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How to Renovate Your Home When Your Business Is Growing
&nbsp;
As a small business owner, you want to see your company succeed and expand. However, a growing company often needs more space. If you operate your business from home, you can make renovations to accommodate your increased workload. <a href="https://enrolledagent.com/">EnrolledAgent.com</a> shares a few tips on how to do so.
&nbsp;
Make Space for a Home Office
If you have a <a href="https://www.extraspace.com/blog/home-organization/diy-projects/spare-room-home-office-ideas/">spare room</a> in your house, you can transform it into your dream home office. Areas such as guest rooms, dining rooms and larger walk-in closets can be redecorated and turned into workspaces. You can also renovate your attic, basement or garage. These spaces may require additional work if unfinished. Ensure the room has adequate insulation, electricity and ventilation to make your office safe and functional.
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If you don't have extra space in your house, you have a few options. First, you can <a href="https://www.amfam.com/resources/articles/at-home/home-additions-costs-and-considerations">build an addition</a> onto your home or a separate structure on your property and convert it into an office. Also, consider moving to a place large enough to balance your business and personal responsibilities.
&nbsp;
Invest in Quality Office Furniture
Apartment Therapy notes that great <a href="https://www.apartmenttherapy.com/how-to-choose-home-office-furniture-36826681">office furniture</a> can help you stay on task and accomplish more. When creating your home office, look for pieces that enhance the room's form and function. For example, if your work requires a high-tech setup, consider buying a desk with cable management features. You should also account for comfort and <a href="https://www.pcmag.com/how-to/everything-you-need-to-set-up-an-ergonomic-home-office">ergonomics</a> if you spend significant time seated. Items like task chairs, keyboard trays and monitor risers can help you maintain a healthy posture while you work.
&nbsp;
Optimize Your Space for Productivity
When designing your new home office, you should make choices that <a href="https://www.more.com/lifestyle/stylish-home/10-home-office-decorating-ideas-increase-productivity/">support productivity</a>. Bringing more light into your office can help you stay focused and energized. Decorate with soft colors and glossy textures that boost natural light during the day. Task lighting can illuminate workspaces like your desk into the evening hours.
&nbsp;
According to Progressive Desk, a <a href="https://www.progressivedesk.com/blogs/wellbeing-productivity/clutter-free-workspace-for-increased-productivity">well-organized desk</a> free of clutter can help you avoid distractions, appear professional and find peace of mind while you work. Start by removing any unnecessary items from your office. Invest in storage solutions like desk organizers and filing cabinets so that everything has its place.
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Hire Professional Services to Help
Creating a new home office can be a lot of work. Fortunately, there are professionals and services that can guide you through the process. Interior designers and home organizers can help you balance practicality and personal style.
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As a home-based business, some particulars come into play such as paying for property tax, which is determined by an <a href="https://www.redfin.com/definition/property-tax">assessment</a>. You should consult an accountant or <a href="https://enrolledagent.com/ask-an-ea">tax professional</a> such as one found through EnrolledAgent.com, as office improvements are often considered business expenses and may be deductible from your taxes. Home business <a href="https://www.zenbusiness.com/tax-deductions-home-businesses/">tax deductions</a> are essentially the costs that are incurred while running a business. These include the physical use of space in your home used for business purposes, so you can claim the square footage (as a percentage of overall square footage of the house). The same goes for rent if you&rsquo;re living in an apartment or rented house.
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In addition, you can reduce paperwork and keep your taxes simple by forming an LLC. Avoid legal fees and save money by filing yourself or hiring a formation service. States have varying requirements, so check your state&rsquo;s regulations before you proceed.
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Your home office should be a room that inspires you and helps you avoid distractions. By renovating your home, you can create a workspace that allows you and your business to continue to thrive.
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Image via <a href="https://www.pexels.com/photo/silver-imac-on-desk-265129/">Pexels</a>
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Article written by Ted James

Finance

How to Renovate Your Home When Your Business Is Growing

You are familiar with the common saying, "to err is human, to forgive is divine", right? But does the IRS forgive you when you err with your tax returns? I am not too sure about that. So, it's best not to err, especially if you abhor being summoned by the IRS after filing a return.&nbsp;
Below are six common errors you should be wary of:
1. Not double-checking basic information:&nbsp;It's agreeable that no one is above mistakes; however, errors while filing taxes can be prevented. While filing, you should ensure your name and dependent(s) are correctly spelled. Other information such as your social security number, taxpayer-identification numbers of your dependent(s), and filing status must be correct. This information should be rechecked to be 100% sure that the correct details have been filled. Also, if you had a name change, you should ensure this change is effected with the Social security to avoid receiving a letter from the IRS.
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2. Forgetting a W-2 or 1099 form:&nbsp;If there are some differences in the information the IRS receives from you compared to the one on the W-2 or 1099 form, then be ready to give some explanation. The IRS does an excellent job of collating the W-2s and 1099s they receive from your organization to the amounts you claim on your tax returns, and if there is any disparity, you will get a notice from them asking for clarification, or you end up paying extra tax with interests and penalties.&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Also, regardless of whether you get a W-2 or 1099 or not, the IRS expects that you claim all income made in the tax year. Be careful not to overlook any of your income, even if it is money made from freelancing.
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3. Duplicate dependent reporting: If the IRS observes that an individual is claimed as a dependent on more than one tax return, they won't bother to determine which of the returns is correct. The second return will be automatically rejected.
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4. Arithmetic (clerical) error:&nbsp;This is one of the common errors reported in tax filing. In fact, in 2015, the IRS reported that of the 146million tax returns recorded, over 2.17million had math errors. These errors may vary from simple addition and subtraction to very complex calculations such as when a taxpayer enters a wrong filing status or a salary that does not align with that on the W-2 form, wage, and tax statement, etc.&nbsp; It's best to always double-check whatsoever amount you are entering and your calculations. Nonetheless, if you feel you do not have the luxury of time to go over your calculations more than twice, then it is best to go with a tax preparation software that will perfectly do such arithmetic.
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5. The 1095 form:&nbsp;As a taxpayer, it is expected of you to prove that you have valid health care coverage for yourself, your spouse, and your children. Form 1095 is usually used in doing this, ensure you receive yours before filing your tax returns.
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6. Ignoring extensions:&nbsp; One grace the IRS is willing to give you is an extension grace. So instead of filing a tax return that is full of errors, it's best to file a Form 4868. This gives you the grace of six months on your returns. However, that you filed for an extension does not mean you wouldn't make the payment on the due date which is April 15th. The best bet is to estimate your income and pay what you think you owe.
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To sum it up, try your best not to procrastinate filing your tax returns. Starting early affords you more time to double-check your returns. Moreover, if you are not confident about doing it all by yourself, you should seek the help of a tax professional.

BE CAUTIOUS OF THESE SIX COMMON TAX ERRORS.

The Internal Revenue Service sends out letters to taxpayers for various reasons every year. Should you be one of the taxpayers who get the letter, here are some things to do:
1. Do not panic: It's almost normal to get agitated when you get a letter from the IRS but try not to fret. The IRS and the third-party collection agents often send letters out to taxpayers. You can take care of the notice once you've known the content. Being fearful might lead to you making a big deal out of a small situation. The best reaction is to be as courageous as possible and ask for help from professionals if need be.
2. Do not ignore: A common mistake with some taxpayers is that they ignore the letter they get from IRS. The letter or notice sent by the IRS contains vital information peculiar to you. Each letter typically addresses an issue and often includes further instruction on the subject. IRS letters are necessary to your tax returns and accounts, do not ignore them.
3. Don't rush: Skimming through the IRS letter without a proper understanding of the content is no good idea. You do not need to rush through the letters you get from the IRS. Take your time to look through the letters thoroughly. This will enable you to take appropriate steps in response to the IRS.
4. Review the information: IRS letters are usually detailed, so take your time to read, digest and review the information. Scrutinize every bit of the information, and read between the lines. Compare the information in the letter to your records or a copy of the original tax return if it mentions a revised or altered tax return. This way, you wouldn't be at a disadvantage or be misinformed about your tax status.&nbsp;
5. Follow the instructions: Usually, the letter always includes instructions and guidelines. Take your time to go through and follow the instruction appropriately.&nbsp;
6. Be timely: You should take your time with the letter, but you should also take prompt action. If the letter instructs you to respond or make some payment, you should take action as soon as possible. Your timely action can reduce additional charges, penalties, or interest.&nbsp;
7. Keep copies of your notices: You should have a record of all the letters you get from the IRS. You can never tell when you would need them. You can make copies of the letters and keep them with your other tax records.
8. Respond if there is a dispute: If you disagree with any aspect of the letter you got from the IRS, you can raise a dispute through any IRS channels. You can mail a letter to show and explain the dispute. You should include your supporting documents when responding to a disputed notice. Afterward, you'd need to wait for the IRS to respond to your dispute (this generally takes less than 30 days).
9. Call only if you need to: The typical way to reach the IRS is through mail (electronic or letters). However, you might need to contact them by placing a call through the designated IRS number. The number is typically at the top right-hand corner of the notice. You should have your documents at hand while placing this call to help you answer some questions when asked.&nbsp;
10. Visit the IRS office: You might not need to visit the IRS office for most letters, do not hesitate when the need to visit arises.

WHAT DO I DO WHEN I GET A LETTER FROM THE IRS?

Stocks are the security that denotes the ownership of a fraction of a corporation. This gives the individual right of holding to the proportion of the corporation's assets and earnings. Stocks are one of the most profitable investments and it is easy for beginners than you think.&nbsp;However, investing in stock can be daunting sometimes because of its high unpredictability, thus the need to make certain tough decisions. 
There are basic things you need to know to make you a great investor. Some call it rules, others; principles, but I like to call them yardsticks. These yardsticks helped me make the right decisions when I started investing in stocks:
<ul>
<li>Decide what you want your portfolio to achieve:&nbsp;I would have started with research, but that wouldn't make any difference since you will constantly make research. You must learn a good deal about the investment you want to make. Before starting any investment, you should invest your time to define your portfolio clearly. Once you have done this, you have to stick to that portfolio. Your determination counts as much as your portfolio definition matters.</li>
</ul>
&nbsp; &nbsp; &nbsp; &nbsp; While setting up your portfolio, decide on the manner of approach you will use to invest. Please do not use a trial-and-error approach; it could be catastrophic. Rather, use a calculated and informed approach. Also, decide the amount you want to invest in stocks. In your decision, note the amount that would best suit your purpose and how you plan to raise funds.
<ul>
<li>Milestones:&nbsp;A popular saying is that "if you can measure it, you can manage it." Set milestones in the form of goals, objectives, and missions to track your progress. It would help achieve your goal, which should help fulfill your portfolio.</li>
<li>Open an investment account:&nbsp;This is a must-have account for all investors. The type and criteria are dependent on the region you are in and the local laws. One constant thing is that you need this account to buy stocks.</li>
<li>Stay a step ahead:&nbsp;You must be ahead of your game if you want to succeed. It would be best to stay aware of daily news, events, and trends in the economy. Know every organization and party in your niche and how they affect the economy.</li>
<li>Know the company: The stocks you buy make you part of the business owners. The first thing is to find the companies you understand and know. You have to know the company's profitability, the competitive advantage it has over other companies, and the company's performance.</li>
<li>Take a look at stock prices:&nbsp;You start with many companies and narrow them down with the yardsticks above. You now need to evaluate the companies based on stock prices. You have to dig deep into the financials to know the price-to-earnings ratio, price-to-sales ratios, and dividend yield. You can take it a step further using discounted cash flow modeling to get a fair stock price through cash flow projections.</li>
<li>Be safe:&nbsp;The investment rule is "the bigger the action, the bigger the consequence." As a young investor, you should buy any stock with high risk. The magnitude of risk is relative, but you must set a margin of safety for yourself. The truth is that you will gain some; you will lose some. Win big but lose very little.</li>
<li>Diversify:&nbsp;Don't put your eggs in the same basket as you grow. You can start with a company or a group of companies. Don't stop there. Invest in other companies and other sectors of the economy.</li>
</ul>
Should you follow these steps and measure your stock investment decision with these yardsticks, I am confident you will find some winning investments.

