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|Posted on April 9, 2020 at 9:04 PM||comments (18)|
THE WORLD HAS CHANGED, WE LOST JOBS, WE LOST BUSINESSES, WE GOT LAID OFF.
WHAT IN THE WORLD DO WE DO NOW?
Here are some basic, basic hints on what to do next. I made these very, very general guidelines. As always, with tax law, and especially THESE new laws which seem to be modified and interpreted differently each day, take this as a guide, not intended to be used in your particular case without consulting specifically with your own tax advisor.
IF YOU ARE A W2 EMPLOYEE:
If you have been laid off, AND your employer HAS NOT already filed a “PARTIAL UNEMPLOYMENT CLAIM” on your behalf (you would have received a letter from GA DEPT OF LABOR if he has), then you can file your own unemployment online at GA DEPT OF LABOR. (www.dol.georgia.gov) If your employer HAS filed the PARTIAL claim, you must respond to the letter you received from GA DOL, and set up your bank account info, following instructions they send you. Combined with the federal unemployment benefit, this should be at least $ 600 to $ 800 per week, for a total period up to four months. Note that normally, Georgia unemployment ranges only from $ 130 to $ 300 per week maximum, but the
federal government has supplemented with an additional $ 600 weekly.
IF YOU ARE A SUBCONTRACTOR (HAVE YOUR OWN BUSINESS AND DO NOT GET A W2)
GA Dept of Labor has not finalized the application process on its website, but should the week of April 13. This will allow you to file a claim online which when combined with Federal benefits could be $ 600 to $ 800 per week.
BUSINESSES, CORPORATIONS, SOLE PROPRIETORS, LLCS
The SBA (www.SBA. gov) has several options to try to work through:
ECONOMIC INJURY LOAN (EIDL)
On their website, you will find a yellow menu bar that shows “Corona Virus- Relief Options” info. If you click on that, and search for “ Coronavirus Funding Options” ,you should find an application for EIDL (which mentions up to a $ 10,000 grant). Some business info is requested regarding gross revenues, expenses, ownership, and a bank account must be supplied in order to submit. So far, none of my folks have received any email updates or monies regarding that form.
PAYCHECK PROTECTION PROGRAM (PPP)
This program was created to encourage employers to not lay off their employees by offering a loan that is forgivable, under certain circumstances, which would be used to cover the payroll for employees not layed off over the next 2 and a half months. The requested loan amount is based on the monthly average of your last year’s W2 payroll paid to employees (not subcontractors or 1099 individuals), times two and a half (so only W2 payroll is used in this category). Note that some banks actually will add payments to sub contractors into this category, but the Treasury Department has stated only W-2 employees should be in this category, so there is still confusion here.
For a very rough example, last year’s W2 payroll, including the owner’s W2, was
$100,000. To that number, we add medical insurance paid for employees, payroll taxes paid by employers, and retirement paid for employees. So if those amounts add $ 20,000, making our total $ 120,.000, this averages monthly to $ 10,000. That times two and a half is $ 25,000, which would be the loan amount. Note that only up to $ 100,000 of the owner’s annual salary is used in the computation.
Very generally, if at least 75% of this loan is used to cover the payroll, along with rent and utilities, and you don’t lay off any employees ,the loan is forgiven.
The PPP application form (Treasury Form 2483) is sent by you to your local bank (most banks restrict the application to customers who already have accounts there). After receiving that application, the bank then requests additional info, tax returns, payroll summaries, copies of W2s, organizational documents, etc. in order to process the request. So a lot of homework needs to be done.
PPP FOR THOSE WHO HAVE NO W2 EMPLOYEES (SOLE PROPRIETORS, SINGLE MEMBER LLCS)
The same PPP application would be used, except the “payroll” amount used is the actual net profit of the business. For example, the business makes $ 250,000 gross , with $ 175,000 of expenses, leaving a profit of $ 75,000. This would be the total “payroll” of the business, along with medical, retirement, etc.
