Theresa Arndt, CPA

Have you ever filed a tax extension? Or have you been worried about the implications of having to do so? Then read below on some of the common facts and myths regarding tax extensions. Statement #1: Taxpayers can get an automatic six-month extension from the IRS. FACT! Not ready to file on April 15? Don’t worry! We file a six-month extension that extends the deadline to file to October 15. For business returns, the original deadline is March 15 and the extended deadline is September 15. NOTE: For the 2020 filing season, the April 15 deadline was automatically moved to July 15, due to COVID-19. Statement #2: An extension also extends my time to pay tax owed. MYTH! This is incorrect! While you can file an extension to file by October 15, your tax liability is owed on April 15. Thus, if you wait to pay until later on in the year (whether that be May or October 15), you’ll owe some interest and penalties on top of the tax liability due. That’s why it’s always best to t...

Are you self-employed and want to save on self-employment taxes ? Then becoming an S Corporation might be a great option for you! Below we will go over the basic taxation you will see as a Schedule C versus an S Corporation, outline when it makes sense to become an S Corporation, and discuss how to become an S Corporation. Note: Income taxes are the same under either scenario, so we will only be comparing PAYROLL taxes. To see the blog on comparing taxation as a W-2 employee and self-employed on Sch C, click here . PAYROLL TAXES USING SCHEDULE C Whenever you are self-employed reporting your earnings on Schedule C, you pay 15.3% of self-employment (SE) taxes on your net income. Why? Because you aren’t on payroll (like a traditional W-2 employee) but are still required contribute towards the Social Security and Medicare systems. (Note that the Social Security part of the SE tax is 12.4% maxed at $137,700 [for 2020].) EXAMPLE FOR SCHEDULE C Let’s say that you have ...

Have you recently transitioned from being an employee of company to being self-employed (or vice versa)? Or are you considering such a transition? In this post, we will explore the main tax differences of being an employee versus being self-employed (with earnings reported on Schedule C) that you NEED to know. Or check out our video on the same topic here . EMPLOYEE & TAXES As an employee of a company, you should receive a Form W-2. You may or may not realize exactly what this form, or your paychecks each pay period, say about taxes. So let’s dive into that. 😊 First, we need to discuss that there are two main types of taxes reported on Form W-2/paystubs. FICA (Social Security & Medicare) taxes – 7.65% deducted from each paycheck (usually you will NOT get this back at all) Note: The Social Security 6.2% is only accessed on the first $137,700 (for 2020) of wages Did you know… Your employer also has a separate 7.65% they are paying for FICA taxes on your pay. ...

Paycheck Protection Program Loan Forgiveness Once you receive the Paycheck Protection Program (PPP) loan proceeds, it is important to correctly track and document everything to ensure you qualify for and receive the potential loan forgiveness aspect of the program (either in-part or in-full). *Note: The below is current from facts/information as of April 28, 2020. If additional guidance is issued that changes anything, we will update this blog post. LAST UPDATE - 6/25/20 BASICS OF THE PPP LOAN FORGIVENESS Here are some of the basics related to the loan forgiveness aspect of the loan. The 8-week forgiveness period starts on the day the PPP funds are deposited into your account. An alternative payroll covered period may be used for borrowers with a bi-weekly or more frequent payroll (for payroll costs only).  **NOTE: A 24-week forgiveness period can now be chosen in lieu of the 8-week forgiveness period. The forgiveness will be based upon actual qualified co...

The impact of the Coronavirus (COVID-19) is changing rapidly and all of us at A&CO are praying for the safety of your family and ours.  Even though our first priority is our safety, life goes on and recent events have affected the way we and our clients work.  Please see below for current information regarding the April 15th tax deadline, our office procedures, small business funding resources, and the stimulus package that is expected to pass this week.    There is some free money on the table for businesses and individuals, and we don’t want you to miss it. APRIL 15 TAX INFORMATION The deadline to file your 2019 Form 1040 (individual income tax return) has been extended from April 15 to July 15. If you owe, the tax payment deadline has also been extended to July 15, without accruing penalties and interest. The deadline to contribute to your 2019 IRA or HSA has also been extended to July 15. The first quarter 2020 estimated income tax payments dea...

Filing taxes last year was a nightmare not just for you but for us and the IRS too.  This year might not be much better.   Here’s why: first, the IRS is still working to issue guidance for the changes to the tax code they signed into law more than two years ago and second, Congress passed a series of tax breaks late in 2019 that will require the IRS and tax software providers to revise forms at the last minute.   If you are interested in learning more about what’s happened since we last met, grab your coffee and read at your leisure. J Further Consolidated Appropriations Act In the last few weeks of 2019 Congress produced its most significant tax package of the year as part of the Further Consolidated Appropriations Act, 2020 (FCAA). The Act includes the revival of expired or expiring tax breaks mostly through 2020.  Many of these tax breaks expired after 2017 but Congress retroactively extended them back to January 2018.  This mea...