W-2 Archives - 914 Tax

Tax Deductions You May Be Eligible for as a Freelancer

December 24, 2021

Tax season can be a stressful time, especially for freelancers who might owe taxes at the end of the year. It can be overwhelming to look at the tax debt you owe from the profits you have made.

Our firm specializes in tax resolution and helping people who owe the IRS or state $10,000 or more. We’ve seen small business owners and freelancers get blindsided every year by a huge tax bill and often falling behind on their taxes for years on end. If that’s you, we can help. Contact our firm today to discuss your tax debt settlement options. Get help from Ron Friedman, CPA.

So, if you’re worried about how you’re going to pay your tax bill this year, try to relax. There are a wide variety of legitimate deductions you can utilize as a freelancer to bring your tax liability down. We encourage you to talk to a tax professional to see if any of the following deductions apply to you.

1. Home Office

If you have a home office, you will be able to deduct a part of your rent or home expenses as an expense for your business. Be careful though, home office deductions may require a dedicated office space so speak to a tax consultant to find out if you qualify. In addition to your home office, you can deduct any related office supplies you used over the year. Keep the receipts for paper, ink, and any other home office supplies you’ve purchased. You should also be able to deduct any technology you bought specifically for work. If you have a work computer, internet, and office furniture, those can maybe qualify you for a tax deduction. Furthermore, you can deduct any expensive software programs you need to purchase for work like Adobe photoshop or your word processor.

2. Insurance Premiums

If you work from home, you may be able to deduct your health insurance costs or any other insurance that is required for your job. If you have to purchase liability or malpractice insurance, that is a work-related deduction.

3. Travel Costs

If your work requires you to travel, the cost of that travel is a deduction. Hotel costs, mileage, and even food you eat during work trips are deductible expenses. However, if you are partially traveling for work and luxury at the same time you have to be careful. Any portion of your trip used for a personal vacation is not a deduction. You can only deduct expenses that are specific to your work costs.

4. Advertisement Expenses

If you’ve spent any money advertising your business, you can use that expense as a write-off. Any type of advertisement will qualify as a deduction whether you created online ads or utilized influencer marketing for sponsored posts. If you spent money on promoting your business, record that expense for your tax records.

5. Car Expenses

If your automobile is an integral part of your work, you can deduct expenses that are associated with it. You can itemize costs like auto insurance, gas, and any maintenance work you had to pay for. However, you can only deduct the expenses you utilized while working. If you used your business car as a personal car, you cannot deduct all of these expenses and will need to figure out the percentage of time you used your car to work.

6. Occupational Licenses

If your freelancing job requires you to pursue a license in your field then that license becomes a business expense. You may not have to renew your license annually but in the year you pay to renew, you can deduct that from your tax costs.

Owe Back Taxes and Need Tax Relief?

While many of these tax breaks may seem incredibly appealing, filing them incorrectly can result in an audit or the IRS disallowing your deductions and charging you penalties and interest on your tax debt, making your problems worse.

If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Get help from Ron Friedman, CPA.

8 Ways to Get Ready for Tax Season and Avoid a Back Tax Problem

November 30, 2021

The holidays are here. Not to be a Grinch but, right around the corner is a less fondly anticipated time of year. Before you know it, you will be taking down the Christmas tree, pulling down the holiday lights and getting ready for the tax season to come.

Tax season is decidedly less fun than holiday season, but the two times of year do have one thing in common. Just like the holidays, tax season requires lots of preparation and planning, and if you want to be ready, you need to start early.

Why am I writing this article? It’s not to spoil your holiday cheer, it’s because we’ve seen what it’s like when you’re not prepared. We help people who fall behind on their taxes and owe the IRS tens of thousands of dollars in back taxes, and it’s often because they simply failed to prepare and they procrastinate on their taxes.

If you do get in trouble with the IRS and they claim you owe $10,000 or more, reach out to our tax resolution firm and we’ll schedule a free, no-obligation confidential consultation to explain your options in full to permanently resolve your tax problem Get help from Ron Friedman, CPA,

So if you don’t want to end up owing the IRS a ton of money, Here are 10 ways to get ready for tax season and reduce your stress level as this annual ritual approaches.

#1 Organize your records.

Now is the time to drag out last year’s tax return, pull out your most recent pay stub and get organized before the season starts.