So the lower your profit (which is the normal strategy for tax preparers like me), the lower the amount used to compute the average payroll. So in this example, the monthly average would be $ 6250 per month, times two and a half, so the loan amount would be $ 15,625. Remember, the "payroll amount" used for
purposes of the PPP includes only the "profit" of the business which was
reported as self-employment income to the owner. This would include the
net profit for sole proprietors, Single member LLCs, regular 1099 workers
who file taxes on Schedule C of their Form 1040. This does not include
Sub S corporations (see below).
If you are a 1099 worker, self employed, you can not receive a PPP and unemployment benefits at the same time, so it may actually be more beneficial to go through the GA Dept of Labor website, and apply for unemployment benefits, which could be $ 2400 to $ 3000 per month for up to four months at least, rather than seek a PPP loan. So far, only a few of my clients have been able to submit their PPP application and nobody has received any funding yet. Some banks have stopped temporarily taking new applications. Smaller banks may
allow you to submit the application even if you don’t have an account there. None of my folks have received responses regarding the Economic Injury Grant (EIDL) either.
PPP FOR C CORPORATIONS OR SUB S CORPORATIONS
For these taxpayers, the PPP payroll amount includes only those amounts
paid out by the corporation on which EMPLOYMENT taxes were paid. This includes
W2 payroll for the owner or other W2 employees. This DOES NOT include
owner distributions paid out in the form of pass through K1 income. Note that
a big benefit of S Corporations is the ability to minimize self employment taxes
on the pass through income (owner distributions). However, the PPP payroll
amount only includes that portion reported as wages to the owner (which is
usually a smaller amount compared to the owner distributions).
Again, this information is intended to be very, very general so let me know if more details are needed.
Good luck! It will get better!
Dan McNeely CPA
|Posted on April 9, 2020 at 8:58 PM||comments (17)|
WHAT KIND OF STUFF DO YOU NEED TO BRING ME?
Important things to track down and bring to me to assist in your 2019 taxes:
---LAST year’s return but ONLY if I did not prepare it for you
--- ALL copies of your W-2 from your employer
---Copies of Social Security cards for children born in 2019
--- Form 1095-A ( ONLY if you had medical insurance from the
OBAMACARE Marketplace website last year)
--- Forms 1099 for any extra income you might have earned during the year
--- Forms 1099 for dividends and interest earned
--- Forms 1098 from stock brokerage accounts (sometimes those
don't get mailed out til mid February)
--- Information on any stock sales made during the year (and including
any information on your cost of the stocks you may have sold)
---Forms 1099 for any pension retirement income or IRA distributions
---Forms reporting any unemployment income you may have received
---End of the year statement from your mortgage or home equity loan
detailing the total interest paid along with the property tax amounts
---Closing documents (usually just the settlement statement – front &back)
for all real estate sales and purchases
---Forms reporting any college tuition (1098-T) paid for you or children
---Forms reporting any interest paid on student loans
---Schedule K-1 for partnerships, corporations, and trusts
---Year end receipts from churches, Goodwill, and other charities
---The name, address, and tax id number of child care providers
---Summary of any expenses and income you may have earned in
any side businesses you operated during the year
---A voided check for use in electronic filing
---Copies of your drivers licenses for you and spouse (sometimes needed to
verify identity for IRS)
---And as always any Chic Fil A or Diet Mt Dew you have laying around!!
|Posted on February 5, 2018 at 10:08 AM||comments (155)|
TO: ALL SURVIVORS OF THE U.S. GOVERNMENT CLOSURE,
THE GA BULLDOGS LOSING, THE FALCONS LOSING,
THE BRAVES LOSING, AND GOOD OL’ GA SNOW BLIZZARDS
FROM: R. Daniel McNeely, CPA (770) 594-8796
875 Old Roswell Rd., St F-500 fax(770) 594-7406
Roswell, GA 30076 [email protected]
Here we go once again! Time for you to panic, run to Walmart and buy
file folders and Tupperware boxes to put piles of tax forms and receipts
together. Then spend your perfectly good evening sorting out forms
on your living room watching “The Bachelor” on ABC! TAX TIME!!!