THE BASICS OF SELECTING THE RIGHT INVESTMENT STOCKS

Even though the IRS may appear strict, they are humans, and they know fully well that not everyone has it figured out at all times. The IRS understands that there may be times you file your returns and notice that you owe more than you can pay immediately, or you owe Back Taxes (partially or fully unpaid taxes from the previous year(s)). This understanding, I believe, led them to come up with a program called the IRS payment plan. The IRS payment plan is a plan that permits you to pay your tax debts every month (that is, in installments).
How to Access This Plan
To access this privilege of installment payment, you are expected to file Form 9465 (Installment Agreement Request); this can be done online or on paper, depending on what you owe. Filing this form allows you to implement an installment agreement with the IRS. However, it does not overrule interests and penalties. Claims and penalties will still accrue on your outstanding balance until you clear your debts, but you'll be able to avoid collection actions, like tax liens and tax levies.&nbsp;
&nbsp;Procedure for submitting an Installment Agreement Request
If what you owe is not over $10,000, you can complete your installment payment application plan online instead of filing Form 9465 on paper, and this will be automatically approved. Nevertheless, there are some conditions attached which are:
<ul>
<li>You are unable to make a full tax payment when due.</li>
<li>You must have filed all your past tax returns.</li>
<li>You have not been involved in the installment payment plan in the last five years.</li>
<li>You can pay up your debts (outstanding tax balance within three years).</li>
</ul>
In a situation where what you owe, including the interests and penalties, is not more than $50,000, you can also complete your installment payment plan online.&nbsp;
If what you owe exceeds $50,000, the IRS requires that you file Form 9465 together with another form known as Form 433-F (Collection Information Statement) on paper. In this case, you won't be able to apply electronically.&nbsp;
The IRS made certain modifications this year (2021) in response to the terrible economic impact of the COVID-19 epidemic, allowing some taxpayers with debts of up to $250,000 to apply online.
Short- and Long-term Payment Mode
If you can afford to pay what you owe within 120-180 days or even less than that, then you can opt for the short-term payment method. There is an extension of 60 extra days given by the IRS due to the pandemic. The online payment plan is only available for individual taxpayers.
On the flip side, if what you owe is much and you cannot afford to pay back within a short time frame, you can opt for the long-term payment plan. This gives you a maximum repayment period of 72 months, and you can pay every month.
The Setup Fees
A one-time setup fee is usually charged when setting up an installment payment plan.
Short-term payment plan:&nbsp;If you qualify for the short-term payment plan, you will not be charged a setup fee. This is usually applicable to individual taxpayers who owe less than $100,000.
Long-term payment plan:&nbsp;If you apply online and make payment with direct debit from your bank, you will be required to pay a setup fee of $31.
If you did not apply online but make your payments by direct debit, you will be required to pay a setup fee of $107.
If you apply online but did not make your payments by direct debit, you will be required to pay a setup fee of $149.
If you did not apply online and did not make your payments by direct debit, you will be required to pay a setup fee of $225.
Note:&nbsp;&nbsp;The $31 setup fee is usually waived for those whose income is at or below 250% of the federal poverty level for their state if payment is made through direct debit. On the other hand, if payment is not made through direct debit, instead of paying the $149, low-income earners are required to pay a reduced price of $43, else the whole fee is waived.
How to Determine If You Are Eligible for The Online Payment Plan
You qualify to apply online on a long-term payment plan basis as an individual if what you owe in combined tax, penalties and interests is $50,000 or less. For a short-term payment plan, the maximum combined tax, penalties, and interests is $100,000.
If you are operating as a business and you desire to apply online, you must file all required returns, and what you owe in combined tax, penalties and interests should be $25,000 maximum.
To sum up, you do not have to panic if you are experiencing some financial setbacks that affect your tax payment. All you need to do is inform the IRS early enough by filing for the Installment Agreement Request and following the guidelines provided.
If you feel inadequate about applying for the payment plan all by yourself, you can always reach out to an IRS-Enrolled Agent for help.
&nbsp;You may be thinking, 'What is an IRS-Enrolled Agent?'&nbsp;
An IRS-Enrolled Agent is a Federally Authorized Enrolled Agent in the United States who is officially certified to represent taxpayers in all tax-related matters. An EA will professionally walk you through the procedures since they specialize in tax.&nbsp;

HOW DOES THE IRS PAYMENT PLAN WORK?

Filing tax is a bit of a herculean task for most people. It requires dedication, hard work, and a lot of time for individuals and businesses alike. It is daunting to both the learned and unlearned. This is mostly because tax gets people confused easily as they have to sort through lots of paperwork, learn a lot of 'jargon,' and keep up with the changing regulations.
The good news!
There are specially trained individuals known as Enrolled Agents that can help you with your tax-related issues. An enrolled agent is a licensed tax advisor qualified to file a tax return, deal with an audit, decide payment, solve collection issues, or appeal a fine before the internal revenue service.
The unique thing about enrolled agents is that they are a one-stop-shop for all your tax-related matters. This is why they have unlimited representation rights, that is, unlimited practice rights. This indicates that they can represent you as an individual, your business, or your group as an entity. They also have unlimited scope and can help you with any aspect of your taxes.
Typically, an enrolled agent can do these for you:
<ul>
<li style="font-weight: 400;" aria-level="1">Advise you on all tax matters</li>
<li style="font-weight: 400;" aria-level="1">Aid you in tax planning.</li>
<li style="font-weight: 400;" aria-level="1">Help you navigate complex tax regulations</li>
<li style="font-weight: 400;" aria-level="1">Help you with the filing of your tax return</li>
<li style="font-weight: 400;" aria-level="1">Represent you before the IRS for audit, payment, and collection.</li>
</ul>
I cannot overemphasize the need for you to hire an enrolled agent &ndash;you need one to help you with your tax matters. While getting a tax professional may not be rocket science, things can only get a bit tricky if you are unsure of what to look out for before hiring one.
Not to worry, I am here to share seven things to look for when hiring an enrolled agent.
<ol>
<li style="font-weight: 400;" aria-level="1">Preparer Tax Identification Number (PTIN):&nbsp;This should be the basis of your tax relationship with your enroller. Certified Public Accountants, Licensed Tax Attorneys, and Enrolled Agents all have IRS PTIN that qualifies them as tax advisors. It is an essential requirement for all compensated tax preparers. IRS also requires that your agents put his PTIN number on your return. One thing to note is that anyone can prepare your returns, but not anyone can represent you. Anyone that wants to represent you must have a PTIN.</li>
<li style="font-weight: 400;" aria-level="1">License and qualification: PTIN is relatively easy to come by. The fact is that many tax preparers (asides from volunteers) have PTIN. The case is not the same with having a federal authorization or credentials. You need to get credentialed personnel to prepare and file your tax returns. The person must have taken and completed a professional course on tax such as Accredited Business Accountant/Advisor and Accredited Tax Preparer programs.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">EA's services:&nbsp;Each EA has his area of strength, which usually becomes their specialization area. Check out the type of service offered by the prospects and have a detailed discussion on the kind of service you would need. This discussion will let you in on the services provided by the EA. It will allow you to know if he is best suited to handle your tax matters or you have to hire someone else. This is a critical criterion since each business and individual is unique and requires a distinctive approach to tax preparation, filing, and representation.</li>
<li style="font-weight: 400;" aria-level="1">Compare fees:&nbsp;Except you hire a volunteer EA, you must reimburse your tax preparer. Each enrolled agent will charge you a fee based on the type and complexity of the tax representation. Sample a few Enrolled agents to know the average price you are to pay. Then choose the most suitable EA to represent you.</li>
<li style="font-weight: 400;" aria-level="1">E-file:&nbsp;This is one of the subtle yet essential things you must look out for when hiring an enrolled agent. This might not be a point of concern for you if your Tax-Preparer does less than ten returns. Once he does up to 10 returns, he is required by IRS to file electronically via the IRS' e-file system. It is compulsory the EA you would hire offer an e-file system even If you don't need it yet. A tax preparer who doesn't provide an e-file system isn't doing as much tax prep as required.</li>
<li style="font-weight: 400;" aria-level="1">Signing on the line:&nbsp;Many people have been ripped off their tax returns by some fraudulent and unqualified tax preparers. One way to check is to ensure that your enrolled agent will put his PTIN and signature on your returns form. They are required to do so, and an EA that would defraud you by taking your returns would not put his PTIN.</li>
<li style="font-weight: 400;" aria-level="1">Character:&nbsp;The person of your EA is also essential. The character might be a little bit tricky to ascertain, but there are some things you could look out for. The individual must:</li>
</ol>
<ul>
<li style="font-weight: 400;" aria-level="2">Be accessible. The individual must have time for you.</li>
<li style="font-weight: 400;" aria-level="2">Have a reputation for integrity and honesty.</li>
<li style="font-weight: 400;" aria-level="2">Possess excellent organization skills.</li>
<li style="font-weight: 400;" aria-level="2">Ready to listen to you, patiently.</li>
<li style="font-weight: 400;" aria-level="2">Attentive to security and individual details.</li>
<li style="font-weight: 400;" aria-level="2">Provide tax-matters counseling; and</li>
<li style="font-weight: 400;" aria-level="2">Have your back.</li>
</ul>
Now that you know the things to look for when hiring an enrolled agent, you should be ready to find one that would suit your tax-related issues.&nbsp; You can <a href="https://enrolledagent.com/">find an Enrolled Agent via our homepage</a> or <a href="https://enrolledagent.com/find-or-verify-enrolled-agent">listing</a>.

TOP 7 THINGS TO LOOK FOR WHEN HIRING AN ENROLLED AGENT

In my opinion, I feel tax has a way of setting one straight. Imagine there was nothing like tax. It is most likely that you wouldn't pay much attention to saving, investing, and other responsible financial decisions, except you, are a very prudent person.
However with taxation in the picture and the benefits it offers by making persons choose responsible financial decisions, many people are left with no choice but to be fiscally conservative. Thus enabling them to have extra funds to save, invest and give to charity, hence reducing their annual tax burden.
There are several ways provided by Congress through which the reduction of your taxable income can be achieved, and these include:
&nbsp;
1. Donating to your retirement account: You can exempt or defer some of your income from taxation when you make contributions to qualified retirement accounts. Interestingly, taxable income for both 2020 and 2021 can be reduced for contributions up to $19500 in a 401(k) and 403 plan. If you are above 50 years, you have the privilege of a catch-up contribution worth $6500.&nbsp;If there is no provision of a retirement plan by your employer, you can opt for the traditional individual retirement plan to contribute up to $6000 and $7000 if you are above 50 years. These amounts are applicable for 2020 and 2021.
&nbsp;
2. Minimizing your customer debt: This demands a lot of discipline, but it is very achievable; remember that the end goal is to be financially stable. However, if you have some customer debt on you, there are some legal ways you can adopt to cut down the taxes you pay on the interest.
The interest paid on customer debt can be categorized into two: tax deductible and non-tax deductible. Interests paid on a home mortgage or home equity, debt accrued from the purchase of investment property, student loans, etc., are classified as tax-deductible interests. On the other hand, interests from credit cards, and car loans are classified as non-tax-deductible.
To reduce your tax as an individual, you can transfer your customer debt to a home equity loan; this will help you maintain deductibility on the interest. However, you've got to be intentional about settling your home-equity debt because if you do not settle the debt early enough, you might lose your house.
&nbsp;
3. Opening a Health Savings Account: Another intelligent way of reducing your taxable income is through a Health Savings Account (HSA), especially if you have high-deductible health insurance. Just like the 401(k)-retirement plan, you can make contributions to your health savings account before your income is taxed. As an individual, the maximum amount you can contribute to your health account is $3350, but for the year 2021, it is $3600.
&nbsp;
4. Setting up a business: The good thing about setting up a business is that it exposes you to the tax privileges available for self-employed individuals. Suppose your business is set up in your apartment. In that case, you have a home office, you can deduct many expenses from your income, primarily if these expenses were used for business purposes. To qualify for these deductions, your business must be profit-oriented, and the IRS expects that your business should have proof of that within 3-5 years, else you'll be expected to prove your profit motivation to deduct losses.&nbsp;
5. Charitable giving: Aside from the fact that this is a humane act, it is another way by which you can reduce your taxable income inasmuch as your donations are made to organizations that the IRS recognizes. Generally, deductions from your Adjustable Gross Income cannot exceed 60%.&nbsp;
When you donate, you should always get a receipt from the organization because it helps strengthen your tax records, especially when the IRS decides to audit you. Your giving should not just be limited to cash. Donations made in kind (such as the giving of household items, clothes, etc.) are also recognized by the IRS. These goods are usually valued at their estimated price at the time of donation. You can get a tax deduction on them as well. However, these rules are generally stricter than that of cash donations.
6. Investment planning:&nbsp;As a taxpayer, if you know how to play your cards well for investment losses, you can utilize it in minimizing your tax obligations each year.
&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Some helpful hints for maximizing the impact of investment losses
<ul>
<li style="font-weight: 400;" aria-level="1">Adequately plan when to take an investment loss to take full advantage of the $3000 yearly reduction from your earned income.</li>
<li style="font-weight: 400;" aria-level="1">Never forget to always net your investment losses against your gains before your earned income.</li>
<li style="font-weight: 400;" aria-level="1">When possible, net losses should be offset by short-term profits, especially if you are in the high-income tax bracket.</li>
</ul>
In conclusion, tax payment can substantially positively impact your finances and help you reach your short- and long-term financial goals if you maximally utilize the benefits that come with it.&nbsp;You don't have to figure it out all by yourself; <a style="background-color: #ffffff;" href="https://enrolledagent.com/find-or-verify-enrolled-agent">we have Tax Experts</a> who can advise and walk you through any of the processes you desire to consider.

HOW DOES TAX INFLUENCE RESPONSIBLE FINANCIAL PLANNING?

An Enrolled Agent is a tax professional with unlimited practice rights (empowered by the U.S. Department of Treasury) to represent taxpayers before the Internal Revenue Service (IRS) at all administrative levels. In other words, an Enrolled Agent is a tax specialist who has the right to help you as an individual or your business with any tax issue.
The Enrolled Agent title is the highest awarded by the IRS, and these folks have the right to represent clients in any IRS office or State. Enrolled Agents have the right to work across state borders because their designation is at the federal level.
Enrolled Agents help with tax issues, including audits, collections, and appeals. The only place an Enrolled Agent is not permitted to stand on behalf of their client is in the tax court. This is because that practice is limited to the Bar of the Court members making a Tax Attorney ideal for court cases.
&nbsp;
There are two significant ways by which an Enrolled Agent gets licensed:
<ul>
<li style="font-weight: 400;" aria-level="1">The first way is passing the three parts of the Special Enrollment Examination, a thorough and comprehensive examination (SEE). This exam covers all aspects of individual and business tax laws, including tax representation, practices, and procedures. To maintain their status, all Enrolled agents are also required to take 72 hours of continuing education; this usually includes 2 hours of ethical or professional conduct each year.</li>
<li style="font-weight: 400;" aria-level="1">A more popular way to become an Enrolled Agent is if an individual has worked with the IRS for five or more years. They can attain the Enrolled Agent status without taking the Special Enrollment Examination.</li>
</ul>
Hitherto an Enrolled Agent have all representation rights before the IRS, and they are expected to show their proficiency in all areas of taxation, representation, and ethics to the IRS.
Since the Enrolled Agent status is the highest awarded by the IRS, you can be confident that they will get the job done. Moreover, they handle tax matters daily, differentiating them from you or a simple tax preparer.
&nbsp;
&nbsp;
&nbsp;Here are some of the benefits of hiring an Enrolled Agent:
1. They are Tax Experts: Since Enrolled Agents must focus only on tax and tax-related issues, they have specialized knowledge. i.e., they are well versed and have a good understanding of the federal tax codes, which can be a dire strait for most individuals and businesses. Enrolled Agents ensure that your returns have a lower risk of getting fined or audited by helping you manage the technical issues. They differ from the ordinary tax preparers because they possess the authority to prepare more complex returns. Furthermore, Enrolled Agents take continuing education courses every year to keep up with the changing tax code. They also utilize research tools that they usually have at their disposal to monitor updates.
&nbsp;
2. They save you time and money: Preparing a tax return can be a daunting experience, especially with how the tax code changes each year. Moreover, it is most likely that you do not have the luxury of time to read the volume of materials added to or deleted from the tax code each year, nor do you have access to the various research tools available to Enrolled Agents. Employing the service of an Enrolled Agent will save you from lots of guesswork which can lead you to the IRS net, i.e., getting audited. Therefore, instead of putting yourself in an avoidable mess, you should seek the help of these Tax Experts.
&nbsp;
3. Competitive costs and fees:&nbsp;Even though Enrolled Agent is the highest status awarded by the IRS, they are more competitively priced than the Certified Public Accountants (CPAs). The Enrolled agents have lower overhead and specific tax expertise, making them deliver quality service to clients at an excellent price.
&nbsp;
4. The state does not limit them: Another benefit of hiring an Enrolled Agent is that they are not limited by geography; thus, you can hire an Enrolled Agent from another state in the country to assist you with your tax matters, or even hire an Enrolled Agent to file your returns in multiple states, unlike CPAs who can only practice in the State in which they are certified.
The other benefits that an Enrolled Agent affords you includes:
<ul>
<li style="font-weight: 400;" aria-level="1">Suggesting ways for you to save on taxes.</li>
<li style="font-weight: 400;" aria-level="1">Helping you make sound financial plans.</li>
<li style="font-weight: 400;" aria-level="1">Serving as your tax advisor to answer any of your tax queries and break down complex tax codes for you in a language you can understand.</li>
<li style="font-weight: 400;" aria-level="1">Standing in your stead before the IRS.</li>
</ul>
I believe this article has addressed what an Enrolled Agent is and why you must employ their services in filing your taxes and other tax-related matters. We at EnrolledAgents.com look forward to serving you.

