How to file Fed and States Tax Returns in the Face of Coronavirus Crisis?

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The Coronavirus COVID 19 has pushed the world into a recession, with stoppage of work and   productivity taking a hit, across all sectors.  Since March 2020, the United States witnessed a sudden increase in COVID 19 cases,  is now the top three nations with most active number of COVID 19 cases.

In a period of uncertainty, there is ambiguity about tax payments for US citizens. The good news is that federal tax payments have been deferred.  There is a three-month extension, till  July 15 to pay federal taxes, without limitations on amounts owed and encompasses individuals, businesses, the self-employed, corporations and non-corporations. There is no penalty for making payments before July 15.

How do I go about getting the extension?

The IRS states that one doesn’t have to meet any criteria to get the extension, it is available for everyone.  You do not have to fill any form or call the IRS.

If you do need an extension beyond the stipulated date of July 15, then you have to file FORM 4868. With this form, you will have to pay estimated taxes by July 15 to steer clear of penalties. However, you have to file tax returns before October 15.

Can I file my federal tax returns before April 15?

Most certainly. According to the information given by the Treasury Secretary, you can defer payments till July, but you can file your tax returns before April 15. The sooner you file your tax returns, the faster is the chance of getting tax refunds, if any. The IRS processes tax returns even now, but the Tax Assistance Centers are closed.

Can a business also benefit from the July 15 extension?

Yes, businesses can also pay their taxes without worrying about penalties and interest, till July 15.  The IRS states that businesses have to file Form 7004 to get a deferral post July 15, just like individuals, businesses have to pay estimated taxes before July 15 to avoid penalties, and file returns before October 15.

How do I get up-to-date information on Federal Tax updates with respect to coronavirus?

You can go to the IRS website, there is a section dedicated to information with regards to coronavirus →.  https://www.irs.gov/coronavirus

 Is there information on filing state tax returns?

Many states have stated that they are willing to postpone deadlines for people and businesses affected by coronavirus.  States like Florida, Oregon, Indiana, Connecticut, North Carolina and South Carolina are ready to forego penalties if tax payments are delayed due to the ongoing coronavirus problem. California has allowed its residents to delay payment of taxes until June 15, if they cannot make it before April 15. Do check with your official state government website for more information on state tax returns, applicable to your state.

Why now is prime time to do business in Florida

Walt Disney World is just one of the many places that attracts tourists by the millions every week. No wonder that tourism is the largest economy; it added more than $111 billion annually. Other businesses are adding to the economy, too. Thanks to the warm climate, nearly 70% of the state can be used for farmland year around; Florida provides 70% of all the citrus that is consumed in the U.S.

Florida is one of the seven states that does not impose a personal income tax, which makes living in the Sunshine State even more attractive for entities that are LLCs. With more than 150 banks spanning the state, businesses can shop around for capital for startups and for expansion. Thanks to Florida’s robust housing market, the real estate industry accounted for $227.3 billion of the state’s economy in 2018. If you are looking for a vibrant location for commercial property, Ft. Myers is gaining traction, even in residential communities. Finally, in 2018, approximately 208,000 new private sector jobs were added. This raises the annual job growth rate to 2.7%, in comparison with 1.9% growth annually. Florida is home to 2.5 million small businesses and has a workforce of about 3.5 million people. It’s important to note that businesses in Florida are not required to purchase commercial liability insurance, but it is always wise to protect your assets with some type of insurance.

How Accurate Bookkeeping Can Save You Time and Money

Guessing is fun – if you are watching a game show. But it’s not the right strategy for running a small business. Bookkeeping can provide you with a monthly snapshot of your income sources and expenditures. It paints a clear picture of what adjustments you may need to make – sooner rather than later. Is one vendor charging too much? Has another customer paid that last invoice? Reviewing entries regularly enables you to see if there is a recurring charge to something – like a subscription or service – you no longer need.

Having a reliable bookkeeping and accounting service will also help you stay ahead of the tax-day curve. Most of the frantic, sleepless nights that taxpayers experience can be eliminated if they simply have all their receipts and records at their fingertips. Bookkeeping software, such as QuickBooks, allows you to capture receipts and keep them organized. It also allows employees to easily enter their time sheets.

Bookkeeping and accounting professionals rarely make mistakes, such as data entry errors or even double entries. They will also ensure that you pay company bills on time to avoid costly late charges.

If bookkeeping and accounting intimidates you, or if you simply don’t have the time, hire someone. And yes, your business will incur a cost but when you compare it to the time you can reallocate to making more sales and networking, it will be minimal. Once you eliminate the distractions, you can maximize your time to reinvest in yourself, your family and your business.