This year, again, we have made it through quite a lot of good news and bad news,
finally culminating in the news that our wonderful government was taking
a small vacation. Fortunately, they opened back up and will soon be back
at full speed, so go ahead and plan that vacation to the Grand Canyon!
Even through all the bad news, lots of good things happened. We had jobs,
we made money, we might have had kids, we might have gotten married
(or unmarried), we saw kids graduate and get jobs and enter the working
world, and we all survived the best way we could. Now what?
We do our taxes! Like the last few years, there have been quite a few
changes to our income taxes. Last minute changes, IDENTITY THEFT
issues, and the government shutdown will cause delays in processing
our returns. The IRS will not even start processing returns until the end
of January and not issue refunds until the end of February. Some tax credits
for some folks and GA refunds may even take up to three months to process!
Fortunately for this year’s tax returns, most folk’s returns will look somewhat similar to last year’s returns. Many of you won't see many differences in the
return for this year compared to last year. As normal, the more you make,
the higher tax bracket you are in, the less credit you get for having kids and
mortgages and making church contributions. My job is to figure all that out
for you, and try not to make you scream at your kids or dog in the meantime!
WHAT MAY AFFECT MOST PEOPLE?
The NEW TAX PLAN will not kick in until next year’s return, as most
of its laws kicked in on January 1, 2018 (more later).
If you HAD insurance through your employer, or you paid for it all year through your own individual plan, and you had it all year, the insurance part probably won’t be a big deal. We dohave to report to the IRS that you did have insurance.
If you HAD NO insurance, or you obtained it by logging into the Insurance
Marketplace (the website that was so slow to work last year), we might have a problem. For those with no insurance, the IRS wants you to pay a small penalty which may cause you to owe when we file the return or will reduce your refund.
For those who USED THE MARKETPLACE to sign up for insurance last year, and especially if you received a reduction or credit in the amount of the monthly medical premiums you had to pay, your refund will probably be affected. If you underestimated your income when you applied for insurance, your refund could be reduced or eliminated in some cases. And the government will be sending you a brand new fancy tax form, a 1095-A, that summarizes all of your insurance activity, which is needed before your return can be done.
IDENTITY THEFT is another big issue this year. The most common problem related to identity theft and income taxes happens when someone uses your Social
Security number and files a “fake” tax return. Then, when you file your
real return, the IRS sends me a nice message that we have a PROBLEM.
Eventually, we get it straight, you get your refund, and all is put back to normal
but it normally takes an extra 6 to 9 months to clear it up! So to combat that
issue, the IRS is doing more checkups on addresses, birthdates, employer
information, etc. and all that will lead to delays in you getting your refund
and possible questions from the IRS. In fact, Georgia has already indicated
they will hold up on refunds for up to 3 months to combat this issue!
I am sending you this tax package, with all of this wonderful information,
to help you prepare your tax documents to bring to me. I really do read updates
and fancy tax books and go to boring seminars to understand all the weird
rules and laws that affect most people. I actually probably know more than
that guy you met on MARTA that said you can deduct the cost of your
entire house as long as you store business files there (you can’t by the way)!
We do keep up with the tax changes, and all the new forms, and all the laws
that affect your taxes. One of my goals is to try and legally reduce how much
the IRS keeps of your hard earned money, while making this process as painless
and simple as possible.
WHAT DO YOU NEED TO DO!
Right now, you are probably getting in the mail all of that junk that says “IMPORTANT TAX DOCUMENT”, from banks, mortgage companies, brokerages, your employer, etc. Start now by keeping all that stuff in one big file, along with any other documents you may have accumulated over the year pertaining to your taxes. That really prevents you from spending a pretty
Saturday morning digging through your pile of Arby coupons, offers from
internet and cable companies, and all those notices telling you that tree companies
are in your area, looking for important documents that ended up stuck between
the pages of that Better Homes and Garden magazine.