WHAT IS AN ENROLLED AGENT, AND WHY SHOULD I HIRE ONE?

States such as Texas, Washington, Alaska, South Dakota, Florida, Nevada, New Hampshire, Tennessee, and Wyoming do not tax the personal income of their residents. This is possible because different rules exist at the local, state, and federal levels for tax payments in the United States. Aside from the federal tax that individuals and corporations pay, several states levy taxes separate from the federal.
There are different reasons why a state could ignore the personal income tax. Of course, not paying taxes at the state level can be appealing and can make one consider relocating to any of these states, but there is more to making this decision than taxes. Moreover, some other taxes, such as sales tax, excise tax, etc., can exist in these states.
The fact is that revenue must be generated in every state, which is usually used to pay for programs and services of immense benefit to the residents. If it is not gotten from taxing your income, it definitely must be gotten elsewhere. For example, in Alaska, the state income tax for residents was officially canceled in the 1970s due to the oil boom. Since enough revenues were made from oil, Alaska figured there was no point burdening the people with income tax.
&nbsp;
More details about these states are given below:
1. Alaska: Among the 50 states in the United States, Alaska has the lowest tax burden. As an Alaskan, the total tax you'd be bothered with at the state level is 5.16% of your income. Aside from the benefit of low taxation, there is another mouth-watering benefit of living in Alaska. This is the Permanent Fund Dividend, a payment made to all state residents- both adults and children. This fund generates revenue and investment earnings from mineral lease rentals and royalties.
According to the U.S. News &amp; World Report on "Best States to Live In," Alaska ranked 44th on the list, and in affordability, the state was in the 45th position.
2. Florida: This State is the fifth lowest when it comes to the tax burden in the country. The overall tax burden is 6.82%. The significant taxes in Florida are sales and use tax, corporate income taxes, and intangible tax. Florida does not concern itself with Estate tax, neither does it have eyes on your inheritance; hence no estate or inheritance tax in Florida. However, there is a 6% sales tax on goods except for groceries and medicines.
According to the U.S. News &amp; World Report on "Best States to Live In," Florida ranked 13th on the list, and in affordability, the state ranked 35th.
3. Nevada: The sales tax in Nevada is entirely on the high side, most probably because a good part of its revenue is generated from sales tax. The overall state-imposed tax in Nevada is 8.39% which makes Nevada the highest on this list. Nevada is not an affordable state to live in, and there is a high cost of living and housing.
According to the U.S. News &amp; World Report on "Best States to Live In," Nevada ranked 37th, and in affordability, the state came 42nd.
4. South Dakota: The total tax burden for residents of this state is 7.86%. Although the tax paid on a property is on the high side, this state seems like a 'haven' for retired persons because social security, pensions, and other forms of retirement income are tax-free, and the cost of living there is on the average. Sales taxes are low in South Dakota, and despite property taxes being somewhat high, low-income seniors can offset those costs. Most of the revenue of this state is generated from taxes on cigarettes and alcohol.
According to the U.S. News &amp; World Report on 'Best States to Live In,' South Dakota ranked 20th on the list, and in affordability, the state was 14th.
5. Texas: Texas has the lowest tax burden in the United States. This state depends mainly on sales and excise taxes for infrastructure and services.&nbsp;&nbsp;Although, the property tax is entirely on the high side, and for some districts, sales taxes can be up to 8.25%. The overall tax burden of Texas residents is 8.20%. Moreover, Texans do not pay taxes up to many other states in the U.S.
According to the U.S. News &amp; World Report on "Best States to Live In," Texas ranks 38th on the list, and in affordability, the state ranks 23rd.&nbsp;
6. Washington: Much of the revenue of Washington comes from high sales and excise taxes, the state's overall tax burden of 8.32%. Although, this state also does not charge the corporate income tax, which makes it attractive for Employers, and the populace is majorly youths.
Interestingly, according to the U.S. News &amp; World Report on "Best States to Live In," Washington was ranked as the best state to live in, even though it came 44th in affordability.
7. Wyoming: Wyoming has few things in common with Alaska. Aside from the no personal income tax, the two states have a low population, and Wyoming generates its revenue from oil, just like Alaska. Additionally, there is no corporate state income taxes or retirement income taxes. The tax burden on residents of this state is about 6.47% which is generated from sales, excise, income, and property taxes.
According to the U.S. News &amp; World Report on "Best States to Live In," Wyoming ranked 31st on the list, and in affordability, the state was 28th.
8. Tennessee: Right from time, even though investment incomes, interests, and dividends of residents were taxed, personal income taxes have never been a thing in Tennessee. &nbsp;In 2016, the state came up with a plan to reduce taxes on unearned income by 1% yearly, and in this year 2021, the tax on unearned income came to 0%. Currently, the total tax burden of Tennessee is 6.18%. Much of the taxation of this state comes from sales tax.
According to the U.S. News &amp; World Report on "Best States to Live In," Tennessee ranks 30th on the list, and in affordability, the state ranks 22nd.
9. New Hampshire: This State also tax interests and dividend, just like Tennessee. However, the legislative already plans to eliminate taxing investment income by 2025. The plan is to reduce this tax by 1% every year. The total tax burden of New Hampshire is 6.85%. Although this state does not have a sales tax, there is an excise tax, and alcohol is also taxed. Moreover, the tax rate for the property is about 2.20%.
According to the U.S. News &amp; World Report on "Best States to Live In," New Hampshire ranked 2nd on the list, and in affordability, the state was 26th.
&nbsp;
While some states may not generate revenue via personal income taxes of their residents, they may generate income from other means such as sales tax (Florida, Tennessee, Texas, Washington, and Wyoming), property tax (eg. New Hampshire), and excise taxes (New Hampshire, Texas).

STATES THAT DO NOT TAX PERSONAL INCOME IN THE US

Honestly, not all audit requests from IRS should make you break out in cold sweats; some audits are just simple interrogations while others can be a bit more serious. Having a good understanding of what you are being audited for can save you unnecessary anxiety. There are several ways by which the IRS selects a tax return for an audit.
<ul>
<li style="font-weight: 400;" aria-level="1">You can be audited if the IRS system randomly selects your return; this is usually called Computer Scoring. Every tax return has a 'score' based on experience with similar returns. The IRS's scoring systems in carrying this out are Discriminant Function System (DIF) score and Unreported Income DIF (UIDIF) score. The Discriminant Function System (DIF) score rates the potential for change based on past IRS experience with similar returns. While the Unreported Income DIF (UIDIF) score rates the return for the possibility of unreported income. The returns that have the highest of these numbers are then selected for an audit by the IRS. They are as follows:&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">If there are any differences between your tax returns and the documentation that go with them.</li>
<li style="font-weight: 400;" aria-level="1">If the IRS notice that you have some sort of affiliation or relationship with potential participants in abusive tax avoidance transactions.</li>
<li style="font-weight: 400;" aria-level="1">If you own a large corporation.&nbsp;</li>
</ul>
&nbsp;
The different types of audits can be classified into:&nbsp;
Correspondence Audit:&nbsp;This kind of audit can be sorted via mail, and it can either come in the form of a simple letter or an audit letter.
You get the former from the IRS when they need you to claim that you owe the government some money. Although this simple letter can't be fully classified as an audit, ignoring it can lead to big issues. If there are any errors with the figures on your returns, or if you failed to disclose some of the income listed on the W-2 or 1099 Form that the IRS received, you will most certainly receive this request.
On the other hand, the audit letter is a type of correspondence audit in which the IRS requires you to send supporting documents for a deduction you claim or for some other related stuff.
The correspondence audit is often referred to as the most external audit. Hence, it isn't a big deal since you respond promptly to whatever you are being asked.&nbsp;
&nbsp;
Office Audit:&nbsp;This type of audit is more severe because you will meet with the IRS in person to discuss. This interview is usually held at the IRS office; nevertheless, don't panic. It can end up being in your favor.
However, if you feel you cannot handle meeting with the IRS all by yourself, you can go with a Tax Professional.
&nbsp;
Field Audit:&nbsp;When you get this kind of audit, just expect the IRS to show up at your door- either your office or your home. Although this type of audit is uncommon, it is advisable to have a tax professional with you when this kind of audit is being carried out.
&nbsp;
Line-by-Line Audit:&nbsp;For this type of audit, the IRS selects Taxpayers at random and scrutinizes their returns. This type of audit might cause you to panic, primarily if you might owe to the IRS, but if you have been careful with preparing your returns over the years, then there is nothing to worry about.
&nbsp;
How does the IRS give an audit notification?
The typical way the IRS reaches out to Taxpayers is through the regular, and the U.S. postal service usually delivers it.
&nbsp;
Provided you get an audit invite from the IRS, how soon are you expected to respond?&nbsp;
You should know for sure that the IRS will give you some time to respond to their request. You don't have to respond immediately to avoid unnecessary mistakes or more issues. The IRS will most likely give you some weeks to prepare. So, take your time and carefully prepare all that is necessary,
Moreover, you can request a reschedule if the time set by the IRS is inconvenient for you.
&nbsp;
What are the expectations of the IRS from you?
The IRS will not leave you in the dark or for guesswork; they will provide you a written request of the specific documents they want to see.
Note:&nbsp;The fact that the IRS can decide to audit a return that dates as far back as three years ago suggests that it is wise to keep all the documents you used in preparing your returns and not thrash them after submitting them to the IRS. This will save you a whole lot provided you get a mail or an invite from the IRS.
&nbsp;
To sum up, an audit is not a financial death sentence, especially if you've been careful and intentional with preparing your tax returns. Therefore, when you get the invite from the IRS, you have to find the courage and show up, and if you feel inadequate about the whole process, you can always reach out to a Tax Professional for help.

AUDITING THE TAX RETURN- WHAT DO YOU NEED TO KNOW.

Tax filing and tax payment are two different things. Though many people take one for the other, they are not the same. The deadline for tax filing is usually more extended than tax payment. The deadline varies across countries, regions, and states. Typically, the tax payment and the filing deadline are due on April 15 every year. However, the deadline for tax filing can be extended to October 15.&nbsp;&nbsp;
What happens after this deadline?
What if I don't file my taxes?
&nbsp;Should you fail to file your taxes and fail to inform the IRS, a few things could happen.
<ul>
<li style="font-weight: 400;" aria-level="1">You could be penalized: If you fail to file your tax, the total tax you will pay may increase due to penalties and interest. You may have to pay interest of 0.5% up to 1% in the tax owed. You will be charged 5% monthly for the tax you owed as a late-filing penalty.</li>
<li style="font-weight: 400;" aria-level="1">You might not receive credits towards your social benefits: As a self-employed individual, you will not receive credits toward disability benefits or social security retirement benefits. The social security administration will deny you any benefit if you do not report any income from your self-employment. And not filing your tax is the same as not reporting your income to the administration.</li>
<li style="font-weight: 400;" aria-level="1">You will have to pay a substitute return:&nbsp;Once the IRS files a substitute tax return for you, you are no longer in control of how much tax you pay. When you file your tax, you would be doing so with an accurate and detailed record but with a substitute return, and the filing is based on information sourced for various fronts. These might be inaccurate. Substitute return also strips you of all tax exemptions and expenses you may be entitled to. This may lead to overstating your actual tax liability.</li>
<li style="font-weight: 400;" aria-level="1">You may have to pay through a third-party collection scheme:&nbsp;IRS can employ third-party collection agents to get the taxes you owe. These collectors are vicious and would stop at nothing to get the tax. IRS can also start the collection process, including filing a federal tax lien against your property and placing a levy on your bank accounts or your wages.</li>
</ul>
To conclude, it is best to file your taxes and do so early. If you find the process overwhelming, you can always reach out to an Enrolled Agent for professional help.