Understanding Small Business Terminology

Small business owners are visionaries; they have dreams about making a difference in the communities where they live – while making a good living. Yet when most begin their entrepreneurial journey, they are unaware of all the nuances of doing business. When speaking with a bank manager about a line of credit, for example, the owner may be asked a multitude of questions that sound like Greek. Lending institutions will want to see a P&L statement, EIN, balance sheet and licenses and permits.

Becoming educated about accounting will arm you with knowledge that will help you make smarter business decisions. We’ll start with your P&L – profit and loss statement/income statement. It helps you track your revenue flow, and is broken down into categories. Keeping an eye on your utilities and Internet provider services will help you understand trends. Then there’s your balance sheet, which lists your assets (cash in the bank, physical equipment to help your employees perform their job, vehicles, etc.). Additionally, you need to consider your liability – or what you owe. This could be creditors, vendors, rent or bank loans. Now, what about those who owe you? An accounts receivable (A/R) aging report gives you data showing which customer is late. If one is habitually late, this may prompt you to issue late charges until the account is made current. The other side of the coin is Accounts Payable aging. Keep an eye on due dates and make sure your bills are paid on a timely basis. Check to see if paying early will earn you a discount!

Many ITINs will expire soon; learn if you should renew now!

The IRS assigns an Individual Taxpayer Identification Number (ITIN) to citizens or non-citizens who are authorized to work in the U.S. Keep in mind that Social Security Numbers (SSN) never expire. If you have not used your ITIN on a federal tax return at least one time in the past 3 years, you must submit a renewal application. Taxpayers are advised to renew as soon as possible, or at least by the end of 2019 to avoid refund delays. If your ITIN does expire and you file a 2020 tax return, you run the risk of the IRS disallowing tax credits and exemptions. However, these credits, refunds and credits will be restored when the ITIN is renewed.

It is much easier and will be less stressful if you submit the renewal now. If you are one of the two million taxpayers whose ITIN will expire, the IRS will mail you a CP48 Notice this summer. It will explain how to renew your ITIN. This can also impact small business owners who have employees who do not renew the ITIN; it could negatively affect your ACA annual filings.

No action is required if you have an expired number, or your ITIN is not subject to expiration. If you are now eligible to receive an SSN, you do not need to take any action.

What All Business Owners Need to Know

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The new Tax Cuts and Jobs Act (TCJA) law passed by Congress in 2017 has reshaped the landscape for not only individuals but also for business owners – especially those who own small businesses. The most significant change that will impact a proprietor may be the new deductible rate of 20 percent. This will include pass-through businesses such as S Corporations, partnerships and sole proprietorships. Revenue and expenses that they incur are “passed through” to the individual’s income tax return, which are subject to individual rates. This is a hefty reduction, considering that C Corporations pay a flat 21 percent.

Overview: You may be eligible to receive a 20% deduction on your pass-through income of your business

First-year bonus depreciation
One way businesses capitalize on tax savings is by depreciating property. The Act has doubled from 50 percent to 100 percent. Simply stated, businesses may now deduct the full amount of expenses on eligible equipment and property purchases, instead of writing off only a portion annually. Some of the qualified property includes business property such as computers and passenger automobiles and items used in a home-based business.

This applies to property purchased and placed in service after September 27, 2017. It is important to note that it will expire in 2022. Afterwards, the deduction percentage will be reduced.

A new cap on State and Local Tax Deductions (SALT)
If you have been able to lower your tax liability by deducting a significant amount in state and local taxes, you may be in for a big surprise this year. The IRS has now set a limit as to how much you can deduct: $10,000 annually.

This will include property, income and sales tax. If you itemize property tax you must choose between taking a deduction in either your income tax or sales tax. Since income tax is normally larger, most people choose to take the income tax deduction. Those who will be negatively impacted by this $10,000 cap are those who earn in excess of $100,000.

Deductions for pass-throughs and corporations
The government notes that nearly 95 percent of all businesses in the U.S. are pass-throughs. Most of these should all see a 20 percent deduction for pass-through and corporate entities.

Limitations on high-earners
The Act sets limits on how much people with high incomes can deduct:

  1. Professional service. In certain professional service industries, (health, law, consulting, etc.) the 20 percent deduction will start to phase out for individuals earning more than $315,000 (couples) and $157,500 for single filers. The deduction is completely phased out for couples earning $415,000, and for those filing single, it is $207,500.
  2. All industries. The Act has applied a different formula to calculate the limit for high-earning taxpayers in other industries. It is 50 percent of total wages paid or 25 percent of wages, plus 2.5 percent of the cost of tangible depreciable property.
  3. Other significant changes:
    • For most taxpayers, income averaging has been discarded
    • Unemployment income is now fully taxable ☹
    • IRA contribution deductions are limited
    • Social Security numbers are now required for all dependents on personal returns
    • Investment Tax Credit has been eliminated
    • Dividend exclusions have been repealed
  4. Should you use a tax preparer?
    You have invested more time, money and energy than you can recall in building and growing your business. To protect its solvency and integrity, you should give serious consideration to engaging a tax professional. Your schedule is already packed with time-consuming, high-energy meetings geared toward gaining a competitive advantage in the marketplace. The last thing you need is to miscalculate deductions or thresholds.