#2 Settle any back taxes you might owe.

If you have years of unfiled returns or have a tax issue for anything besides the current year, you should get this handled now, before the upcoming tax season. When April 15th comes around, your tax professional is likely swamped with returns and they’ll pay less attention to your back tax debt. We recommend reaching out to a specialized tax relief firm like ours who handles complicated tax debt cases all year round.

#3 Defer bonuses and incentive pay.

If you’re going to owe taxes, it might make sense to defer getting paid so you can lower your taxable income. If you can, you might want to defer any bonuses and incentive payments. You can also defer payments from retirement accounts and IRAs to save on current-year taxes.

#4 Look for additional deductions.

Now is the time to make those last-minute donations to charity, so start writing those checks and gathering up those household goods. Be sure to get a receipt and save your cancelled checks so you can substantiate your charitable giving if a question should arise later.

#5 Expand your education.

Not only can taking a class improve your business or career prospects and help you get ahead, but that additional education could also lower your tax bill. You might qualify for a generous tax credit or take a good tax deduction for investing in your future.

#6 Up your retirement savings.

The end of the year is the perfect time to increase your 401(k) contributions and make your annual IRA investment. Maxing out your 401(k) and IRA contributions is one of the best ways to reduce your tax bill while saving for the future.

#7 Sell your losers and let your winners run.

if you have substantial capital gains in your stock portfolio or crypto portfolio, selling your losers could lower your tax bill. You can use those losses to offset your capital gains and save money on your taxes.

#8 Estimate your income for tax planning.

You will not know the exact amount of income you received until all your documents are in, but you can estimate your compensation and start doing some advance tax planning. This can be key in preventing back tax debt since you wont be blindsided by a large tax bill come April 15th.

Tax season will be here before you know it, and now is the time to get ready. You do not have to wait until April to start your tax planning, and the sooner you get started, the sooner you can put this unpleasant task behind you.

Need Tax Relief?

4 Common Tax Return Mistakes That Could Get You in Trouble with the IRS

October 22, 2021

As tax filing season unfolds, many taxpayers are taking the bull by the horns and doing their own taxes. Though it may seem like good news for the individual taxpayer, it’s important to watch out for common tax filing mistakes. Tax preparation software makes some errors like addition and subtraction blunders less likely, but even the best software cannot eliminate all potential problems and human error.

If you are getting ready to file your tax return, be sure to take a second (or third) look before you hit send. Keeping a close eye out for these common tax filing mistakes is the best way to ensure the IRS does not come knocking at your door.

Note: If you do get in trouble with the IRS and they claim you owe $10,o00 or more, reach out to our tax resolution firm and we’ll schedule a free, no-obligation confidential consultation to explain your options in full to permanently resolve your tax problem Get help from Ron Friedman, CPA.

That said, lets jump into the 4 common tax return mistakes that could land you in tax trouble.

#1. Transposed Numbers

If the 1099 you receive shows $6,300 in income and you inadvertently enter $3,600 instead, the IRS may see this as a tax dodge instead of an innocent mistake. At best, transposing numbers will slow down your refund and raise a red flag with the tax agency. At worst, it could trigger an audit or further examination of your entire return.

IRS computers are very good at comparing the figures taxpayers report to the ones they receive independently from banks, brokerage firms and other agencies. Be sure to double-check and verify every number you enter and make sure it is right. Your tax software can tell you if your numbers do not add up, but they cannot catch transposed figures.

#2. Misspelled Names

It is easy to misspell a name or transpose a Social Security number when entering dependent information, but doing so could cause real problems with your return. Be sure to double-check the names, ages and Social Security numbers of all your children before sending your return to the IRS.

Do not assume that all of that information will be transferred from a prior year return.

#3. Missing Social Security Numbers

It is easy to forget this vital piece of information, and doing so could delay your return and cause long-lasting problems. You may assume that your tax prep software will automatically enter your Social Security number, but that does not always happen.

Be sure to give your Social Security number (and that of your spouse) one last look before filing your return. That last minute check could save you a world of trouble later on.

#4. Not Reporting All Your Income or Taking Too Many Deductions

The IRS will likely get notified of income you received throughout the year, and it doesn’t just include your W2 wages. It’s important to keep track of all your income and report it to the IRS correctly to avoid any problems.