WHAT HAPPENS IF I DON'T FILE MY TAXES

You are at the point of seeking the help of a tax advisor regarding your taxes, and you are unsure about the documents that will be required of you. Below is the list of documents your tax advisor expects you to bring.
1. Record of your income statement: Naturally, the IRS should receive the report of your income as supplied by your employer. You should also take a copy when you visit your tax advisor. Should you have more than one job, you need to provide the report for all the jobs. If there is a correction on any records, you need to provide both copies. You also need to show a report of incomes from gambling winnings, pensions, annuity, and other insurance contracts.&nbsp;
If you are self-employed or receive income from other sources, you need to report that on your tax return. You also need to take copies of the documents to your tax advisor. These documents include dividends and distribution, social security and retirement benefits, state tax refunds, and self-employment income.
2. Tax documents: You need to take all documents that could support your tax history. This includes tax deduction documents, mortgage interest statement, tuition statement, interest paid on your student loan for the previous year, donation of a vehicle, aircraft, or boat of more than $500, and copies of records of estimated tax payments made. It would help if you also took all of the IRS forms you've received.
3. Means of identification:&nbsp;It is no brainer that you need your social security details or tax identification numbers. You also need to provide the exact information for your spouse and children if you have any. The best way to have all the information handy and correct is to take the document itself. It would be best if you took another means of identification (any government-issued I.D. would do) to prove the information on your social security card is accurate. All these documents would reduce the chances of having a name misspelled or a number wrongly typed.
4. Receipt for expenses:&nbsp;Keeping the receipt for some of your expenses can save you some money on taxes because such expenses are tax-deductible. Examples of such personal expenses are education, charitable contributions, IRA contributions, and medical bills. Asides from the above-listed tax-deductible personal expenses, basic expenses needed to run a business are also generally tax-deductible, so keeping the receipts for business expenses can be a blessing.
5. Tax return documents:&nbsp;You also need to take your last tax return document when visiting your tax advisor. This is a great way to start your meeting with your tax advisor. It can serve as a foundation for your current tax preparation and filing. It is also a yardstick to note any discrepancies or changes in the previous return.&nbsp;
Having these documents readily available when your tax advisor calls for it would make life easy for both you and your tax advisor.

WHAT DOCUMENT IS MY TAX ADVISOR GOING TO ASK FOR

An income tax advisor helps taxpayers prepare their returns or provide them with vital information that will enable them to file their return appropriately. They can also help taxpayers prepare for future tax situations.
As a result of the detailed knowledge about the tax laws and IRS guidelines that tax advisors have, you can reach out to them for professional advice on ways by which you can reduce your income taxes without getting into trouble with the IRS. You can be sure that their advice complies with the federal, state, and local tax rules.
&nbsp;
The differences between Enrolled Agents (EAs), Certified Public Accountants (CPAs), and Uncertified Tax Agents.
&nbsp;
Although EAs, CPAs, and uncertified tax agents can all help with tax returns, they have significant differences.
&nbsp;
Enrolled Agent:&nbsp;An enrolled agent is a tax professional with unlimited practice rights to represent taxpayers before the IRS at all administrative levels.
An enrolled agent specializes in tax and is empowered to represent clients before the IRS concerning collection, appeals, and audits.
&nbsp;An enrolled agent can work across state borders because their enrollment is a federal designation.
To become licensed as an EA, they must pass an IRS test covering individual and business tax returns or have worked with the IRS for five years.
The enrolled agent title is the highest awarded by the IRS, and as earlier stated, EAs have the right to handle any tax issues and represent clients in any IRS office or state.&nbsp;
&nbsp;
Certified Public Accountants: A Certified Public Accountant is a licensed accounting professional whose specialization includes accounting, taxation, auditing, bookkeeping, etc. The Board of Accountancy usually gives the CPA designation for each state; hence a CPA cannot work across state borders.
For someone to be qualified as a CPA, they must hold a bachelor&rsquo;s degree in business administration, finance, or accounting; complete 150 hours of education and have at least two years of experience in public accounting.&nbsp;
A CPA can also represent clients before the IRS. However, unlike the EAs, CPAs do not specialize only on tax and are limited to the state of their practice.
&nbsp;
Uncertified Tax preparer:&nbsp;Uncertified tax preparers usually do not receive special training or education regarding tax. That is, they are neither licensed nor certified.&nbsp;However, they have a Preparer Tax Identification Number (PTIN)- a requirement for all tax preparers- and can help you prepare your tax returns. But they cannot represent you before the IRS or help you with an audit.
To sum up, there are different tax preparers, some are certified while some are not. Differences such as their core speciality, license coverage, and qualifications for practice exists among the certified tax preparers. Therefore, it is advisable to seek professional help when you get overwhelmed and not some random persons.
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WHAT DO INCOME TAX ADVISORS DO? THE DIFFERENCES BETWEEN ENROLLED AGENTS, CPAs, AND UNCERTIFIED TAX AGENTS.

It's your first time attending a tax preparation event, and you're as perplexed as the rest of the world about what to do. Or you're so unaccustomed to asking for help with tax returns that you're at a loss on what your next step should be now that you need a professional assistant. Whatever the situation is, this article will aid you in picking an enrolled agent.
To pick an Enrolled Agent suitable for you, you need to list what you want the Enrolled Agent to do for you. This list does not have to be accurate, but it must be enough to know what you want. Your list will help you and help your prospect deliver the service you need without any hassles.
Thankfully, the internet has made life very much easy. With a simple click on our <a href="https://enrolledagent.com/">homepage</a> or <a href="https://enrolledagent.com/find-or-verify-enrolled-agent">directory</a>, you can find an EA through a listing of over 60,000 tax experts and engage them free.
Other options include the tax preparation section on your local Yellow Pages. You could find a match from commercials. There is also an option of reaching out to the National Association of Enrolled Agents via their toll-free line to access their round-the-clock referral service.
You do not have to worry too much about the qualifications of the Enrolled Agent because these folks go through rigorous tax examinations and verifications before they are licensed. However, you might have to note the area of expertise of the Enrolled Agent you want to hire. You can do this by having a quick check on the Enrolled Agent's experience and tracks records. Doing this will give you an idea of the EA's area of specialization.&nbsp;
Lastly, you should consider the type and level of service you expect from the Enrolled Agent you are about to hire. Answering essential questions that relate to your needs will go a long way in helping you figure things out.

HOW TO PICK AN ENROLLED AGENT

Even though the <a href="https://enrolledagent.com/">IRS enrolled agents</a> may appear strict, they are humans, and they know fully well that not everyone has it figured out at all times. The IRS understands that there may be times you file your returns and notice that you owe more than you can pay immediately, or you owe Back Taxes (partially or fully unpaid taxes from the previous year(s)). This understanding, I believe, led them to come up with a program called the IRS payment plan.
The IRS payment plan is a plan that permits you to pay your tax debts every month (that is, in installments).
&nbsp;
How to access this plan
To access this privilege of installment payment, you are expected to file Form 9465 (Installment Agreement Request). This can either be done online or on paper, depending on what you owe. Filing this form allows you to implement an installment agreement with the IRS. However, it does not overrule interests and penalties. Interests and penalties will still accrue on your outstanding balance until you clear your debts, but you&rsquo;ll be able to avoid collection actions, like tax liens and tax levies.
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&nbsp;
How the Installment Agreement Request works.
If what you owe is not over $10,000, you can complete your installment payment application plan online instead of filing Form 9465 on paper, and this will be automatically approved. Nevertheless, there are some conditions attached which are:
<ul>
<li>You are unable to make a full tax payment when due.</li>
<li>You must have filed all your past tax returns.</li>
<li>You have not been involved in the installment payment plan in the last five years.</li>
<li>You have the ability to pay up your debts (outstanding tax balance within three years).</li>
</ul>
&nbsp;
In a situation whereby what you owe, including the interests and penalties, is not more than $50,000, you can also complete your installment payment application plan online.
&nbsp;
If what you owe exceeds $50,000, the IRS requires that you file Form 9465 together with another form known as Form 433-F (Collection Information Statement) on paper. In this case, you won&rsquo;t be able to apply electronically.
&nbsp;
For this year (2021), some changes were made by the IRS in response to the devastating effect of the COVID-19 pandemic on the economy, thereby allowing some taxpayers who owe up to $250,000 to apply online.
&nbsp;
&nbsp;
Short-and long-term payment mode
If you can afford to pay what you owe within 120-180 days or even less than that, then you can opt for the short-term payment method. There is an extension of 60 extra days given by the IRS due to the pandemic. The online payment plan is only available for individual taxpayers.
&nbsp;
On the flip side, if what you owe is much and you cannot afford to pay back within a short time frame, you can opt for the long-term payment plan. This gives you a maximum repayment period of 72 months, and you can pay every month.
&nbsp;
&nbsp;
The set-up fees
A one-time set-up fee is usually charged when setting up an installment payment plan.
&nbsp;
Short-term payment plan: You will not need a set-up fee if you qualify for the short-term payment plan. This is usually applied to individual taxpayers who owe less than $100,000.
&nbsp;
Long-term payment plan: If you apply online and make payment with direct debit from your bank, you will be required to pay a set-up fee of $31.
If you did not apply online but make your payments by direct debit, you will be required to pay a set-up fee of $107.
If you apply online but did not make your payments by direct debit, you will be required to pay a set-up fee of $149.
If you did not apply online and did not make your payments by direct debit, you will be required to pay a set-up fee of $225.
&nbsp;
Note:&nbsp; The $31 set-up fee is usually waived for those whose income is at or below 250% of the federal poverty level for their state if payment is made through direct debit. On the other hand, if payment is not made through direct debit, instead of paying the $149, low-income earners are required to pay a reduced price of $43, else the whole fee is waived.
&nbsp;
How to determine if you are eligible for the online payment plan
You qualify to apply online on a long-term payment plan basis as an individual if what you owe in combined tax, penalties, and interests is $50,000 or less. For a short-term payment plan, the maximum amount including combined tax, penalties, and interests is $100,000.
If you are operating as a business and you desire to apply online, you must file all required returns, and what you owe in combined tax, penalties and interests should be $25,000 maximum.
&nbsp;
&nbsp;
To sum up, you do not have to panic if you are experiencing some financial setbacks that affect your tax payment. All you need to do is inform the IRS early enough by filing for the Installment Agreement Request and following the guidelines provided.
&nbsp;
If you feel inadequate about applying for the payment plan all by yourself, you can always reach out to an IRS-Enrolled Agent for help.
&nbsp;
&nbsp;You may be thinking, &lsquo;<a href="https://enrolledagent.com/what-is-enrolled-agent/">What is an IRS-Enrolled Agent</a>?&rsquo;
&nbsp;
An IRS-Enrolled Agent is a Federally Authorized Enrolled Agent in the United States who is officially licensed to represent taxpayers in all tax-related matters. An EA will professionally walk you through the procedures since they specialize in tax.
&nbsp;
&nbsp;

The tax benefits of Sub S-Corporation make it a good choice amongst small businesses; incomes are taxed at an individual rate instead of the business rate for federal income taxes. Couples also benefit from S-corps because it helps them avoid the corporate income tax and save money on the self-employment tax.
The due date for submitting an S-corps return is usually March 15, except this day falls on a weekend or holiday. If the IRS does not receive your returns on that day, you may be penalized. In addition to your S-Corp return, you are also expected to file quarterly payroll tax returns and the annual federal unemployment tax return. You should report all financial activity on IRS Form 1102S and attach a Schedule K-1 for each shareholder as a business.&nbsp;&nbsp;
&nbsp;Failure to comply with the deadline given by the IRS can be costly. Although the late filing of the S-Corp return often does not affect the receipt of the taxes due on April 15.
&nbsp;
The penalty
The charge for late filing is $195 per month or for any part of the month. If there is no outstanding tax, this amount is multiplied by the number of corporate shareholders. This starts counting from the first day after the deadline.
&nbsp;
On the other hand, if you file your S-Corp return late and have outstanding taxes, you get to pay an additional 5% on the unpaid tax for each month. This is then added to the penalty and the due taxes.
&nbsp;
How to avoid the penalty
The best and easiest way to avoid this extra cost is to file your returns on time. Remember that all shareholders have the deadline of April 15 same as individual tax. However, since life can be unpredictable, if you cannot file your S-Corp return before the deadline, you can get an extension by filing Form 7004.&nbsp;
&nbsp;
When you are being penalized and you feel you do not deserve it, you have the right to challenge the penalty. Still, your challenge must be written professionally to increase your chances of convincing the IRS.

LATE FILING OF S-CORP RETURNS CAN BE COSTLY.

Do you know you can lose to win?
I am sure that the word 'loss' is one of the words you cringe at.
Like, really! Who wants to experience a loss of any sort?!
&nbsp;Loss is often associated with negativity and disaster, and no one prays for it.
However, this isn't always the case. Loss- especially investment loss- can be a blessing in disguise for you.
How so?
As a taxpayer, if you know how to play your cards well regarding investment losses, you can utilize this to minimize your tax obligations each year.
There are many rules that you must understand about investment loss if you want to go this route, and these include:
<ul>
<li style="font-weight: 400;" aria-level="1">Offsetting gains:&nbsp;You can use your investment losses to offset investment gains yearly.</li>
<li style="font-weight: 400;" aria-level="1">Netting rules:&nbsp;Before you net your investment losses against your earned income, you should first apply it to your investment gains. This is because you can net any loss against investment gains gotten in the same year. However, only $3000 can be deducted from your earned income yearly if you are netting your investment losses against your earned income. However, you have the right to either utilize the remaining investment losses in the years to come or offset them with investment gains.</li>
<li style="font-weight: 400;" aria-level="1">Short-term versus long-term: Short-term investment gains (profits made from investments or assets you held for less than a year) are taxed based on the tax bracket you fall under, while long-term investment gains are taxed at a maximum tax rate of 20%</li>
</ul>
&nbsp;
Valuable tips on how to maximize the impact of investment losses
<ul>
<li style="font-weight: 400;" aria-level="1">Adequately plan when to take an investment loss to take full advantage of the $3000 yearly reduction from your earned income.</li>
<li style="font-weight: 400;" aria-level="1">Never forget to always net your investment losses against your gains before your earned income.</li>
<li style="font-weight: 400;" aria-level="1">Whenever possible, net losses against short-term gains, especially if you are in the high-income tax bracket.</li>
<li style="font-weight: 400;" aria-level="1">Defer taking losses if it will be used to offset lower taxed gains.</li>
<li style="font-weight: 400;" aria-level="1">Consider transferring stock showing a loss from a low tax rate family member to a higher taxed family member.</li>
</ul>
&nbsp;
In conclusion, if you are a newbie to how these things work, do not hesitate to reach out to a tax planner or an investment advisor. They will guide you on the appropriate time to sell appreciated or depreciated stocks or securities so you can minimize your gains and maximize your losses.