    Many business owners rarely think about taxes until the deadline approaches. In reality, it shouldn’t be viewed as a once-a-year frantic event. Instead, it should be top of mind all year long. Procrastination makes the entire tax return process more cumbersome than it should be. If your last-minute struggle leaves you bewildered, it may unfortunately be too late to engage a reputable tax preparation service; they may be burning the midnight oil with hundreds of other clients.

    Accurate bookkeeping = peace of mind
    Established in 1976, Tax Leaf, has been helping business owners and individuals with much more than tax return preparation. Their diverse professionals provide clients with professional, accurate bookkeeping and payroll services. Their cloud-based software will consolidate all the data at tax time. Finally, they are multi-lingual, speaking English, Spanish, Portuguese and Russian.font>

    Ready or not, tax season is quickly approaching. Do yourself a favor; let us help you get organized and compliant.

    For more info about the service visit Business Tax Return

Real Estate Agents Win Again

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Real Estate Professionals Pay Less Taxes in 2019
The Tax Cuts and Jobs Act has made sweeping changes across all industries and sectors; it was not designed to simply provide relief for individual taxpayers. Those who are in real estate will be delighted to learn they will pay less taxes because of the Act. Since this is a new law, it is critical that entrepreneurs and business owners understand its implications to discover how it will impact your tax liability – and find ways to reduce it. It’s safe to say the IRS won’t send you a check with a hefty refund because you failed to utilize all the legitimate deductions.

Consider the professional who established a pass-through entity, of either an LLC or S Corp. Thanks to the passage of the Act, a substantial change has been made in calculating the amount of tax you will owe. Now, agents may deduct up to 20 percent of qualified business income.

Save money; create a professional association One legitimate way to chisel down the amount of tax liability is one that may not be familiar to most. Typically, any funds in a real estate transaction must be paid to the agent, if he or she has a DBPR license in Florida. However, if the agent establishes a Professional Association (often known as a PA), the individual may receive the 20 percent pass-through income deduction on the profit on their income. That’s right: 20 percent! For example, if John Doe is classified as a professional association, it would be set up as: John Doe, P.A. A simple step like this is sure to lower your tax liability.

Depreciation
Many real estate agents may not know what items they can depreciate. Consequently, they end up paying entirely too much in taxes. For example, many are not taking advantage of a home office deduction. For those who fall in this category, you may depreciate a portion of your home.

Also, you may be able to depreciate your vehicle. Let’s consider that you purchased a $20,000 automobile and you use it 75 percent of the time for business. Calculating your mileage is the best way to determine the percentage. Now multiply $20,000 X 75 to arrive at $15,000. This amount is called your depreciable cost basis. You are allowed to depreciate $15,000 – but over time. Many real estate agents overlook thousands of dollars in legitimate annual depreciation costs because they are not aware of them, or they fail to keep proper documentation.

Why it is important to engage a tax expert?
Real estate agents know their business, inside and out. Similarly, tax professionals know their business. TaxLeaf, that has been operating in Florida for more than four decades, is one such firm. Interpreting this new legislation is best left to the experts. For example, the team at TaxLeaf would not be someone you would enlist to sell real estate on your behalf. In their 42 years, they have helped business owners navigate tax rules and regulations. Oftentimes, proprietors don’t want to admit they can’t handle their own taxes. This year, TaxLeaf anticipates more business than usual; they expect many real estate agents will try to demystify the

new tax reform law on their own. No doubt, agents will get caught up in a maze of codes. They may not understand Section 179 expensing, carried interest, and qualifying assets and a host of other tax terminology. TaxLeaf can explain those words and terms – that may seem like Greek to the average person – in simple, easy-to-understand language. Speaking of language, their team is multi-lingual; they speak English, Spanish, Portuguese and Russian.

Make things simple with accurate recordkeeping
Remember those New Year’s resolutions? People have good intentions but still put off tax preparation until the last few days before the deadline. Then it’s a fire drill; they frantically struggle to locate all those documents to demonstrate to the IRS what their income and expenses were for the year.

TaxLeaf has been helping business owners and individuals with much more than tax return preparation. Their diverse professionals provide business owners with professional, accurate bookkeeping and payroll services. You’ll get access to LeafCloud – a cool App that gives you online access to your most important tax documents and filings. No matter the language or the culture, TaxLeaf is ready to assist. Stop by at your convenience for a free, no obligation consultation.

