Taxes Archives

How Long Should I Retain My Tax Records?

By Jessica Sleep, CRTP|2022-02-14T14:45:01-08:00February 14, 2022|Categories: Taxes|Tags: Document Retention, Internal Revenue Code, Jessica Sleep, Tax Records|0 Comments

While one of your more more excitable high school classmates will tell you that purchasing and holding onto your senior yearbook in perpetuity is a graduate’s duty to their fellow classmates, maintaining tax records is actually a real part of your duties as a taxpayer. But unlike hauling around an 8.5” x 11” yearbook, keeping track of and maintaining tax records is time-consuming and a real hassle.

And if you haven’t made the transition yet to electronic documents, your tax records can take up valuable physical storage space. Clearing some of the clutter by destroying old tax records may seem like an attractive option, but in the event of an audit, you could live to regret that decision.

So, what’s the least you can do to maintain your records and minimize storage requirements while protecting yourself in the event of an audit? In this blog post, we review tax record retention requirements and related issues to help you answer these questions for yourself.

Tax Record Retention Requirements

Every taxpayer is required by Internal Revenue Code (IRC) Section 6001 to maintain adequate tax records and to make those records available to the IRS upon request. The Section 6001 regulations also require taxpayers to keep the records for as long as they may be material to tax law administration. In that regard, the IRS Continue reading… Continue reading… Continue reading…

2022 Tax and Employer Rules and Regulations

By Jennifer Shelton, CPA|2022-02-03T13:40:04-08:00February 3, 2022|Categories: Taxes|Tags: California State Tax Table, ETT, Federal Unemployment Insurance, FICA, FUI, Independent Contractor Reporting, Jennifer Shelton, Medicare Tax, Payroll Taxes, SDI, Social Security Tax, State Disability Insurance, SUI|0 Comments

If you own or operate a business, you’re no stranger to payroll taxes — the money you withhold from an employee’s pay to remit to government tax collectors on the employee’s behalf. You pay a portion of these taxes, and your employees pay a portion. The money collected is allocated to the following:

Federal Insurance Contributions Act (FICA) to fund Old Age, Survivors, and Disability Insurance (OASDI), also known as Social Security and Disability, and Medicare (health insurance for senior citizens and the disabled)
State Disability Insurance (SDI)
Federal Unemployment Insurance (FUI)
State Unemployment Insurance (SUI)
Employment Training Tax (ETT)

In today’s post, we’ll bring you up to speed on what you need to know to plan for, pay, and remain in compliance with these and other withholdings for 2022. We’ll also share information about important changes and reminders that your business needs to be aware of for the year ahead. First up, Social Security.

Social Security Tax

For 2022, the Social Security tax rate is 6.2 percent for employer and employee — unchanged from 2021. The Social Security wage base has increased from $142,800 in 2021 to $147,000 in 2022. In other words, Social Security tax applies only to the first $147,000 an employee earns, so the maximum you would withhold on behalf of the employee is $9,114.

Keep in mind that the employee’s share is only half of the total Social Security tax owed. As an employer, you are responsible for paying the other half. So, if you deduct and remit $9,114 on behalf of your employee, you are required to pay an additional $9,114 as employer.

Self-employed individuals are required to pay both “halves,” so a self-employed individual with a net income of $147,000 would pay $9,114 x 2 = $18,228 in Social Security Tax. To take some of the sting out of paying both halves of FICA, self-employed individuals receive a deduction for self-employment tax on their federal income tax return.

Medicare Tax

The Medicare tax rate is Continue reading… Continue reading… Continue reading…

The Infrastructure Investment and Jobs Act: What Taxpayers Need to Know

By Jennifer Shelton, CPA|2021-12-08T14:55:34-08:00December 8, 2021|Categories: Legislation, Taxes|Tags: CARES Act, Employee Retention Credit, Infrastructure Investment and Jobs Act, Jennifer Shelton|0 Comments

Lawmakers in Washington, D.C., are interested in many things, including opportunities for creating generation-defining legislation. So it was in November that Congress passed a bipartisan infrastructure deal with implications that included changing the end date of the Employee Retention Credit and establishing reporting requirements for cryptocurrency transactions.