WHY INVESTMENT LOSSES IS AN IMPORTANT TAX PLANNING SUBJECT.

First, do not panic. Even if your return was rejected close to the tax due date, be assured that the IRS will give you a bit more time (usually until April 20) to rectify any anomaly. Understandably, sorting out a rejected e-filed tax return can be stressful; however, having a clear mind through this procedure will make things a lot easier.
There are several reasons why the IRS can reject your e-filed tax return, and this is closely knitted to the fact that the IRS operates on a lot of strict rules. The rejection of your e-filed tax return can result from simple errors such as missing information or even more complex ones such as identity theft.
&nbsp;
Common causes of rejected tax returns and what to do
1. Simple filing error: This usually results from a mismatch between the information on your returns and the one on the social security administration of IRS records. Examples include misspelling of names, especially the last name, a typo on social security number, error in the birth date or e-filing PIN, missing form, etc.
&nbsp;
What to do:&nbsp;Correct the error for which your return was rejected, then e-file the corrected version with the IRS as soon as possible.
&nbsp;
2. Dependent error:&nbsp;The IRS can reject your e-filed return if the information on your return and that of the IRS do not tally. When claiming dependents on your tax returns, you must provide their full names, Social Security numbers (SSNs), and your relationship with the dependent. If there is a discrepancy between the information you provide and the IRS master file, your return will be denied.
&nbsp;
Another scenario for rejection based on dependent error is if another taxpayer has already claimed the SSN of your dependent. This happens when your dependent e-files a return to recover withheld wages before you claim the dependent on your e-filed returns, or an ex-spouse claimed your child as a dependent before you do, or even a caregiver.
&nbsp;
What to do:&nbsp;If you make a mistake with your dependent information, correct the mistake and send the updated version to the IRS.
&nbsp;
However, if your case is that someone else already claimed your dependent, file a paper return with proof that the dependent belongs on your return. You can also reach out to the other party if they are a family member to amend their return.
&nbsp;
3. Filing status: Some tax filing status, such as head of household, requires additional information rather than just ticking the appropriate status boxes. As a head of household, you are required to claim a dependent on your returns. Failure to do so or any other error found in the dependent information can lead to the rejection of your e-file submission.
&nbsp;
Another case of being rejected due to filing status is if you file a joint return and forget to include your partner's information.
&nbsp;
What to do:&nbsp;If, as a head of household, you fail to include your dependent information, or you are missing some information; correct your mistake by either filling in the dependent in the appropriate box or listing the first and last names of the qualifying persons where it is required, or enter the correct SSN of each of your dependents.
&nbsp;
4. Identity Fraud: This happens when your identity has been compromised; hence the IRS receives a duplicate social security number. Interestingly, the culprit usually files these false returns early enough to claim a refund. Therefore, the IRS system automatically rejects yours when you file your return.
&nbsp;
What to do:&nbsp;
- File a paper tax return.
- include Form 14039: Identity Theft Affidavit with your tax return.
- Attach copies of your social security card, driver's license, and/or passport with your tax returns.
- Consider mailing your tax return using certified mail with the return receipt requested.
&nbsp;
You can also visit the <a href="https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft">IRS Taxpayer's guide to identity theft</a> to get instructions on what to do.
&nbsp;
To sum it all up, try your best not to panic if your e-filed return is rejected. When a return is rejected, the IRS usually sends a code that helps you determine what the error is. This makes things easier because the solution can be easily sought once the problem is known.

WHAT TO DO IF YOUR E-FILED RETURN IS REJECTED BY THE IRS.

Getting an audit request from the IRS can make you heebie-jeebies. The simple-looking 5-lettered word "audit" can make an average person uneasy. Thankfully, only a tiny bit of the entire American populace gets audited. However, you have to be very careful while preparing your returns because no one is 'audit-proof.' If you mess with the numbers or any of the important stuff, you can be sure to get a request from the IRS.
&nbsp;
Below are some of the things that can land you an IRS audit:
<ul>
<li style="font-weight: 400;" aria-level="1">Going wrong on the figures, i.e., math errors.</li>
<li style="font-weight: 400;" aria-level="1">Being shady with your income.</li>
<li style="font-weight: 400;" aria-level="1">Reporting false donations</li>
<li style="font-weight: 400;" aria-level="1">Stating numerous losses on a Schedule C</li>
<li style="font-weight: 400;" aria-level="1">Operating a cash business</li>
<li style="font-weight: 400;" aria-level="1">The deposited large amount of cash</li>
<li style="font-weight: 400;" aria-level="1">You work from home</li>
<li style="font-weight: 400;" aria-level="1">You are self-employed</li>
<li style="font-weight: 400;" aria-level="1">Claiming the Earned Income Tax Credit</li>
</ul>
&nbsp;
Of the truth, not all calls from IRS should make you break out in cold sweats; some audits are just simple interrogations. Therefore, having a good understanding of what you are being audited for can save you unnecessary anxiety.
&nbsp;
The different types of audits can be classified into:
1. Correspondence Audit:&nbsp;This kind of audit can be sorted via mail. It can either come in a simple letter or an audit letter.
<ol style="list-style-type: lower-roman;">
<li>&nbsp;Simple letter: You get this from the IRS when they need you to claim that you owe the government some money. Although this simple letter can't be fully classified as an audit, ignoring it can lead to significant issues. You will most likely get this request if there are mistakes with the figures on your returns, or if you missed out on reporting some of the income stated on the W-2 or 1099 form that the IRS received.</li>
<li>Audit letter: You will get this letter when the IRS requests that you produce supporting documentation for a deduction you claimed or additional related information.</li>
</ol>
&nbsp;The correspondence audit by itself isn't a big deal inasmuch you give a prompt and necessary response to whatever you are being asked.
2. Office Audit:&nbsp;This type of audit is more severe because you will meet with the IRS in person to discuss. Nevertheless, this kind of meeting can end up being in your favor.
If you feel you cannot handle meeting with the IRS all by yourself, you can go with a Tax Professional.
&nbsp;
3. Field Audit: When you get this kind of audit, just expect the IRS to show up at your door- either your office, home, etc.&nbsp;Although this type of audit is uncommon, you should go with a Tax Professional if you get an audit call that requires this.
&nbsp;
4. Line-by-Line Audit: Here, the IRS selects Taxpayers at random, and their returns are being scrutinized. This type of audit might cause you to panic, especially if there is a possibility of you owing the IRS. Still, if you have been careful with preparing your returns over the years, then there is nothing to worry about.
&nbsp;
In conclusion, be transparent with your income and taxes, and if you find yourself in the audit' nest,' here are some essential tips for you:
<ul>
<li style="font-weight: 400;" aria-level="1">Respond promptly to correspondence issues.</li>
<li style="font-weight: 400;" aria-level="1">Seek professional help when and where necessary.</li>
<li style="font-weight: 400;" aria-level="1">Ensure you understand in clear terms what the IRS is requesting.</li>
<li style="font-weight: 400;" aria-level="1">Peruse the Audit Technique Guide (especially the areas that concerns you) before you meet with the IRS. This resource- Audit Technique Guide (ATG) can be found on the IRS website (<a href="http://www.irs.gov/">www.irs.gov</a>).</li>
</ul>

SOME IMPORTANT THINGS YOU NEED TO KNOW ABOUT IRS AUDITS

As an official of the armed services, you have the benefit of excluding some items from your taxable income. These items include living allowance, family allowance, combat zone pay, travel allowance, moving allowance, death allowance, etc.
Living allowance
The items that you can exclude from your living allowance are:
<ul>
<li>Housing and cost-of-living allowances abroad paid by the U.S. Government or by a foreign government</li>
<li>Clothing allowance</li>
<li>Basic Allowance for Housing (BAH)</li>
<li>Basic Allowance for Subsistence (BAS)</li>
<li>Overseas Housing Allowance (OHA)</li>
</ul>
&nbsp;
Family allowance
The items that you can exclude from your family allowance are:
<ul>
<li> Family Subsistence Supplemental Allowance</li>
<li>Certain educational expenses for dependents</li>
<li>Emergencies</li>
<li>Family Separation Allowance (FSA)</li>
<li>Evacuation to a place of safety</li>
</ul>
Combat zone pay
The combat pay or imminent danger pay is a bonus of $225 given to a military member assigned to a combat zone. This pay is also not subject to tax.
<ul>
<li>Compensation for active service while in a combat zone.</li>
</ul>
NB The exclusion for certain officers is limited.
&nbsp;
Travel allowances
The items that you can exclude from your travel allowance are:
<ul>
<li>Transportation for you or your dependents during ship overhaul or inactivation</li>
<li>Reassignment in a dependent restricted status</li>
<li>Leave between consecutive overseas tours</li>
<li>Annual round trip for dependent students</li>
<li>Per diem</li>
</ul>
&nbsp;
Death allowance
Items subject to exclusion under the death allowance are:
<ul>
<li>Death gratuity payments to eligible survivors</li>
<li>Burial services</li>
<li>Travel of dependents to burial site</li>
</ul>
Moving allowance
The items that you can exclude from your moving allowance are:
<ul>
<li>Move-in housing</li>
<li>Moving household and personal items</li>
<li>Temporary lodging and temporary lodging expenses</li>
<li>Military base realignment and closure benefit (the exclusion is limited as described above)</li>
<li>Moving trailers or mobile homes</li>
<li>Dislocation</li>
</ul>
&nbsp;
In-kind Military benefits 
<ul>
<li>Legal assistance</li>
<li>Commissary/exchange discounts</li>
<li>Defense counsel services</li>
<li>Medical/dental care</li>
<li>Dependent-care assistance program</li>
<li>Space-available travel on government aircraft</li>
<li>Uniforms furnished to enlisted personnel</li>
</ul>

THE TAX ADVANTAGE FOR OFFICIALS IN ARMED SERVICES

When you finally submit your returns to the IRS, the relief you feel will make you want to dump every document relating to tax into the trash can ASAP. You do not want to be reminded about that stress again.
But&hellip; wait!
Not too fast.
Don't fall for the temptation of trashing the documents.
The IRS might summon you if it reviews your return, and you will need your documents.
&nbsp;
Here are some essential record-keeping tips you need to know:
1. Keep your tax records for at least three years from the date you file a related income tax record. According to the IRS, you must keep all papers for as long as they are needed to support your tax return. The retention period should be between 3-7 years; however, you can decide to retain a copy of your actual tax return, W-2s, and 1099s for longer than seven years. You can do this electronically to avoid numerous tax papers in your home.
2. Common records worth retaining include:
<ul>
<li style="font-weight: 400;" aria-level="1">Invoices.</li>
<li style="font-weight: 400;" aria-level="1">Bank and credit card statements.</li>
<li style="font-weight: 400;" aria-level="1">Canceled checks.</li>
<li style="font-weight: 400;" aria-level="1">Receipt with time, place, and purpose noted.</li>
<li style="font-weight: 400;" aria-level="1">Mileage logs.</li>
<li style="font-weight: 400;" aria-level="1">Other proof of payment for claimed deductions.</li>
</ul>
&nbsp;
3. The following documents should be kept indefinitely:
<ul>
<li style="font-weight: 400;" aria-level="1">A copy of your actual tax return.</li>
<li style="font-weight: 400;" aria-level="1">Stock transactions.</li>
<li style="font-weight: 400;" aria-level="1">Records related to a home purchase or sale.</li>
</ul>
&nbsp;
4. Take note of other record retention requirements:
<ul>
<li style="font-weight: 400;" aria-level="1">There is a need for social security records proof to ensure they tally with your paychecks.</li>
<li style="font-weight: 400;" aria-level="1">Banking, insurance, and estate management may need other records.</li>
<li style="font-weight: 400;" aria-level="1">Retention requirements for State records are often six months to 1 year longer than Federal requirements.</li>
<li style="font-weight: 400;" aria-level="1">If your returns reduce your tax obligation by more than 25%, the Federal retention requirement becomes six years. However, if fraud is involved, the record retention period is indefinite.</li>
</ul>
&nbsp;
The IRS requires no special record-keeping system. You are only expected to keep all documents that can support the information on your tax return.
&nbsp;
In summary, be deliberate about your tax records. Indeed, you wouldn't be able to keep every piece of document as the year rolls by. Nevertheless, ensure the important documents ate kept, and you have digital copies of all your documents. Keep all the records that cannot be replaced when thrashed.

STOP! DON’T TRASH IT ALL.

A little while ago, tax deductions were permitted for taxpayers on expenses related to a hobby up to the amount of hobby income. However, after the Tax Cuts and Jobs Acts, this was reversed.
&nbsp;Presently, you cannot deduct any expenses related to a hobby, even if the money was earned from the hobby. You are only permitted to make deductions from your business.
According to the IRS, you are either involved in a business or a hobby; you cannot classify the two together. In a situation whereby a small business does not yield profit for 3-5 years, the IRS can then reclassify it as a hobby.
&nbsp;
Below is a list of factors suggested by the IRS for determining if an activity is a business:
<ol style="list-style-type: lower-roman;">
<li>Is the primary aim to make a profit?</li>
<li>Do you maintain complete and accurate book-keeping and records?</li>
<li>Do you depend on income from the activity for your livelihood?</li>
<li>Do you or your advisors have the knowledge needed to carry on the activity as a successful business?</li>
<li>Are your losses due to circumstances beyond your control?</li>
<li>Were you successful in similar activity/activities you engaged in in the past?</li>
<li>Is there a possibility of making a future profit from the appreciation of assets used in the activity?</li>
<li>If you are operating an activity as a hobby, and you run at a loss, you also cannot deduct the loss from your salary or other income. However, if you make profits from your hobby, you are expected to report the income while filing your tax no matter how small it is even though a hobby is different from a business.</li>
</ol>
In conclusion, if you are considering turning a current pastime activity, that is, a hobby into a profitable business and you are unsure about the IRS requirements, do not hesitate in getting professional help.

CAN I MAKE TAX DEDUCTIONS FROM MY HOBBY BUSINESS?

