delivering Payments to Employees
* Business Services: Incorporation, Notary Services, QuickBooks Services
* Accounting and Bookkeeping: Full Service Bookkeeping, Accounts Payable/Receivable, Cashflow and Budget Analysis

When it comes to your financial success, trust Damselfly Accounting and Tax Services. We prioritize strong client relationships and offer personalized support with a deep understanding of financial matters.

Visit our website at https://damselflyaccounting.com to learn more about our services and to schedule a consultation. Let us take care of your bookkeeping and tax needs, so you can focus on growing your business.

02/28/2024

IRS adds two key experts to focus on cryptocurrency, other digital assets

WASHINGTON — The Internal Revenue Service today announced the addition of two private-sector experts to help the agency’s efforts in the cryptocurrency and other digital assets arena.

Sulolit “Raj” Mukherjee, JD, and Seth Wilks, CPA, have been hired as executive advisors.

The pair, who have extensive experience in the tax and crypto industries, will help lead IRS efforts building service, reporting, compliance and enforcement programs focused on digital assets.

“This is a complex and evolving sector that has major tax administration implications,” said IRS Commissioner Danny Werfel. “It’s important we get this right for taxpayers and the nation. Pulling in expertise from the private sector to work with the IRS team is critical to successfully building the agency’s efforts involving digital assets and helping us do it in a way that works well for everyone.”

Mukherjee has been a tax executive for more than 10 years in tax compliance and tax information reporting for financial institutions and has extensive experience in the crypto industry. He joins the IRS from a private blockchain software technology company where he served as Global Head of Tax.

Wilks comes to the IRS having worked in the digital asset tax policy space for the past six years. Prior to this Wilks worked extensively with tax compliance and planning issues related to multinational corporations and manufacturing, with a focus on complex supply chains, transfer pricing and cross-border transactions.

“Seth and Raj expand our ability to understand this sector while designing systems for reporting of cryptocurrency and digital assets and related transactions,” said Doug O'Donnell, IRS Deputy Commissioner, Services and Enforcement. “Improving employee capacity and access to tools in this rapidly evolving global landscape is a top IRS priority.”

With funding from the Inflation Reduction Act, the IRS is working on a variety of taxpayer service and technology improvements as well as expanding enforcement efforts in complex, high-wealth areas where there are compliance concerns. The IRS is also focused on compliance in emerging areas.

Expanded work on digital assets is one of the priority areas where the IRS will focus, including work through the John Doe summons effort and the release of proposed regulations of broker reporting in August 2023 (see IR-2023-153 for more on reporting).

A digital asset is a digital representation of value that is recorded on a cryptographically secured, distributed ledger or any similar technology. Common digital assets include convertible virtual currency and cryptocurrency; stablecoins; and non-fungible tokens (NFTs).

Everyone who files Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120, 1120 and 1120S must check one box answering either "Yes" or "No" to the digital asset question.

02/26/2024

Tax Time Guide 2024: What to know before completing a tax return

WASHINGTON — During the busiest time of the tax filing season, the Internal Revenue Service kicked off its 2024 Tax Time Guide series to help remind taxpayers of key items they’ll need to file a 2023 tax return.

As part of its four-part, weekly Tax Time Guide series, the IRS continues to provide new and updated resources to help taxpayers file an accurate tax return. Taxpayers can count on IRS.gov for updated resources and tools along with a special free help page available around the clock. Taxpayers are also encouraged to read Publication 17, Your Federal Income Tax (For Individuals) for additional guidance.

Essentials to filing an accurate tax return
The deadline this tax season for filing Form 1040, U.S. Individual Income Tax Return, or 1040-SR, U.S. Tax Return for Seniors, is April 15, 2024. However, those who live in Maine or Massachusetts will have until April 17, 2024, to file due to official holidays observed in those states.

Taxpayers are advised to wait until they receive all their proper tax documents before filing their tax returns. Filing without all the necessary documents could lead to mistakes and potential delays.

It’s important for taxpayers to carefully review their documents for any inaccuracies or missing information. If any issues are found, taxpayers should contact the payer immediately to request a correction or confirm that the payer has their current mailing or email address on file.

Creating an IRS Online Account can provide taxpayers with secure access to information about their federal tax account, including payment history, tax records and other important information.

Having organized tax records can make the process of preparing a complete and accurate tax return easier and may also help taxpayers identify any overlooked deductions or credits.