Ready or not, tax season is here. Do yourself a favor; let us help you get organized and compliant.

Tax Season is Officially Open

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How the New Tax Reform Act will Affect You
The Internal Revenue Service is now open for the 2019 tax filing season. This year will be the beginning of an entirely new process for the agency, which is already processing 2018 federal tax returns. In spite of the government shutdown, the IRS is operating at full capacity.

What is different about this new tax-filing season?
Congress passed the Tax Cuts and Jobs Act in December 2017, the first major tax overhaul since President Reagan signed the Tax Reform Act of 1986. The goal was to simplify the tax filing process for not only individual taxpayers but also for businesses.

New forms, new changes
While the Act implemented a vast array of changes, the ones that will apply to most taxpayers deal with:

  • Child credit deductions (doubled)
  • Income tax brackets (adjusted to account for inflation)
  • Standard deductions (doubled)

Child credit
The 2018 tax reform act has doubled last year’s $1,000 deduction: it’s now $2,000 per qualifying child under age 17. There’s more good news; they increased the income thresholds. A married couple filing jointly may earn $400,000, and an individual filing as a single taxpayer can earn up to $200,000 and still take the deduction.

Tax Brackets
It would be simpler if everyone paid the exact same percentage in taxes, but it is doubtful it will happen in our lifetime. The IRS has calculated various ranges to determine tax liability. The Act still has seven tax brackets and seven marginal tax rates; however, it changed the income ranges within each range.

When you prepare your 2018 tax return you will notice that these marginal tax rates have shifted – in your favor! The percentage rate you will pay will be determined after deductions.

Standard deduction
The Act also doubles the standard deduction. For example, a single taxpayer’s deduction that was $6,350 in 2017 jumps to $12,000. For a married couple, it increases from $12,700 to $24,000 in 2018. Furthermore, the Act eliminated personal and dependent exemptions.

Don’t leave money on the table
Many business owners and individuals have been accustomed to ‘business as usual’ when filing taxes. After all, there have been no real changes in 33 years. For decades, they have relied on the same at-home tax preparation software. This is not a year to assume that was has worked in the past will still be good this year. If you want to reduce your tax liability – who doesn’t? – you should strongly consider contacting your local Tax or Accounting Office. To make sure you take advantage of all the available deductions, this may be perfect chance to make the switch to a professional, especially if you have complex tax issues.

Do I Need a CPA?
With all these new changes, you may need an expert to guide you through the process. This is our best advice in help you avoid mistakes and perhaps help lower your tax liability. Tax professionals don’t always have to be CPA’s. In fact, most people prefer a non-CPA to prepare their tax returns at a lower cost and a higher level of service. Check out TaxLeaf if you can. They have multiple locations throughout South Florida and Orlando. They understand tax credits and deductions. The best part, they’re human – unlike tax preparation software – and understand your situation best. Another bonus is that they offer a no-fee consultation, so stop by at your convenience and ask your toughest questions.

Accurate records = simplicity
Every year, millions of taxpayers struggle to keep better track of their income and expenses so they won’t be scouring through their filing cabinets and shoe boxes at midnight looking for receipts. TaxLeaf, founded in 1976, has been helping business owners and individuals with much more than tax return preparation. Their diverse professionals provide business owners with professional, accurate bookkeeping and payroll services. You’ll get access to

LeafCloud – a cool App that gives you online access to your most important tax documents and filings. No matter the language or the culture, TaxLeaf is here to help you this tax season. We have tax professionals that speak English, Spanish, Portuguese and Russian.

Ready or not, tax season is here. Do yourself a favor; let us help you get organized and compliant.

Tax Leaf takes the lead

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Tax Leaf is leading the way as one of the fasting growing recognizable South Florida business bookkeeping and payroll companies. The exposure at trade shows and conferences has been so well received, allowing Tax Leaf to earn new business. Having offices that service Miami, Coral Springs, Aventura and the surrounding communities gives Tax Leaf an edge across South Florida.

Join Tax Leaf at the next business conference or simply connect with us directly to learn more about how your business can benefit from teaming up with Tax Leaf.

Income Tax Extension – Automatic Requests

This past Monday October 17, 2016 (Oct. 15) was the filing date deadline for those that filed a tax extension for their April 15 deadline. When the 15th falls on a Weekend or Holiday, the timeframe is extended to the following business day – this happened this year. However did you know that there are 3 ways to request an automatic extension of time to file a U.S. individual income tax return?

Access our website to get in contact with us to learn more about how to arrange an automatic tax filing extension. The professionals at Tax Leaf offer tips and tricks to most efficiently operate your business tax services. Tax Leaf is focused on offering valuable business tax advice for those operating in South Florida. With locations in North Miami Beach, Coral Springs, and servicing South Florida it’s so easy to connect with a team member to get you on the right track today.

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