A powerful marketing tool that is often overlooked is quality customer service.
Don't get me wrong.
I know you try your best to be as polite as you can with your clients.
However, do you go the extra mile?
Do you check back to know how well they enjoyed the product or service rendered?
Do you return calls promptly, give an update about pending issues, and explain delays as soon as possible?
Do you offer discounts at the point of sale rather than giving out coupons?
&nbsp;
Often, there is this temptation that most business owners face; we just want to cash out from clients/customers as soon as they can and move on to the next client. We often forget that our customers are not cash cows but humans with emotions like we are.
Take a minute to reflect on the brands you are loyal to, and you will observe that they subtly won your heart against their competitors due to how they made you feel, especially on your first contact with them.
So, when next you feel going the extra mile to satisfy your customers is stressful and unnecessary, remember these top reasons:
1. Satisfied customers are loyal customers:&nbsp;You can trust a happy customer always to return. The reason is that they are not actively searching for other suppliers, nor are they open to pitches from competing companies. Moreover, they so much trust your brand and are willing to stick by when things go awry.
2. Satisfied customers promote the brand reputation and popularity: When satisfied customers commended a product they got from you, they are likely to become your brand advocate even without paying them. Take, for example, this imaginary scenario:
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Miss A: 'Wow! Your shirt is lovely.'
&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Customer: *Blushing* 'Thank you, I got it from XXXX.'
Can you see what played out in the example? The customer gave out the name of the brand even without being asked. In certain circumstances, a satisfied customer will discuss their experience with the brand and other products available from the company.
&nbsp;A report I stumbled on sometime ago states that customers publicize a brand more than advertising agencies. This is enough reason to pay attention to your customers' quality of service.
&nbsp;
3. Satisfied customers drive sales revenue: As earlier said, a loyal customer is a satisfied customer. You cannot expect a customer to be dedicated to your brand if their needs are not met.
A report gotten from Adobe states, 'loyal customers spent 67% more than new ones.' A happy and satisfied customer wouldn't want to leave your brand nor look elsewhere; they will always come back. Moreover, they are willing to spend more as time goes on because they trust your brand. It is also easier to convince customers to try out your other products, i.e., cross-selling, upselling, etc.
You can also trust a satisfied customer to recommend you to their families and friends.
&nbsp;
4. Satisfied customers reduce marketing expenses:&nbsp;It is way cheaper to retain a customer than to acquire a new one- statistics show it is 5-7 times cheaper. Besides, a satisfied customer is an outstanding brand advocate. They are not just customers of your brand; they are also die-hard fans. They often feel fulfilled when they can convince their families and friends about your brand, generating more business for you.
So, instead of spending huge bucks on acquiring new customers, you can use part of that to improve the quality of your existing customer's experience.
&nbsp;
In conclusion, make customer satisfaction a priority, and you'd be amazed at the positive effect it will have on your profits.

Business

4 TOP REASONS WHY SATISFYING YOUR CUSTOMER IS NECESSARY.

As a business owner or a CEO, a mindset I will encourage you to have is that your business is only as important as your employees.
Regardless of the industry you are in, your business can only be strong as your employees. This is because your employees are the ones who majorly interact with your customers since they are the ones that carry out the mission of your organization. Hence they have a more significant influence on them, which subsequently rubs off on your business.&nbsp;
The following are some ways you can fire up your employees to perform better:
&nbsp;
1. Show genuine care to your employees:&nbsp;Many CEOs often make the mistake of paying more attention to their business than their employees. It would be best if you didn't think the only obligation you have is to pay your staff salaries; you owe them care. Their personal development is also your business.
If you nurture your employees the same way you do your business, it is most likely that one of them will transfer that care to your business. They will want to do more than they would have usually done. I understand your organization isn't some charity or support group. However, you should not forget that we tend to give our best when we feel genuinely loved and cared for.
&nbsp;
2. Be sincere about your expectations:&nbsp;Your employee must understand what they are expected to do, how they are expected to do it, and how they will be appraised for it. Ensure there is an adequate provision for all they need to carry out their obligations. Try your best to be available and accessible to them, especially those that report to you directly.
&nbsp;
It is equally important that you have an approachable personality. If you are someone who flares up at every little mistake, your employee will prefer to patch up a pressing issue instead of letting you in on it, and this could harm the business.
&nbsp;
3. Improve team communication:&nbsp;According to McKinsey improving team communication can increase productivity by up to 25%. When you encourage team communication, you enable your employees to complete their tasks faster because they will be free to share ideas, have their questions answered, and share their thoughts on each other's work.
&nbsp;
4. Give feedback from time to time:&nbsp;If you have to wait for the annual employee performance review before giving your feedback, you can be assured that many issues will be swept under the carpet. An employee tends to know the effect of their action(s) on an organization when provided with immediate and continuous feedback.
A significant motivation for employees is knowing that they are making progress in relation to the company's goals. The only way they can know this is if you provide them with regular feedback. However, you should give negative feedback privately. Publicly criticizing an employee's work in the presence of others can kill their morale. You will hardly find someone motivated by negative feedback, especially if it is done in an embarrassing manner. Conversely, giving positive feedback can boost your employee's confidence, and they will be glad if that is being done publicly. Everyone wants to be the star, you know.
&nbsp;
5. Incentivize a job well done: 82% of employed Americans don't feel that their supervisors recognize them enough for their contributions. According to the Havard Business review, 40% of employed Americans say they would put more energy into their work if they were recognized more often. Giving incentives or rewarding an employee(regardless of their role in the organization) for a job well done goes a long way in driving the employee to do more.
According to the incentive theory, behaviors are motivated by a desire for reinforcement or incentives. Research has also shown that the expectation of a reward has the power to influence emotional reactions and memories. When your employee remembers the reward they got the last time they did something excellent, they will be encouraged to do more, even when inconvenient.&nbsp;
&nbsp;
In all, treat your employees as humans, not as tools you need to achieve your business goals. Never forget that the golden rule also applies in a workplace.

5 GREAT WAYS TO FIRE UP EMPLOYEE’S PERFORMANCE

Expecting or having a baby is one of the big moments in one's life. Having a baby changes various aspects of your life- including your taxes. Depending on your response, this unique addition to your family can bring about opportunities to save or bring about some costly pitfalls. To save you some cash should a time like this present, below are some essential tips:
&nbsp;
1. Obtain a social security number for your baby: Getting a social security number (SSN) for your child is very important because it is a means by which the federal government identifies your child. Without the SNN, you cannot claim child-related tax breaks on your income taxes. The number also serves other important purposes, including setting up a college savings plan, opening a bank account, getting medical coverage for the child, etc.&nbsp;Not obtaining a social security number for your baby can delay your tax filings or subject you to a $50 penalty.
The process of applying for this number is straightforward. All you need to do is file for the SSN, as the hospital carries out the remaining steps at the time of birth.
&nbsp;
2. Fund your baby's future:&nbsp;You can build your baby's net worth from infancy. You achieve this by providing gifts worth $15,000 ($30,000 for a married couple) yearly in a savings or investment account opened in your baby's name. Doing this gives you an edge over the kiddies' tax exemption for up to $2100 of unearned income in your child's name.
You can also start saving towards your child's education; this privilege is not limited to you. Your relatives or any adult in your family also have the right to save tax-free money in your baby's name. You can take advantage of the 529 college savings plans and other beneficial savings plans.
&nbsp;
3. Optimize available tax benefits: Some tax benefits (such as the Earned Income Credit and the $2000 Child Tax credit) come with the arrival of a new dependent. It would be best if you considered these when recalculating your withholdings.&nbsp;&nbsp;
&nbsp;
4. Dependent Care Assistance Plan (DCAP): Childcare can put a big dent in one's wallet if not adequately strategized. Thankfully, a tax-advantaged account can help you save money on childcare. This account is referred to as a Dependent Care Assistance Plan (DCAP), or Dependent Care FSA.
DCAP operates such that it allows you, as an employee, to save some funds each pay period for approved childcare expenses. The account the DCAP funds is not subject to tax. Therefore, this helps you reduce your total tax amount.
&nbsp;
In conclusion, do not get too overwhelmed with the latest addition to your family that you ignore your taxes or how the change affects your taxes. Moreover, your bundle of joy can bring some tax joy for you with the appropriate response.

ARE YOU AN EXPECTANT PARENT? HERE ARE SOME BASIC TAX TIPS FOR YOU.

What's your take on internal control; do you take it seriously or don't give two hoots?
It would be best if you didn't joke about having a proper internal control structure as a business owner. It should be a vital part of your day-to-day activities.
You may be wondering why the fuss about internal control.
Here's what an optimized internal control system does for your business:
An optimized internal accounting control helps monitor your financial operations, therefore, minimizing the risk of damage your business could be exposed to through fraud or theft. The objectives of internal control are made such that it helps in ensuring that your business maintains financial procedures and reporting.
It is safe to refer to internal control as the most important tool employed in managing risks in business operations. Of course, risk in a business is not entirely avoidable. However, performing internal accounting control helps reduce the risks of financial operations.
Internal control is specific for different organizations; no one size fits all. The internal control structure of your organization cannot work effectively for another organization because it is expected that you design it to be efficient and effective for your organization. Your business should have an adequate system in place that ensures the safety of all its assets, and there should be a constant review of the system to ensure its effectiveness.
Here are some suggestions that you can use to review your internal control procedure:
On cash
<ul>
<li style="font-weight: 400;" aria-level="1">Are vital responsibilities such as cash handling and cash recording adequately segregated?</li>
<li style="font-weight: 400;" aria-level="1">Do you carry out impromptu checks on petty cash and other cash accounts?</li>
<li style="font-weight: 400;" aria-level="1">Are all expenditures authorized and documented?</li>
<li style="font-weight: 400;" aria-level="1">Do you ensure that all receipts are intact and deposited to the bank daily?</li>
<li style="font-weight: 400;" aria-level="1">Do you prepare bank reconciliation?</li>
<li style="font-weight: 400;" aria-level="1">Do you forbid that a single employee handles any cash process from start to finish?</li>
</ul>
&nbsp;
On inventory
<ul>
<li style="font-weight: 400;" aria-level="1">Are your inventories insured?</li>
<li style="font-weight: 400;" aria-level="1">Is central control over inventories maintained?</li>
<li style="font-weight: 400;" aria-level="1">Are inventories physically counted from time to time, or at least once a year?</li>
<li style="font-weight: 400;" aria-level="1">Do you have a system that safeguards your business against theft and pilferage?</li>
</ul>
On stock
<ul>
<li style="font-weight: 400;" aria-level="1">Do you have designated officers in charge of signing stock certificates?</li>
<li style="font-weight: 400;" aria-level="1">Are stock certificates prenumbered and carefully accounted for?</li>
</ul>
&nbsp;
On sales
<ul>
<li style="font-weight: 400;" aria-level="1">Do you play an active role in monitoring sales activities? Especially if you do not have much staff involved in sales processes.</li>
<li style="font-weight: 400;" aria-level="1">Do you have a structure that disallows your staff from pocketing cash from a sale that was recorded?</li>
</ul>
On fixed assets
<ul>
<li style="font-weight: 400;" aria-level="1">Are your fixed assets adequately insured?</li>
<li style="font-weight: 400;" aria-level="1">Do you take a regular inventory of fixed assets?</li>
<li style="font-weight: 400;" aria-level="1">Do you ensure that any difference between physical count and accounting records is resolved immediately?</li>
</ul>
On debts
<ul>
<li style="font-weight: 400;" aria-level="1">Are accounts payable checked for accuracy?</li>
<li style="font-weight: 400;" aria-level="1">Are liabilities promptly recorded?</li>
<li style="font-weight: 400;" aria-level="1">Is there proper authorization for the creation of debt?</li>
<li style="font-weight: 400;" aria-level="1">Do you pay the bills only when the merchandise has been received?</li>
</ul>
&nbsp;
As earlier mentioned, there is no size fits all when planning an internal accounting control for a business; you can add as many steps as you deem appropriate to the above suggestions

THE IMPORTANCE OF INTERNAL CONTROL CHECKUP TO YOUR BUSINESS.