Taxpayers who have an Individual Taxpayer Identification Number or ITIN may need to renew it if it has expired and is required for a U.S. federal tax return. If an expiring or expired ITIN is not renewed, the IRS can still accept the tax return, but it may result in processing delays or delays in credits owed.

Changes to credits and deductions for tax year 2023
Standard deduction amount increased. For 2023, the standard deduction amount has been increased for all filers. The amounts are:

Single or married filing separately — $13,850.
Head of household — $20,800.
Married filing jointly or qualifying surviving spouse — $27,700.
Additional child tax credit amount increased. The maximum additional child tax credit amount has increased to $1,600 for each qualifying child.

Child tax credit enhancements. Many changes to the Child tax credit (CTC) that had been implemented by the American Rescue Plan Act of 2021 have expired.

However, the IRS continues to closely monitor legislation being considered by Congress affecting the Child Tax Credit. The IRS reminds taxpayers eligible for the Child Tax Credit that they should not wait to file their 2023 tax return this filing season. If Congress changes the CTC guidelines, the IRS will automatically make adjustments for those who have already filed so no additional action will be needed by those eligible taxpayers.

Under current law, for tax year 2023, the following currently apply:

The enhanced credit allowed for qualifying children under age 6 and children under age 18 has expired. For 2023, the initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where AGI income exceeds $200,000 ($400,000 in the case of a joint return). The amount of the CTC that can be claimed as a refundable credit is limited as it was in 2020 except that the maximum ACTC amount for each qualifying child increased to $1,500.
The increased age allowance for a qualifying child has expired. A child must be under age 17 at the end of 2023 to be a qualifying child.
Changes to the Earned Income Tax Credit (EITC). The enhancements for taxpayers without a qualifying child implemented by the American Rescue Plan Act of 2021 will not apply for tax year 2023. To claim the EITC without a qualifying child in 2023, taxpayers must be at least age 25 but under age 65 at the end of 2023. If a taxpayer is married filing a joint return, one spouse must be at least age 25 but under age 65 at the end of 2023.

Taxpayers may find more information on Child tax credits in the Instructions for Schedule 8812 (Form 1040).

New Clean Vehicle Credit. The credit for new qualified plug-in electric drive motor vehicles has changed. This credit is now known as the Clean Vehicle Credit. The maximum amount of the credit and some of the requirements to claim the credit have changed. The credit is reported on Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit, and on Form 1040, Schedule 3.

More information on these and other credit and deduction changes for tax year 2023 may be found in the Publication 17, Your Federal Income Tax (For Individuals), taxpayer guide.

1099-K reporting requirements have not changed for tax year 2023
Following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion, the IRS recently released Notice 2023-74 announcing a delay of the new $600 reporting threshold for tax year 2023 on Form 1099-K, Payment Card and Third-Party Network Transactions. The previous reporting thresholds will remain in place for 2023.

The IRS has published a fact sheet with further information to assist taxpayers concerning changes to 1099-K reporting requirements for tax year 2023.

Form 1099-K reporting requirements
Taxpayers who take direct payment by credit, debit or gift cards for selling goods or providing services by customers or clients should get a Form 1099-K from their payment processor or payment settlement entity no matter how many payments they got or how much they were for.

If they used a payment app or online marketplace and received over $20,000 from over 200 transactions,

the payment app or online marketplace is required to send a Form 1099-K. However, they can send a Form 1099-K with lower amounts. Whether or not the taxpayer receives a Form 1099-K, they must still report any income on their tax return.

What’s taxable? It’s the profit from these activities that’s taxable income. The Form 1099-K shows the gross or total amount of payments received. Taxpayers can use it and other records to figure out the actual taxes they owe on any profits. Remember that all income, no matter the amount, is taxable unless the tax law says it isn’t – even if taxpayers don’t get a Form 1099-K.

What’s not taxable? Taxpayers shouldn’t receive a Form 1099-K for personal payments, including money received as a gift and for repayment of shared expenses. That money isn’t taxable. To prevent getting an inaccurate Form 1099-K, note those payments as “personal,” if possible.

Good recordkeeping is key. Be sure to keep good records because it helps when it’s time to file a tax return. It’s a good idea to keep business and personal transactions separate to make it easier to figure out what a taxpayer owes.