The Infrastructure Investment and Jobs Act (H.R. 3684), which was signed into law on the Nov. 15 by President Biden, was originally introduced in the U.S. House of Representatives as the INVEST in America Act. It began as a $715-billion infrastructure bill to address provisions related to federal-aid highway, transit, highway safety, motor carrier, research, hazardous materials, and rail programs of the Department of Transportation (DOT).

During congressional negotiations, it was expanded to include funding for broadband access, clean water, and electric grid renewal. The revised version, renamed the Infrastructure Investment and Jobs Act, calls for approximately $1.2 trillion in spending.

In this post, we cover several new tax provisions in H.R. 3684 that may impact you as an individual taxpayer, contractor, or business owner.

New Tax Provisions for Individuals

As a result of the passage of H.R. 3684, the following tax provisions now apply to individual taxpayers: Continue reading… Continue reading… Continue reading…

2021 Year-End Tax-planning Tips for Business Owners

By Office Staff|2021-12-08T14:55:45-08:00November 23, 2021|Categories: Taxes|Tags: American Rescue Plan Act, Build Back Better, Business Meals, Business Taxes, Cryptocurrency, Employee Retention Credit, SBA, Work Opportunity Tax Credit|0 Comments

As we covered in “2021 Year-End Tax-Planning Tips for Individuals,” what you do this year can make a big difference in how much you pay in state and federal tax next year. And perhaps more important if you’re a business owner, it can impact your net worth for decades to come.

Because it stands to reason the more you save on taxes, the more money you have to invest in your businesses and your own future.

Paying attention to tax rules and regulations and how they impact your business finances has become especially important in recent years with the flurry of changes in response to the global pandemic and its economic impact, major shifts in government policies (and spending), business slowdowns and shutdowns, and more.

In this environment of disruption and uncertainty, having a well-thought-out tax plan in place enables you to minimize your obligations while using your tax savings to protect and grow your business and personal wealth.

Here at SWC, we encourage business owners to schedule a year-end tax planning and financial strategy session with your CPA. And if you are a business client of ours, you already know that we can help you reassess your business taxes and finances, adjust your plan to optimize outcomes, and take any year-end steps that can save the business money and protect and grow your personal net worth.

In the meantime, whether you’re a client of ours or you work with another firm, here’s a look at some tax issues for business owners to consider as you approach year-end 2021: Continue reading… Continue reading… Continue reading…

2021 Year-End Tax-planning Tips for Individuals

By Office Staff|2021-12-08T14:55:56-08:00November 17, 2021|Categories: Taxes|Tags: American Rescue Plan Act, Child Tax Credits, Cryptocurrency, Plug-in Vehicle Credit, Solar Credit, Telework, Year-end Tax Planning|0 Comments

When it comes to your personal finances, what you do this year will make a big difference in how much state and federal tax you pay next year (on April 15). It could also have an impact on your net worth for decades into the future.

That’s especially true this year when so many factors are likely to have impacted your taxes and finances — the lingering global pandemic, new tax laws, business slowdowns and shutdowns, supply chain disruptions, inflation, major shifts in government policies, and more. In this environment of relative disorder and uncertainty, having a well-thought-out tax plan in place empowers you to successfully meet the challenges, capitalize on new opportunities, and move forward with confidence.

Here at SWC, we encourage you to schedule a year-end tax and financial strategy session with your CPA. And if you are a client of ours, you already know that we can help you reassess your taxes and finances, adjust your plan to optimize outcomes, and take any year-end steps that can save you money and protect and grow your net worth.

In the meantime, whether you’re a client of ours or you work with another firm, here’s a look at some issues to consider as you approach year-end 2021: Continue reading… Continue reading… Continue reading…

First Look: The Biden Administration’s Proposed Tax Law Changes

By Office Staff|2025-07-10T10:37:58-07:00July 9, 2021|Categories: Business Taxes, Tax Credits, Taxes|Tags: American Families Plan, American Jobs Plan, Biden Tax Plan, Green Book|0 Comments

When a new administration settles into the White House, you can be certain there will be proposals to change the nation’s tax code. And as Walt Disney once famously said, times and conditions change so rapidly that we must keep our aim constantly focused on the future. And that’s the aim of today’s post.