As an individual who is most likely not excited about taxes and tax-related issues, the best you can do for yourself is to understand ways to cut down on the taxes you pay.
Thankfully, several tips can help you reduce your taxable income- to reality. Some of the timeless tips are:
1. Organize all your tax documents: Organization gives clarity, which aids simplicity. Once you are deliberate about organizing your tax documents and ensuring everything you need to file a return is ready, and in a place, it makes the whole process easy both for you and your tax preparer. For Instance, if you have a folder in which you carefully organize all your tax-related documents for a year, deductible expenses receipts, and other important financial documents. When the time comes for you to file your return for the tax year, you give your tax-preparer all they need early enough.
&nbsp;
It is normal to want to do away with the papers once your return is complete and with the IRS. Nevertheless, it is not wise to do so because the key documents might be handy when the IRS comes questioning your return. In order to save space and prevent the loss of important tax-related documents, it's advisable to make electronic copies of them and keep them for, say, a period of 3-7 years.
&nbsp;Yeah! You read right. 3-to 7 years is the advisable period to keep any tax document because the IRS is given three years from the period you file your return to come back and audit it. On the flip side, you also have up to 3 years to file an amended return. For example, if you noticed you forgot to claim a deduction or credit you qualify for, you can always file an amended return for it since you have the proper documents that enable that.
&nbsp;
2. Minimize your customer debt: Minimizing your debt demands a lot of discipline, but it is very achievable. Remember that the end goal is to be financially stable. However, if you have some customer debt on you, you can adopt legal ways to cut down the taxes you pay on the interest.
&nbsp;
The interest paid on customer debt can be categorized into two: tax deductible and non-tax deductible. Interests paid on a home mortgage or home equity, debt accrued from the purchase of investment property, student loans, etc., are classified as tax-deductible interests. On the other hand, credit card and car loans' interests are classified as non-tax-deductible.
To reduce your tax as an individual, you can transfer your customer debt to a home equity loan. This will help you maintain deductibility on the interest. However, you've got to be intentional about settling your home-equity debt because if you do not pay the debt early enough, you might lose your house.
&nbsp;
3. Donate to your retirement account:&nbsp;You can exempt or defer some of your income from taxation when you make contributions to qualified retirement accounts. Interestingly, taxable income for both 2020 and 2021 can be reduced for contributions up to $19500 in a 401(k) and 403 plan. If you are above 50 years, you have the privilege of a catch-up contribution worth $6500.
&nbsp;
If there is no provision of a retirement plan by your employer, you can opt for the traditional individual retirement plan, where you can contribute up to $6000 and $7000 if you are above 50 years. These amounts are applicable for the years 2020 and 2021.
&nbsp;
4. Set up a business: The beautiful thing about setting up a business is that it exposes you to the tax privileges available for self-employed individuals. Suppose your business is set up in your apartment. In that case, you have a home office, and you can deduct many expenses from your income, especially if these expenses were used for business purposes. To qualify for these deductions, your business must be profit-oriented, and the IRS expects that your business should have proof of that within 3-5 years. Otherwise, you'll be expected to prove your profit motivation to deduct losses.
&nbsp;
5. Open a Health Savings Account: Another intelligent way of reducing your taxable income is through a Health Savings Account (HSA), especially if you have high-deductible health insurance. Like the 401(k)-retirement plan, you can make contributions to your health savings account before your income is taxed. As an individual, the maximum amount you can contribute to your health account is $3350, but for the year 2021, it is $3600.
&nbsp;
6. Take advantage of tax credits and tax deductions: Tax credits have more advantages than tax deductions because tax credits reduce your taxable income dollar-for-dollar. However, since the two are not mutually exclusive, you can utilize them simultaneously to achieve the best results.
&nbsp;
There are numerous tax credits and deductions. Earned income tax credit (applies to you if your income is low to medium, and you can make up to $6242). American opportunity tax credit, savers credit, advanced premium tax credits, and child and dependent care credit are just a few examples of tax credits.
Tax deductions can be classified into standard deductions and itemized deductions. The standard deduction lowers your income by one fixed amount, while itemized deductions comprise a list of eligible expenses. Itemized deduction includes charitable gifts, healthcare casualty expenditures, theft or losses resulting from a natural disaster, etc. You are free to claim whichever deduction lowers your tax bill the most.
&nbsp;
7. Pay attention to AMT liability:&nbsp;If your regular tax is reduced below a certain amount due to too many tax preference items, you will be required to pay the alternative minimum tax. To prevent paying this, you should consider shifting income and deduction, especially if you use preference items such as private activity bond interest, accelerated depreciation, etc., to reduce your tax.

7 CLEVER WAYS TO REDUCE YOUR TAXES AS AN INDIVIDUAL.

I understand how traumatic a divorce process can be. Often, it is a painful and challenging process leaving the parties involved emotionally unstable. Asides from the emotional imbalance that divorce brings, it can also pose some financial pitfalls and tax traps. To avoid divorce being more taxing than required, below are some things to take note of:
&nbsp;
Child Custody: If you have custody of your child or children for the more significant part of the tax year, you can claim the child as a dependent. If you had your divorce before 2018 and are the custodial parent, you are entitled to a dependency exemption for your children. This exemption cannot be split between you and your ex-spouse, but you can significantly transfer the claim to them if it benefits them. Moreover, you can decide to bargain for more alimony or a larger property settlement in exchange for the dependency deduction. You pass on this dependency exemption to your ex-spouse by signing the IRS Form <a href="https://www.irs.gov/pub/irs-pdf/f8332.pdf">8332</a>. The number of years you decide to give up the dependency exemption depends on you and your spouse.
&nbsp;
On the other hand, if your divorce is between 2018 through 2025, you are not entitled to claim the dependency exemption. However, Form 8332 is not useless during these years. For example, claiming a child below 17 years as a dependent on your tax return can be a huge factor in determining your ability to claim the child's tax credit. You can decide to transfer the child tax credit to your Ex-spouse (the non-custodial parent) in the same way as the dependency exemption by signing Form 8332.
&nbsp;
Alimony and Child Support:&nbsp;If you are preparing to financially separate from your spouse, you must have a good understanding of the difference between Alimony and child support.
Alimony is the payment you pay or receive from your spouse to maintain the same standard of living after divorce, while child support is the payment a custodial parent receives to aid childcare.
&nbsp;
Two factors that will affect your response to Alimony when it comes to tax are:
<ul>
<li style="font-weight: 400;" aria-level="1">Your position regarding the fund (are you paying or receiving it?)</li>
<li style="font-weight: 400;" aria-level="1">The date when your divorce was finalized.</li>
</ul>
&nbsp;
If your divorce was finalized before Dec 31, 2018, you would be able to deduct the amount you pay to your ex-spouse from your taxable income.
The IRS has several regulations that must be met before spousal support can be considered Alimony.
&nbsp;
Tax Filing:&nbsp;You and your partner may have filed your tax jointly as a couple. However, the IRS does not restrict you from filing singly. When going through a divorce process and you are still legally married at the end of the tax year, you can decide to file your return as either ''Married filing separately'' or ''Head of Household'' (if qualified).
&nbsp;
On the contrary, you can decide to file jointly with your partner if you are still married on the last day of the tax year. Whatever the case is, do not hesitate to talk to your tax advisor and lawyer and understand the pros and cons of your decision.
&nbsp;
Property Settlement:&nbsp;It is easy to overlook the issue of property settlement because it is usually not a taxable event. However, there may be future tax consequences, especially when you, as the receiving party, decide to sell the property. This is due to what is called a "Tax Basis."
&nbsp;
A property is usually received with its original tax basis, but this tax basis does not remain the same when the property is put up for sale. The fact that you inherited a property with a low tax basis doesn't mean the capital gain will be minimal. An insufficient tax basis may result in a large capital gain in the long run.
&nbsp;
Having this knowledge can save you some rude shock. Moreover, it will help you consider the current market value of a property and the tax basis.
&nbsp;
In conclusion, ensure you are well informed about tax issues when going through a divorce and seek professional help where necessary.

RECENTLY DIVORCED OR CONSIDERING A DIVORCE? TAKE CHARGE OF YOUR FINANCES.

Good ideas and enthusiasm are great, but they are never sufficient in starting a business. They cannot take the place of the capital. For a business to prosper, you've got to be strategic about raising sufficient funds and judiciously utilizing the funds to get good returns and pay back loans.
&nbsp;
As an entrepreneur or newbie, here's a description of the temptation you might most likely fall into; you start a business with limited funds but many great ideas and aspirations. You are making enough sales to generate a net profit, and your inventory is double what you envisaged. However, your bills are stacked up to the point that some of your creditors are opting for cash-on-delivery only. You have depleted your accounts so as not to disappoint your creditors, and your bank manager is unhappy.
&nbsp;
You can avoid the scenario described above if you limit your company's growth to that which your retained earnings can handle. If you feel your retained earnings will slow down the growth you are aiming for, then you should look out for a means of long-term funding.
Below are some of the ways by which you can fund your business:
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Friends and Family Financing: Seeking financial support from family members or social networks can be intimidating, but you have to overcome those emotions, especially if you know they can help you fund your business. However, in seeking help from these folks, you have to be as professional as possible. Please do not take it casually because you are familiar with them. Draw out your business plan, which should include your financials, metrics, and milestones, and let them have a look at it. Also, make it clear to them how you intend to profit from your business.</li>
</ul>
&nbsp;
If you are going the path of friends and family financing, it is only wise to ask for sufficient funds instead of asking in bits, leading to mistrust or a strain in the relationship. Ensure that whatsoever you are getting from them is enough to set your business on its foot. It would be best to ask for sufficient time for a refund but not overdo things.
&nbsp;
If you feel comfortable offering equity in exchange for cash, you have to weigh the pros and cons well, so you won't start complaining later on when they want to have a say in everything about the business.
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Bank Loans:&nbsp;The scrutiny you get from a bank for soliciting their financial support will most likely be the most severe. This, on their part, is to ensure that you are worth the risk. There are some documents that you have to get ready and in order, e.g., your business plan, your company's history, balance sheet, business credit, etc. Having a prior good understanding of what your bank needs can save you a lot of stress. It is also necessary to know the correct type of business loan ideal for your needs. Not being particular about the kind of loan you desire can limit your chances of approval.</li>
</ul>
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Angel Investors: Some influential individuals are eager to provide funds/capital for startups. They usually do this in exchange for ownership equity or convertible debts. If you do not plan to pass on the ownership of your company to a third party in the long run or have an exit strategy, then do not opt for an Angel Investor. However, if you intend to expand your business and sell, an Angel Investor might be the proper fix for your capital generation.</li>
</ul>
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Venture Capitalists:&nbsp;If your business is just an idea, then one of the best sets of investors who would like to take a bet on you is the Venture Capitalists. These people or firms usually generate funds from various sources, which include investment companies, large corporations, private individuals, etc., to invest in high-risk startup companies that they feel will be profitable in the long run.</li>
</ul>
&nbsp;
Due to their interest in small businesses and ideas, they are usually difficult to access because of the volume of proposals they get. One way to get their attention is through a referral from a financial professional, which can either be a CPA, a banker, etc.
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Crowdfunding:&nbsp;As described by Investopedia, crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture.</li>
</ul>
&nbsp;
Thankfully, the internet and social media have made this funding a reality and easily accessible. There are several sites where you can find this pool of investors, e.g., Kickstarter, Indiegogo, etc.
&nbsp;
The type of crowdfunding you will opt for will largely depend on your product or service and your plans for your business growth. If you opt for reward-based crowdfunding, you can reward your contributors by giving them incentives. If you opt for equity-based crowdfunding, you offer your contributors equity. They receive financial returns on their investment and later get a share of the profit in a distribution or a dividend.
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Money Brokers:&nbsp;You get to see their advertisements in different business publications and newspapers. They usually demand an upfront payment to deliver their services (locating creditors or money lenders for you). However, you have to be discreet about Money Brokers by asking for references and reviewing their credentials. You can also ask for professional help about the Broker you are considering from your Accountant or Lawyer.</li>
</ul>
&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Small Business Administrators:&nbsp;They are usually available to secure loans, especially if other means are unavailable or easily accessible.</li>
</ul>
&nbsp;
In conclusion, be diligent when raising funds for your business or startup because it goes a long way in determining how successful your business will turn out to be.

RAISING FUNDS FOR A START-UP

Debt, without a doubt, comes with a series of negative emotions: stress, anxiety, doubt, low self-esteem, anger, etc. It is so prevalent that there is a medical name for one of the negative emotions of debt: Debt-Anger Syndrome.
&nbsp;
Paying debt can be a pain in the skin. You want to keep the extra cash or use it to make yourself more comfortable, but the reality that you are still on the debtor's list is enough to ruin your mood for the whole day.
Sometimes, you act as though the debt is not there. You deny it and go about your daily duties. However, it is always a subtle and creepy thought; it sure knows how to find its way back into your head. Moreover, you cannot brainwash reality.
&nbsp;
How then can you overcome this harsh reality that is eating you up?
&nbsp;
It is a battle you win first in your mind before establishing the victory in reality.
&nbsp;
Foremost, you have to accept the reality that you are indebted to someone or an organization. Then you have to make up your mind about doing everything within your power to pay up your debts; doing this sets you up to achieve your debt reduction goals.
&nbsp;
I chose to use the word-debt reduction because it looks more achievable than debt elimination. Or what do you think?
&nbsp;
After dealing with the monster called debt in your mind, you have to take the next crucial step of avoiding buying anything you do not need or cannot pay for within 30 days.&nbsp;
&nbsp;
Channel the energy you use for impulsive shopping to settle your existing debts. Don't convince yourself that what you want to pay is too little. No matter how little it is, devote it to reducing your debt because there will never be a perfect situation to pay off debts. You've got to make the little efforts.
&nbsp;
An exciting way I learned about debt reduction is from the famous book- Richest Man in Babylon. I believe the old Babylonian wisdom inscribed on the pages of that book to help overcome debt is still very effective today, and here is it:
&nbsp;
Keep 10% of your monthly income as savings, live on 70%, and use the remaining 20% to settle your debts.&nbsp;
&nbsp;
This may look difficult or unreasonable at first glance, but you cannot indeed discredit it until you give it a trial for twelve months.
&nbsp;
Taking conscious steps in reducing debt is very rewarding. It can be your best investment.&nbsp;&nbsp;
For example, when you pay off a typical credit card debt, you will save about 18% interest on the amount. This shows that debt reduction gives a guaranteed rate of return.
&nbsp;
What's more?!
Reducing your debt also helps you build security. For example, you can be more stable if you are a low-debt person when you lose your job than someone who owes a lot of money. Your low-debt status will only expose you to a bit of discomfort instead of financial ruin when a job loss happens.
&nbsp;
To sum up, monthly, try to major on the highest nondeductible interest rate, then when you are done with that, pick the next in line, that is, the one with the next highest rate. If you feel you cannot achieve this yourself, do not hesitate to ask for help, especially from a professional.

