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Don't Worry...Unemployment Refund Coming.

Posted on March 31, 2021 at 4:05 PM Comments comments ()

I know there has been a lot of changes since the election and a great deal of confusion has come of the new Acts that passed on March 11, 2021. Here is something that a lot of Americans will find helpful in the coming months.


IRS to recalculate taxes on unemployment benefits; refunds to start in May

 

WASHINGTON – To help taxpayers, the Internal Revenue Service announced today 3/31/2021, that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan.


Details:

Taxpayers who earned less than $150,000 in modified adjusted gross income get to exclude unemployment compensation up to $20,400 if married filing jointly. All other elibible taxpayers get to exclude up to $10,200. The legislation excludes only 2020 unemployment benefits from taxes.


For those taxpayers who filed their taxes based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation and tax. Any overpayment of tax will be either refunded to you or applied to outstanding taxes owed.


There is no need to do an amended return, the IRS is aware of the issue. Should the adjustment affect other parts of your return that may require you to file an amended return, you will be notified. 


The IRS has been working with tax software companies to update the systems but be patient, not all systems have been totally updated.


The new IRS guidance also includes details for those eligible taxpayers who have not yet filed.

 

Consider familiarizing yourself with these changes that may affect your return by clicking this link


https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation


Retirement controlled by the State?

Posted on June 20, 2016 at 11:50 AM Comments comments ()

I've heard horror stories about social security not being available when I reach retirement age. The thought of working all my life and having no sustainable source of income to carry me further is frightful. Clearly the political minds of the world have thought the same thing.


While reading my monthly newsletter from American Institute of Professional Bookkeepers I read an interesting fact that I needed to research for my present and future clients.


"Must a firm have a retirement plan? Almost 25 states have or are considering laws that require small employers that do not offer retirement plans to enroll employees in state-run retirement plans."


The long and short is yes and no, if you are a part of the 25 states then yes otherwise, just hold tight, because the change will be coming soon. This got me thinking about my lovely state of Illinois and this is what I found from PensionRights.org and confirmed by the Illinois General Assembly.


SB 2758 establishes a payroll-deduction IRA for workers whose employers do not offer any other retirement savings vehicle. The bill requires all businesses in existence for at least two years with 25 or more employees to automatically enroll their employees in the Secure Office Savings Program unless they offer another retirement options to their workers.


This article is for information purposes only. The more small business owners know the better they can plan for sustainability and success. This is just another factor to consider when developing your business plan.

Separation is Key!

Posted on June 24, 2015 at 7:50 PM Comments comments ()

I was reading an article from Entreprenuer.com dated back in 2010. This may seem like a dated article but the information in it was and is very real to this day for many small business owners. The topic at hand is about mixing business and personal finances together.

Important Fact: The IRS frowns upon this type of activity.

Important Fact: Some form of legal entity should be established.

 

A few other points that were discussed in the article to help get you organized were:

1. Open a bank account for your business

2. Maintain up-to-date records on an accounting software or Excel

3. Open a business credit card

 

In a more recent article written for Chron.com by Madison Garcia, she speaks on the same items mentioned but also a few other important things to consider:

 

Hobby vs. Business

Maintaining a separate business account helps the IRS understand that your work isn't just a hobby. This is especially important if your business has posted losses in recent years.

 

Appearance of Professionalism

Keeping your personal finances separate from your business lends to your branding, credibility and professional image. Customers may question your level of commitment and professionalism if they're forced to make personal payments to you. Bookkeepers and accountants might get confused about what your invoice is for, which could delay your checks.

 

From a tax preparation standpoint, this is also another obstacle when intermingling business with personal funds that need to be mentioned, the IRS website had this Q&A:

 

Question: I am a sole proprietor and pay personal expenses out of my business bank account. Should I include the money used for personal expenses as part of my business income? Can I write these expenses off?

Answer:

• You would include the money used to pay personal expenses in your business income when your business earned it.

• You would not write off these expenses as business expenses because they are not ordinary and necessary costs of carrying on your trade or business.

• Personal, living or family expenses are generally not deductible.

• It is a good idea to keep separate business and personal accounts as this makes it easier to keep records.

 


Moral of the story….yep you got the point. Separation is key!

 



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