For details on what to do if a taxpayer gets a Form 1099-K in error or the information on their form is incorrect, visit IRS.gov/1099k or find frequently asked questions at Form 1099-K FAQs.

Direct File pilot program provides a new option this year for some
The IRS launched the Direct File pilot program during the 2024 tax season. The pilot will give eligible taxpayers an option to prepare and electronically file their 2023 tax returns, for free, directly with the IRS.

The Direct File pilot program will be offered to eligible taxpayers in 12 pilot states who have relatively simple tax returns reporting only certain types of income and claiming limited credits and deductions. The 12 states currently participating in the Direct File pilot program are Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state and Wyoming. Taxpayers can check their eligibility at directfile.irs.gov.

The Direct File pilot is currently in the internal testing phase and will be more widely available in mid-March. Taxpayers can get the latest news about the pilot at Direct File pilot news and sign up to be notified when Direct File is open to new users.

Finally, for comprehensive information on all these and other changes for tax year 2023, taxpayers and tax professionals are encouraged to read the Publication 17, Your Federal Income Tax (For Individuals), taxpayer guide, as well as visit other topics of taxpayer interest on IRS.gov.

Form 1099-K reports payments from payment apps or online marketplaces and from credit, debit or stored-value cards. Use it to help figure and report your correct income on your tax return.

02/20/2024

IRS: Many farmers and fishers face March 1 tax deadline

WASHINGTON — The Internal Revenue Service today reminded farmers and fishers who chose to forgo making estimated tax payments by January that they must generally file their 2023 federal income tax return and pay all taxes due by Friday, March 1, 2024.

The special March 1, 2024, deadline allows farmers and fishers to avoid any estimated tax penalties. Though several tax-payment options are available, a taxpayer can use a quick, easy and free option to pay from their bank account by using their Online Account or schedule payments in advance using IRS Direct Pay.

The special March 1, 2024, deadline applies to anyone who qualifies as a farmer or fisher and did not make an estimated tax payment by Jan. 16, 2024. Those who made a qualifying payment by Jan. 16, 2024, can wait until the regular April 15, 2024, deadline to file and still avoid estimated tax penalties. See Publication 505, Tax Withholding and Estimated Tax, for details. The deadline is April 17, 2024, in Maine and Massachusetts.

For this purpose, a farmer or fisher is anyone who received at least two-thirds of their gross income from farming or fishing during either 2022 or 2023.

Special rules for disaster areas
Disaster-area taxpayers, including farmers and fishers, have more time to file and pay. Currently, individuals and businesses in parts of Connecticut, Maine, Michigan, Rhode Island, Tennessee and West Virginia, have until June 17, 2024, to file their 2023 return and pay any tax due. This extension is automatic; taxpayers don’t need to file any paperwork or call the IRS to get it.

Like other taxpayers, those in a disaster area who need more time can request a tax-filing extension. Visit IRS.gov/extensions for details.

Paying online is safe, fast and easy
Online Account allows individuals to make same-day payments from a checking or savings account. Taxpayers can also see their payment history, balance and payment plan information, and digital copies of certain notices sent from the IRS.

Taxpayers can use IRS Direct Pay to schedule a payment from their bank account with no registration or login required. Those who need to pay business taxes through the Electronic Federal Tax Payment System (EFTPS) can also choose to use this system to make their individual income tax payments.

For more information about these and other payment options visit IRS.gov/payments.

Forms and publications to use
Farmers
Use Schedule F (Form 1040), Profit or Loss From Farming, to report income and expenses.
Use Schedule SE (Form 1040), Self-Employment Tax, to figure self-employment tax if net earnings from farming are $400 or more.
See Topic no. 554, Self-employment tax, Publication 225, Farmer's Tax Guide, and Agriculture Tax Center for more information.
Fishers
Use Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), to report income and expenses.
Use Schedule SE (Form 1040), Self-Employment Tax, to figure self-employment tax if net earnings from fishing are $400 or more.
See Publication 334, Tax Guide for Small Business, for commercial fishers who file Schedule C.
Related items
For farmers and fishers operating as a partnership or corporation see Publication 541, Partnerships, or Publication 542, Corporations.
For information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax, and Topic no. 416, Farming and fishing income.
Publication 5034 (en-sp), Need to Make a Payment?PDF (English and Spanish)

How to get an extension of time to file your tax return.