WORRIED ABOUT DEBTS? READ THIS

There is no doubt about how worked up one can get when going through a change in marital status- whether getting married, getting a divorce, or losing a spouse. Regardless, it would be best to consider your finances no matter how psychologically stressed you may be. Pardon me if the statement seems harsh, but the reality is that if you ignore the effect that a change in marital status can have on your finances, you will have yourself to blame for it in the long run.&nbsp;
To help you keep an eagle eye on what matters, here are some suggestions:
&nbsp;
Plan your tax: if you are tying the nuptial knot, you have to ensure that your marriage is recognized by the federal tax law to enjoy the benefits that come with the marriage tax package. Although you may decide to file a joint tax return with your spouse or file separately, there are more advantages to filing jointly as a married couple than filing separately.
&nbsp;Furthermore, there are some important things you have to know and plan for when filing for a divorce. According to the IRS rules, you are still considered married if your divorce isn't yet final as of Dec 31 of the tax year, even if you or your spouse filed for divorce during the year. Also, you cannot file a married return if your divorce decree was issued on Dec 31 of the tax year. Knowing this will guide you in making wise decisions and adequate research about filing your tax.
Losing a spouse can be the most draining of these statuses, and it is understandable if the last thing on your mind is tax issues. However, the loss of a spouse usually comes with some federal income tax tasks and responsibilities, and it is advisable to note them.
&nbsp;
Insurance Coverage:&nbsp;As a married couple, you may want to compare plans and determine which one of you has better coverage, especially if you both have health insurance from your employers.
If you are wondering if insurance coverage is something you should pay attention to while filing for a divorce, the answer is ''yes.'' It shouldn't be taken lightly, especially if you have children. Doing all that is meant to be done to help protect your financial interest and that of your spouse.
&nbsp;
Beneficiary Designation: Life insurance policies and retirement accounts are vital aspects that need your review, especially for beneficiary designations.
&nbsp;
Estate Planning:&nbsp;A periodic review of your existing will and other estate planning document is something you should imbibe, especially when there is a change in your marital status. Ensure your paperwork is up-to-date, and no choices are left obsolete. You wouldn't want a situation where your intended beneficiary won't access the assets you want to pass down to them.
&nbsp;
To sum it up, don't get too worked up with a change in your marital status that you neglect your finances. Get acquainted with how getting married, filing for a divorce, or the loss of a spouse affect your taxes, assets, and liabilities. Review important documents, and if you make any changes in your name, notify the concerned bodies such as the Social Security Administration and the Department of Motor Vehicles. You should also make copies of vital documents such as divorce decree and estate papers and ensure that the original copies are kept safe.

SOME IMPORTANT THINGS TO NOTE ABOUT CHANGING MARITAL STATUS

&nbsp; It's no news that many Houstonians dread the early months of the year due to tax filing and its numerous paperwork. However, tax filing isn't as complicated as people make it seem. You can make filing taxes less of an adrenaline-pumping activity by changing the mindset that it is an arduous task and doing what is necessary early enough.
&nbsp; The year 2021 did not seem to take it easy on taxpayers, especially those filing tax returns in Houston, or better put, residents of Texas. Asides from the economic effect the pandemic had on taxpayers, the winter snowstorms experienced in Houston and other parts of Texas affected the filing of returns in these areas. Thankfully, the IRS was sensitive to this situation and extended the deadline for those filing returns from Texas in general to June 17th.
&nbsp; Nevertheless, as a taxpayer resident in Houston, here are some suggestions that can always come in handy for filing your returns:
1. Start early by resisting the urge to procrastinate:&nbsp;Doing this will save you a whole lot of agitations. Always remind yourself that no matter how you run from it, you will still end up doing it, so you should start early enough so as not to lose your peace. Lol
2. Gather all the tax documents that are essential for your filing: The typical ones are Form W-2 (Statement of wages), K-1s (income and deductions from partnerships, S corporations, trusts, estates), Form 1099-int (interests, dividends, royalties, etc.), Form 1099-R (distributions from pensions, annuities, retirement or profit-sharing plans, IRAs, insurance contracts, etc.), Form 1099-B (sales of securities), Form 1099-B (sales of securities), Form 1099-K (income from third-party payment networks) and Form 1095-A (proof of health insurance).
3. Chose what works for you best between standard deductions or itemizing your deductions: Remember the standard deductions for the year 2022 is $12 950 if you are a single filer and $25,900 for a couple filing jointly. However, if you feel itemizing your deductions is the best option for you, then ensure everything you need to prove your claim is ready and handy, e.g., receipts for deductions and tax credits, including education costs, childcare, medical expenses, etc.&nbsp;
4. Pick a suitable filing status:&nbsp;Depending on your status, you can either file as a single, married filing jointly, or married filing separately. You can also file as a head of household if you paid more than half of the household expenses for the year, are unmarried, or have a qualifying child as a dependent. The last status option available is that of a qualifying widow(er). You have the license to this status for about two years after losing a spouse if you do not remarry.
5. If you feel you have all it takes to file a tax return excellently, you should do it. However, if you are not sure about yourself, it is advisable to seek the helo of a tax expert.
6. Lastly, do not let the excitement of filing your tax return to the IRS make you set all receipts and tax forms ablaze. Create a space for them and keep them safe. They can save your skin in the near future.
&nbsp;
In conclusion, while tax filing isn't exactly a walk in the park, following these few steps can make it much easier. When you feel you need a second eye, it's best to seek the services of an <a href="http://www.enrolledagent.com">enrolled agent</a>.

FILING TAX RETURN IN HOUSTON

&nbsp; &nbsp; Early withdrawal from your IRA account will attract a 10% penalty apart from the tax you'll pay on the money withdrawn. However, there are some exceptions to this rule, and these include:
1. Being a beneficiary: You won't be subjected to the 10% penalty charge if you withdraw from an IRA account you inherited. Nonetheless, this depends on the method of inheritance. Suppose you inherited the account from a spouse and treated it like a personal account. In that case, you will be penalized, but if you inherited it from a non-spouse, you wouldn't be penalized even if your benefactor was below 59.5 years when they kicked the bucket. However, you are expected to include the withdrawal(s) in your adjusted gross income (AGI).
2. Medical Insurance Premiums if unemployed: You might escape the 10% early withdrawal penalty if you withdraw from your IRA account to settle your health insurance payment due to unemployment.
There are two more conditions that you must satisfy to escape the penalty:
i. The money must be withdrawn during the year of your unemployment or the following year.
ii. You must be a recipient of the federal or state law unemployment compensation for 12 consecutive weeks.
3. Medical Expenses: You may also escape the penalty fee of early withdrawal from the IRA account if you use the funds for medical expenses, especially if what was about 7.5% of your adjusted gross income.
4. Switching to Roth IRAs: If you decide to convert your traditional IRA to a Roth IRA to avoid paying taxes on future account earnings, you may also escape the penalty fee.
5. Qualified Higher Education Expenses: Funds used to pay for qualified higher education are exempted from the early withdrawal penalty. The money could be used for tuition, books, supplies, equipment, fees, and special needs and services for yourself, your spouse, your children, and even your grandchildren.
6. First-Time Homebuyer Expenses: If you do not have an ownership interest in a principal residence for two years before your new home acquisition date, then the IRS can consider you a first-time homebuyer. This qualification(first-time home buyer) allows you to take IRA distributions up to $10000 to help pay for the qualified acquisition cost of your new home without being penalized. This can be done on yourself, or on behalf of your spouse, your parent, grandparent, grandchild, or even your spouse's child.
7. Disability: The IRS considers you a disabled person and exempts you from the 10% penalty if you cannot perform any significant profitable activity because of your physical or mental condition. However, you must present a physician's report confirming that your situation is likely to be continued or one that can lead to death.
8. Qualified Reservist: The IRS considers you a qualified reservist if you were called to active service after September 11, 2001, and you were on active service for more than 179ndays. If this is your case, you are not subject to the penalty fee for each withdrawal.
Note: In 2020, due to the pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES) removed the early withdrawal penalty for those affected by COVID. This gave affected individuals the privilege to withdraw up to $100000 from their IRA accounts. Nevertheless, this money was not made tax-free, but the tax payment can be made over three years.
To sum it up, before taking any decision, ensure you pass it through a professional so your case will be reviewed. It is usually advisable to avoid unnecessary withdrawals and keep your traditional IRA until retirement.
&nbsp;
&nbsp;
&nbsp;

Retirement

EXPECTATIONS TO THE 10% EARLY WITHDRAWL PENALTY OF AN INDIVIDUAL RETIREMENT ACCOUNT (IRA)

The two most important factors that any family enterprise aiming for success must consider are tax and planning.
&nbsp;Below are some questions that you have to ponder on if you are at the helm of affairs in a family business:
1. What are the short and long-term goals of the business?
&nbsp; &nbsp; For a family business to be a successful enterprise, there must be a business plan in place. This plan should be able to accommodate both the short and long-term goals. The plan should also be able to guide your decisions so that it takes you closer to your goals. Besides, since it is a family business, all stakeholders have the right to grasp what the plan entails fully, so they can appropriately contribute their quota.
2. Are formalities observed?
Enabling a formal family business environment is crucial and has its advantages. A family business shouldn't be operated on sentiments. The business's assets must be adequately monitored and structured so that these assets cannot be diverted for personal use.
Also, every spending and loan should be properly documented as there may be a tax consequence(s) to employee or shareholder's use of the company's assets. It is advisable to seek professional advice when it comes to structuring transactions.
&nbsp;
3. Who's in charge of the daily activities of the business?
&nbsp;The managerial role of a family business should be well-defined. Family members must come to a consensus about the person that will fill the managerial position. Should they be a family or an outsider?
Also, there should be a proper organizational chart in place that enables people (especially family members) to know their roles and stick to them. This helps set boundaries and provides clarity.
4. Should the legal form of the organization be revised?
The legal form of your business operations (be it a sole proprietorship, regular cooperation, a partnership, etc.) is a significant determinant of the costs of doing business, the amount of paperwork, the amount of tax you pay, and the red tape you'll have. A periodic review of your business form is necessary; this helps you know if your current form of operation is still the best choice for your business.
5. What are your retirement and fringe benefits plans like?
&nbsp; One of the effective ways of retaining excellent employees, which in a way helps business sustainability, is to have a good retirement plan. Asides from that, it is also a perfect planning tool. Since the legal form of business determines the type of plans available, it is essential to have the one that enables you to have a competitive retirement and fringe benefit plan.
6. What is the business succession plan?
Research shows that only 30% of family-owned businesses survive to the second generation and 13% to the third generation: this is more or less a result of inadequate planning.&nbsp;
For a family business to be sustainable across generations, great care must be taken in choosing its successors. Since this is a crucial decision that must not be made hastily or carelessly, the business should be structured in a way that enables and enhances this decision.
&nbsp;
Are you ready to run a family business? To run a successful family business, several factors such as the business's short and long-term goals, the formalities observed, the individual(s) in charge of daily activities, the business structure, its retirement plus fringe benefit plans, and its succession plan should be thoroughly considered.

SIX IMPORTANT QUESTIONS EVERY FAMILY BUSINESS MUST CONSIDER

In my opinion, I feel tax has a way of setting one straight.&nbsp;Imagine there is nothing like tax, it is most likely you wouldn&rsquo;t pay much attention to saving, investing and some other responsible financial decisions except you are a very prudent person.
However, with tax in the picture and the benefits it offers to some of these responsible financial decisions, many Americans are left with no choice but to be prudent with their finances.
An undeniable fact is that you have extra funds to save, invest and give out if you can reduce the amount of income tax you pay per year. Thankfully, there are several ways provided by Congress through which the reduction of your taxable income can be achieved and these include:
&nbsp;
<ol>
<li>Donating to your retirement account:&nbsp;You can exempt or defer some of your income from taxation when you make contributions to qualified retirement accounts. Interestingly, taxable income for both 2020 and 2021 can be reduced for contributions up to $19500 in a 401(k) and 403 plan. If you are above 50 years, you have the privilege of a catch-up contribution worth $6500.&nbsp;</li>
</ol>
If there is no provision of a retirement plan by your employer, you can opt for the traditional individual retirement plan where you can contribute up to $6000 and $7000 if you are above 50 years. These amounts are applicable for 2020 and 2021.
&nbsp;
<ol start="2">
<li>Minimizing your customer debt:Minimizing your debt demands a lot of discipline but it is very achievable, remember that the end goal is to be financially stable. However, if you have some customer debt on you, there are some legal ways you can adopt to cut down the taxes you pay on the interest.</li>
</ol>
The interest paid on customer debt can be categorized into two: tax deductible and non-tax deductible. Interests paid on a home mortgage or home equity, debt accrued from the purchase of investment property, student loans, etc., are classified as tax-deductible interests. On the other hand, interest from credit cards, car loans are classified as non-tax-deductible.
To reduce your tax as an individual, you can transfer your customer debt to a home equity loan, this will help you maintain deductibility on the interest. However, you&rsquo;ve got to be intentional about settling your home-equity debt because if you do not settle the debt early enough, you might lose your house.
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<ol start="3">
<li>Opening a Health Savings Account:Another smart way of reducing your taxable income is through Health Savings Account (HSA), especially if you have high-deductible health insurance. Just like the 401(k)-retirement plan, you can make contributions to your health savings account before your income is taxed. As an individual, the maximum amount you can contribute to your health account is $3350, but for the year 2021, it is $3600.</li>
</ol>
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<ol>
<li>Setting up a business:&nbsp;The good thing about setting up a business is that it exposes you to the tax privileges available for self-employed individuals. If your business is set up in your apartment, that is, you have a home office, you can deduct many expenses from your income, especially if these expenses were used for business purposes. To qualify for these deductions, your business must be profit-oriented, and the IRS expects that your business should have proof of that within 3-5 years, else you&rsquo;ll be expected to prove your profit motivation to deduct losses.&nbsp;</li>
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<li>Charitable giving:Aside from the fact that this is a humane act, it is another way by which you can reduce your taxable income inasmuch as your donations are made to organizations that are recognized by the IRS. Generally, deductions from your Adjustable Gross Income cannot exceed 60%.&nbsp;</li>
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When you donate, you should always get a receipt from the organization because it helps in strengthening your tax records especially when the IRS decides to audit you.
Your giving should not just be limited to cash, donations made in kind (such as the giving of household items, clothes, etc.) are also recognized by the IRS and these goods are usually valued at their estimated price at the time of donation, and you can get a tax deduction on them as well. Although the rules for this are usually stricter than that of cash donations.
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<li>Investment planning:&nbsp;As a taxpayer, if you know how to play your cards well when it comes to investment losses, then you can utilize it in minimizing your tax obligations each year.</li>
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&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;Some useful tips on how to maximize the impact of investment losses.
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<li>Adequately plan when to take an investment loss to take full advantage of the $3000 yearly reduction from your earned income.</li>
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<ol>
<li>Never forget to always net your investment losses against your gains before your earned income.</li>
<li>Net losses against short-term gains whenever possible especially if you are in the high-income tax bracket.</li>
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In conclusion, tax payment can have a huge positive impact on your finances and help you reach your short- and long-term financial goals if you maximally utilize the benefits that come with it.&nbsp;
You don&rsquo;t have to figure it out all by yourself, we have Tax Experts who can advise and walk you through any of the processes you desire to consider.
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1-855-22-AGENT

info@enrolledagent.com

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