The fact that the Biden administration is planning to raise taxes is no surprise. The President campaigned on a promise to raise taxes on corporations (from 21 to 28 percent) and on wealthy Americans (those earning more than $400,000 per year). If you ever complained that politicians never follow through on their promises, this is the one exception — the Biden administration will raise taxes. The only question is how?

In late May 2021, the U.S. Treasury Department presented a sneak peek into the administration’s proposed tax law changes in the form of a 114-page document commonly referred to as the “Green Book.” The proposed changes are part of two plans — the American Jobs Plan, geared more toward businesses, and the American Families Plan, focusing on individuals. In this post, we explain many of the proposed changes and highlight how they might impact your taxes moving forward.

The key word here is proposed. It’s too early to tell exactly which proposed tax changes will become law or the extent to which they’ll be modified as they move through Congress. Regardless, here’s what we know about The American Jobs Plan and how it might impact businesses:

The American Jobs Plan

The primary objective of The American Jobs Plan is to create millions of jobs while rebuilding the country’s infrastructure and positioning the United States to out-compete nations like China. To raise revenue to pay for the plan, the administration is considering the following changes to tax law (note: generally, these changes would go into effect after the 2021 tax year): Continue reading… Continue reading… Continue reading…

Recognizing the Tax Risks of Loan Modifications

By Office Staff|2021-06-17T13:23:56-07:00June 17, 2021|Categories: Taxes|Tags: Cancellation of Debt, Loan Modification|0 Comments

Any discussion about the tax risks of loan modifications has to start with the fact that between 2007 and 2010, the United States experienced a subprime mortgage crisis that contributed to a world-wide financial recession that threatened to collapse our economy. In response, the federal government introduced and widely publicized several federal mortgage loan modification programs — each aimed at assisting distressed homeowners by modifying or refinancing mortgage loans that became unaffordable.

If you’re unfamiliar with it, loan modification is the renegotiation of the terms of an existing loan. It may involve a reduction in principal or interest rate, an extension of the length of time for repayment, or a change in loan type (from adjustable rate to a fixed rate, for instance). It can also result in a cancellation of debt (COD) — a situation in which the total amount you pay the lender is less than that required under the original agreement.

From the borrowers’ perspective, a cancellation of debt is a great deal. The only drawback is that the Internal Revenue Service (IRS) is likely to treat the COD as taxable income, which can come as a nasty surprise when tax season hits. Unfortunately, it’s likely to surprise more people this coming tax season because of the increase in loan modifications during the COVID-19 pandemic.

One of our responsibilities here at SWC is to protect our clients from nasty surprises. If you received a 1099-C from your lender or you’ve had a loan modified or are in the process of doing so, we want you to know what to expect and be prepared. One way to do that is by helping you answer common questions like the ones that appear below.

Is My Cancelled Debt Taxable? Answer These Four Questions

According to the IRS, “In general, if you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable, and you must report the canceled debt on your tax return for the year the cancellation occurs.”

On its surface, that seems simple enough, but when you start digging into the details, determining whether a certain loan modification generated a taxable cancellation of debt (COD) can be challenging. If you renegotiated the terms of a loan, you can determine whether it resulted in taxable COD income by answering these four questions: Continue reading… Continue reading… Continue reading…

Midyear Tax Planning Tips for Individuals and Businesses

By Office Staff|2021-06-09T14:26:33-07:00June 9, 2021|Categories: Taxes|Tags: Child Tax Credits, Employee Retention Credit, Estimated Taxes, Investment Income, Mid-Year Meeting|0 Comments

If you’re waiting until around the 15th of March — or worse yet, April — to save on your taxes, you’re waiting too long. Sure, you can use certain approaches to trim your taxes when completing your annual tax returns, but the bigger savings come from what you do in the months and years prior to filing.