When you start assembling your information, just do your best to gather the documents and shove all the stuff you think might be important into an envelope and bring it all to me, and I will sort it out. Remember, my daughter works at a doctor’s office and I get free samples of aspirin!
Many people simply mail their package to me, or you may just drop it
off at your convenience. If you have questions, or need to go over
events and transactions which happened during the year, please call
and set up a quick drop off appointment. We also have a mail slot for “after hour” drop offs. Remember , the earlier you bring your information in, the earlier I can start working on getting you your BIG PILE OF TAX REFUND MONEY back in your wallet. We do encourage you to drop off your package before March 15
(earlier is better!) to assure timely completion before the dreaded date of April 15.
Even with extra staff working here, and my sleeping on the floor at night here,
and eating any leftover food from Subway the night before, it is almost impossible to even look at last minute returns, let alone finish them on time!!!
In closing, I really appreciate your assistance in this job. I hope I make a stressful job a little bit easier for you. Please call if you have questions, unusual circumstances, or if you need to see me personally to tell me about when you fell down on the ice taking your garbage can out the last time it snowed!
I do look forward to helping save you time, headaches, arguments,
and all the aggravation of working on an entire year’s worth of paperwork
and confusing tax documents. Maybe, just maybe, I will save you enough money for a fun dinner at the QuickTrip roller food counter!
DAN MCNEELY, CPA
|Posted on February 5, 2018 at 10:06 AM||comments (783)|
WHAT’S NEW IN THE TAX BILL?
This is a very generalized summary of the new tax bill. Every person’s
circumstance, income, family size, etc. will determine the savings (and hopefully
not additional tax!) of the changes in the tax laws!
LOWER TAX RATE BRACKETS- This should make your take home paycheck slightly higher, since less taxes will be taken out. The brackets will drop on average 2 to 3 % each, along with changes in how much income is taxed at
lower brackets. The higher your income, the more you should save. New tax payroll tax tables should be in place by mid February at your workplace,
so your paycheck should go up slightly sometime in February.
DOUBLES THE STANDARD DEDUCTION- Whereas now many folks
list out separately their mortgage interest and property taxes and church contributions, the new law may make it easier to just take the standard amount
the IRS allows. The deduction for single folks increases from $ 6,350 to $ 12,000 and married folks increases from $ 12,700 to $ 24,000. This means that your mortgage and charitable contributions may not make as much difference as in the past, but you may not have to keep track of all those things as you have in the past.
REDUCES PERSONAL DEDUCTIONS – Only a total of $ 10,000 in state and local taxes (your withholding from your paycheck and your home property taxes)
can be deducted, whereas now there is not a limit. Charitable deductions stay the same as well as student loan interest and IRA contributions.
Mortgage interest is limited to the first $ 750,000 of the loan, and interest
on home equity loans will no longer be deductible (although there may be an exception if the loans are used to fix up or improve your residence).
ELIMINATES PERSONAL EXEMPTIONS – Folks with a lot of kids may lose out, since in years past, you subtracted over $ 4,000 for each dependent. Now there is no deduction. for you, your spouse or your kids.
MEDICAL EXPENSES- Now, expenses over 7.5% of your adjusted income are
a possible deduction for you, instead of the 10% previously, if you have a lot of
unreimbursed medical bills, you might save a little.
OBAMACARE TAX PENALTY FOR NO MEDICAL INSURANCE – No
penalty will be charged starting in 2018, even if you have no medical insurance.
CHILD TAX CREDIT- Previously a parent received a $1,000 credit for each child if family income was less than $ 110,000. Now that credit is $ 2,000, even if
your income is higher( up to $ 400,000). So, for this change, if you have a lot of kids, you may do better! But please don’t go have kids just for this change!