It can also be tempting to click a few extra boxes and input a few made up numbers as deductions to bring your tax liability down. DO NOT DO THIS. Just because the software lets you do this, doesn’t mean you should.

It’s not the software’s job to tell you whether or not you should be taking that extra deduction or write off, it’s the taxpayer’s job to be honest and file their tax returns correctly.

NEED TAX RELIEF?

If you made a mistake on your tax return and end up on the receiving end of an IRS notice, or if you have years of unfiled tax returns, reach out to our office. We’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem Get help from Ron Friedman, CPA.

Which Tax Records to Keep and For How Long. Do This And Avoid Tax Problems Later.

October 11, 2021

Whether you are expecting a nice tax refund or preparing to write a big scary check, you know that April 15 is the annual tax filing deadline. What you may not know, however, is that tax day is every day at the IRS, and the tax agency is always reviewing the information taxpayers and business owners have provided.

That means that keeping tax records is about more than just smart bookkeeping – it is an integral form of self protection. You see, millions of Americans get letters from the IRS stating they owe back taxes or requesting more information about their tax returns.

It may be disconcerting, but the IRS has the right to request additional information months, or even years, after the return you filed has supposedly been processed and accepted. In fact, the much feared tax agency can request additional documentation for up to three years after the annual tax deadline has come and gone.

We help people resolve their back tax problems and often settle with the IRS for less than the amount they owe, but in order to do this, we need to provide the right records. That’s where having your tax records saved can be the difference between settling your tax debt or not.

As a result, it is important to retain your tax records and keep certain tax documents on hand, just in case the IRS asks for them. Here are the most common tax records and how long you should keep them around.

If you owe back taxes, our firm can help negotiate with the IRS and potentially settle your tax debt. Call us today. Our tax resolution specialists can navigate the IRS maze so that you have nothing to worry about. Get help from Ron Friedman, CPA.

Save The Tax Returns Themselves

In most cases the IRS will have up to three years to question the figures you reported on your tax return, or otherwise challenge the information you provided. You may think the tax year is over, but for the IRS the final curtain does not fall for a full 36 months.

For this reason, it is generally a good idea to keep your old tax returns for a minimum of three years. You do not necessarily have to print and retain hard copies of your tax returns – electronic documents are fine as long as you will be able to access them quickly should you need them.

If you fail to keep copies of your tax returns, you can still access them by asking the IRS for transcripts. It is best to keep your own records, and doing so will make your life a lot easier.

Pay Stubs and W2 Forms

As with the tax returns themselves, it is generally a good idea to keep your W2 forms for a minimum of three years. This will provide you with the documentation you need should the IRS find a discrepancy between the amount of income you reported to the agency and the figures your employer provided.

It is also a good idea to retain at least your year-end pay stubs, not only to help reconcile them with the W2 forms but also for other forms of income documentation. If you are applying for a mortgage, for instance, the lender may ask to see several years’ worth of tax returns, pay stubs and other income documents, and having them on hand will make the application process faster and easier.

Income and Dividend Forms

The IRS looks at all of the income you report when you complete and submit your tax returns, but the agency does not just take your word for the accuracy of those figures. Instead, the IRS uses sophisticated matching programs to compare the amount of income you reported from various sources with what they receive from third party sources.

Those third-party sources could include your bank and credit union, your brokerage firms and mutual fund companies and any other places that provide you with income. It is therefore a good idea to hold onto any income related forms you receive for at least three years, and possibly longer if you run your own business or earn income from gig work or freelancing.

Once again, these income documents can do double duty, serving as backup if the IRS questions the numbers on your tax return but also giving you the information lenders and others might need down the road. If you store these documents electronically you will not even need to worry about buying a file cabinet, so there is really no reason to not keep them around.

Filing taxes can be a stressful experience, but the difficulty does not end when you click send on your e-filed tax return. Even after that return has been filed and accepted, the IRS could still question or challenge your numbers, and that is why it is so important to retain the backup documentation until the challenge window has passed. Now that you know what to retain and for how long, you can rest a little easier when tax time rolls around.

If you do run into tax trouble or the IRS states you owe back taxes, reach out to our tax resolution firm and we’ll schedule a free, no-obligation confidential consultation to explain your options in full to permanently resolve your tax problem. Get help from Ron Friedman, CPA.