Important tax credit deadlines 🛎️

Hi! 

This week’s message is for contractors, freelancers, business owners, or anyone with 1099-NEC income. If this is you, please read on: 

Below are important tax deadlines for businesses that we often see missed. Some can lead to substantial, immediate tax benefits if implemented correctly & on time. Others can lead to penalties from the IRS and/or state, so they must be addressed right away, as well!

These are not in order by size of potential tax reduction/refund, so please read all to the end! Here goes: 

• • QBI Deduction: if you have any type of business that is showing a profit, there is a system for reducing your taxable income by 20% through using proper QBID allocation. This involves payroll & is complex, outside of the scope of a quick email. Message me directly for more details about this

• • Section 179 Deduction: Small businesses may benefit from the Section 179 deduction, allowing for the immediate deduction of certain qualifying business assets rather than depreciating them over time.

• • Home Office Deduction: Self-employed individuals and small business owners are allowed to deduct expenses associated with a portion of their home used exclusively and regularly for business purposes, with two methods of calculation (simplified method and regular method)

• • Payroll: relatedly, if you have an s-corp that is showing a profit, please remember that the IRS requires payroll. If you do not have W2 payroll, please note that payroll takes at least 4-6 weeks to set up, so we must get to work on this immediately if you are to meet the deadline. The IRS and states specifically do not allow 1099s to replace W2 payroll.

• • Business structure: if you are earning over 60-100 thousand net income per year, you may be able to save tax in the 5 figures through a business restructure depending on your case.

• • Sales taxes: If you have any type of business that sells products, certain memberships, or other sales-tax applicable products/services, we see that sales taxes are often missed. We can help with implementation, state registration, catching up on late filings, etc. 

• • Bookkeeping: If you have any type of business, contract income, self-employment, 1099-NEC income, etc. the IRS considers you as a business. If you are not sure what deductions to take or how to organize them, you may need bookkeeping. Proper bookkeeping can save you substantially in taxes. Please do not wait to year-end for this – most bookkeepers will be completely full by then. Luckily, we have a books team, but must start early, as well as an advisory team that can go over deductions you qualify for.

• • SEP IRA, Solo 401k, etc.: If you have any type of self-employment income, you can reduce your taxable income by up to $66,000 through taking retirement plan deductions. These can be easy to set up, depending on your structure

• • 1099 NECs: if you hired anyone to work for you & they are not an employee, you are required to collect W9s and issue 1099s. Please do not wait for this as the deadline is only weeks from now to have these in order. 

• • Quarterly income taxes: please remember that if you are showing a profit of any kind, you are required to file quarterly taxes in many cases. We can help with understanding whether you are required to file this. If so, we can compute this for you. Please note that there are IRS penalties for missing this. 

• • SBA loans: The SBA recently announced changes to make applying for favorable loans much simpler. We have multiple clients using us to help them apply. 

• • Employee Retention Credits: If your revenues decreased during the pandemic or your business was affected by government orders (e.g., shutdowns or restrictions), you may qualify for a tax credit potentially up to $26,000 per eligible employee. This expires soon! 

• • R&D Tax Credits: For those that used US-based labor & resources to develop new technologies, systems or processes. This can be sustantial and is one of the methods applied by public companies to avoid tax entirely, sometimes for years 

Please note that many of these require a few weeks of setup. Since we are only 5 weeks to year end, we must start immediately on these if you need our help. Please let me know by Friday and preferably today if you need assistance with any of the above. 

— 

George Dimov CPA

www.dimovtax.com

(866) 938-5763 toll free