And with recent changes in the balance of power in Washington, D.C., a little mid-year tax planning is sure to help you avoid some nasty surprises in the Aprils to come. President Biden has released a plan that, if enacted, will result in higher tax rates for certain individual and corporate taxpayers. Only time will tell what will ultimately happen. We’re keeping an eye out for any new tax legislation and will alert you when changes occur. But now is a good time to review your finances, so that if any changes to tax laws do take effect, you’ll be better prepared to act.

In this post, we cover several tax-planning approaches you’ll want to consider now — midway in the year — whether you’re an individual taxpayer or a small-business owner.

SWC Client Reminder: It’s time to schedule your complimentary 2021 Mid-year Tax Planning and Financial Strategy Meeting. Visit www.SteesWalker.com and click on the Contact link at the top of page, followed by the “Schedule Your Appointment Online” button on the next page.

Tax-Planning Strategies for Individual Taxpayers

First, consider some tax-planning approaches for yourself as an individual taxpayer. From revisiting your tax withholding or estimated tax payments and taking advantage of lower tax rates on investment income, to timing your investment gains and losses and taking advantage of expanded credits for kids, there are several strategies you may want to consider.

First up, let’s have another look at your tax withholding and estimated tax payments: Continue reading… Continue reading… Continue reading…

How to Get an Identity Protection Personal Identification Number from the IRS

By Office Staff|2021-06-08T15:05:52-07:00February 25, 2021|Categories: Taxes|Tags: Identity Fraud, Identity Protection Personal Identification Number, IP PIN, IRS Form 15227|1 Comment

While con artists love tax season, 2020 marked the first year since at least 2014 that tax-related identity theft was not included on the Internal Revenue Service’s (IRS) “Dirty Dozen” list of tax scams. However, it remains a threat to all taxpayers, yourself included. All the bad guys need to do is file your tax return before you do and redirect your refund to their bank account.

Commissioner Rettig’s words ring true (see image above), especially when you stop to consider that the COVID-19 pandemic has increased online activity for many of us. As a result, it stands to reason that con artists are increasing their online activity as well, and capitalizing on our increased exposure to online identity theft.

One of the tools the IRS offers taxpayers to help in the fight against tax-related identity theft is the Identity Protection Personal Identification Number (IP PIN)— a six-digit number that the IRS is authorized to assign to eligible taxpayers. The number is known only to the taxpayer and the IRS, and it’s meant to prevent identity thieves from filing fraudulent tax returns using the taxpayer’s Social Security Number (SSN).

As the IRS puts it, the IP PIN locks your federal tax account, and serves as the key to opening that account. So, if you file electronically and your submission doesn’t contain the correct IP PIN, it will be Continue reading… Continue reading… Continue reading…

How to Get PPP Loan Forgiveness

By Office Staff|2021-02-03T17:18:36-08:00February 3, 2021|Categories: Taxes|Tags: Loan Forgiveness, Paycheck Protection Program|0 Comments

If you’re an owner or manager of one of the more than 5 million U.S. businesses that received a loan under the Paycheck Protection Program (PPP) — you can now have that loan converted to a grant and forgiven.

However, if you don’t apply for PPP loan forgiveness within 10 months after the last day of the covered period for the loan your business received, then the possibility of deferment ends. At that point, your business will be required to begin making loan payments to your PPP lender.

If your business is a Paycheck Protection Program borrower, it is eligible for loan forgiveness if you used the funds for eligible payroll costs, business mortgage interest payments, rent, or utilities during either the 8- or 24-week period after you received the loan.

Paycheck Protection Program Loan Basics

For the uninitiated, the Paycheck Protection Program (PPP) is a $659-billion economic relief program established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses remain solvent and continue paying their workers during the COVID-19 pandemic. Under the PPP, a qualifying small business (generally with fewer than 500 employees) could obtain a loan of up to $10 million at a very low interest rate (1 percent) and have the loan forgiven after proving that the money was used for qualified payroll and other expenses.

The following table provides an overview of the PPP Loan program. Continue reading… Continue reading… Continue reading…