12/25/2021
December 2021 Newsletter
As we head into the final month of 2021, there is some information that I would like to make you aware of going forward.
The IRS website IRS.gov has a way for you to sign up to get information regarding your account and what they show at the IRS. Basic things that you can do once you create an account or log in are, get an account transcript of the balances for each tax year, get a wage and earning transcript to verify that the information you receive from your employer is what was turned into the IRS or reported, gambling earnings that are reported, interest income and interest paid for mortgages, pay your payment plan or yearly tax amount due and many other requests. It is a good idea if you are not sure you have received all of your tax documents by mail, login and get that transcript to verify that you are not missing anything. Bring this transcript with you when you bring in your tax documents, this helps us to be sure that you will not get a letter stating that you failed to report income and owe more tax.
This is a reminder; in January 2022 the IRS should be sending out a letter to all people who received the Advance Child Tax Credit payments that were to be sent monthly from July 15th to December 15th. These payments were sent to the parent or guardian who claimed a child under the age of 18 on the 2020 tax return. If you filed a joint return with a child, you may have received that payment as a split payment with the other joint filer on the return, and both filers should receive a letter from the IRS. YOU WILL NEED TO BRING THIS INFORMATION IN WITH YOU TO PREPARE YOUR RETURN. We have been informed that if you do not know the exact amount that you received, if you say you didn’t get it and you did, or if the amount is off, this could cause your return to be pulled from the automated system and be handled individually by hand. This could create an extended delay in the receipt of a refund you may be expecting, could be a 12+ month delay. If you have further questions regarding how this will be handled for parents who trade years or if you had a new baby, refer to the IRS.gov website and there is a whole section related to these issues. You/or spouse if filing a joint return, can login and get the amount that was paid to each. We also discussed this in the October 2021 Newsletter.
We will also need to know if you received the 3rd Economic Impact Payment/Stimulus payment that was $1400 per person that was claimed on the 2020 tax return. Again, if you are not sure if you received it, this is where the IRS.gov website is helpful in determining if you actually received it, and how much if it was not the full amount. You/or spouse if filing a joint return, can login and get the amount that was paid to each. Failure to report this amount correctly, just the same as the Advance Child Tax Payments, will result in your return being pulled out of the automated system and handled individually by hand. This could create an extended delay in the receipt of a refund you may be expecting, could be a 12+ month delay. If you received a letter from the IRS regarding the EIP/Stimulus payment, please bring that in with your other tax documents.
Over the past two years we have had a change in the tax return due dates due to Covid 19. We are anticipating and would ask that you expect that the due dates will go back to the normal dates. Corporate tax returns are due March 15th 2022, Individual tax returns are due April 15th 2022. These are also the deadlines to file an extension requesting a 6 month extension to file the tax return. This does not mean that you have a 6 month extension to pay, if you owe taxes. They expect you to send in a payment for what you estimate to be due by the tax deadline of April 15th due date, even if you have not filed your return. If you are unsure what to do, feel free to contact our office and we can look at your past history and determine the usual amount you are refunded or owe per year. Again, if you have an IRS.gov login you can pay this online.
Another reminder regarding the tax deadlines and filing an extension, in the past we made every effort to file an extension for our clients who filed the prior year as a courtesy. We will still attempt to file these however, we do request that you contact our office by phone, or by email and be sure that we have your business name or individual name on our extension list. If you do not call and it is missed, we are not responsible for any penalty or interest that you may incur. If you expect to get a refund and file after the deadline, it is still a good idea to file an extension even though you should not incur any penalties when there is a refund.
One of the last subjects I will touch base on, if your LLC needs to make a 2553 Election or request that you operate as an LLC but are taxed as an S Corporation. Many people who start a self-employed business choose to start an LLC or Limited Liability Company that gives the owner no personal liability for business liabilities. When you are self-employed or an LLC, you will automatically file a Schedule C and pay approximately 15% self-employment tax/social security tax. If you choose to file an LLC and be taxed as an S Corporation, there still is no personal liability for the business liabilities however, filing this way you do not pay that 15% right off the top of the full profit. The owners/shareholders will have compensation through a payroll. The taxes will be withheld just as if they were an employee, half the self-employment tax/social security tax is withheld through the withholdings and the business pays the other half. The good side of this is that the tax the company pays is a deduction; the payroll amount is also a deduction from the gross income or sales. There is a separate return filed and there is a separate fee for a corporate return. You can make the election to have your LLC file as an S Corp for the current year, only if you make this election prior to March 15th. In order to file your 2022 business as an S Corp you need to make that election by March 15th or you will have to wait until the following year for this to go into effect. There are many other benefits and disadvantages for both. If you would like to discuss what is best for your business, please contact our office and speak with one of our tax specialists.
Please feel free to like our Facebook at Brawe & Company or check out our website at atifinancial.biz We are also asking that you consider giving our office a review on google maps and let us know how we are doing. We strive to provide you with the highest standard of service, and look forward to assisting you in 2022.
Thank you and Happy Holidays
Keith, Lyn, Jennifer, Taylar, and Greg