BUSINESS DEDUCTION—Very confusing, but if you own your own
business, like a sole proprietorship, Sub S corporation or partnership,
a special 20% deduction of the profit of the business could be deducted.
However, there are numerous limitations, regarding how much in W2 wages
that the business pays, and your overall personal income. So this may or may
not be a big help, depending on your income and how your business is structured.
BOTTOM LINE OF ALL THE ABOVE
MOST people will save taxes. The more kids you have, the more you should save.
Those with small businesses should save. Those who have very few itemized
deductions now (mortgage, church donations, etc) should save. Those with very
high income (over $450,000 ) should save. It has been projected that the average
family of four in Georgia will save $ 4,000 and the average individual with no
children will save over $ 2,000 a year.
BUT, it certainly NOT going to be a less complicated return, so the good news is,
you will still need ME to do your return!!!
|Posted on February 5, 2018 at 10:04 AM||comments (341)|
IMPORTANT UPDATE ABOUT SCARY NOTICES FROM IRS
We have noticed a large increase in the number of notices from IRS and
Ga Dept of Revenue that clients are receiving, telling you that you owe
extra money, or a penalty, or something is missing. Most of these are incorrect
and are due to IRS misposting or other incorrect processing by their
technicians, or documents you never received from banks or brokerages.
When we receive a notice, we try to handle as many as possible by
mailing in our responses to the IRS, rather than by calling. A typical phone
call requires an hour to reach the right department, and usually they require
a written explanation anyway. Unfortunately, this process could take over
a month to receive a response or before any corrections made to your account.
So what should you do if you receive a notice?
Fax or email us a copy of the notice so we can see what is going on. It
is difficult to decipher what they need until we see their correspondence
and some letters have document id numbers we need when we respond.
Our offices will then prepare a response, whether by phone or mail as
appropriate, to rectify the problem.
Please be patient as we clear the issue, as sometimes we must respond
two to three times to clear the same issue (and in the meantime, you keep
getting scary notices in the mail saying you are going to jail). Eventually,
we will clear it up ! And, so far, none of my clients have gone to jail
(at least for their income taxes)!
|Posted on February 5, 2018 at 10:03 AM||comments (733)|
TAX SCAM ALERTS:
PHONE CALLS TELLING YOU THAT THE IRS IS AFTER YOU, OR YOU OWE MONEY, OR THAT YOU WILL GET ARRESTED IF YOU DON’T PAY
A lot of folks have received phone calls from numbers that
sometimes show “ UNKNOWN” , “PRIVATE”, “WASHINGTON, DC”
or just unfamiliar phone numbers. Sometimes a recording states that you owe a sum of money and that you need to call to make arrangements or you will be ARRESTED.
Please know this is a total SCAM. Our IRS is difficult at times, but
they do not operate that way with their collections and this is a
total 100% fake call. Try not to answer and for sure do not call their
number back. They are very intimidating but just randomly called
you using telemarketing tactics.
IDENTITY THEFT ISSUES
If we file your return and then receive a message stating that a prior
return has been filed, it could mean someone compromised your Social
Security number, filed a fake return before you did, and tried to fool
the IRS into giving them fake refunds. Eventually, we can clear it up,
and although it usually does not affect your overall credit (opening fake accounts, taking over your identity, etc.) it may take 6 to 9 months
to correct the filing so you can receive your actual and proper refund.
PLEASE DON’T BE TRICKED INTO GIVING YOUR SOCIAL SECURITY
NUMBER OR BANK ACCOUNT NUMBER TO UNFAMILIAR PEOPLE OR COMPANIES. REMEMBER, BE CAREFUL WHEN OPENING EMAILS
THAT ASK FOR THAT INFORMATION AS MANY EMAILS ARE “FAKE”
BUT LOOK LIKE THEY ORIGINATED FROM THE ACTUAL COMPANY