Piwonka, CPA, Inc. does not prepare your tax return while you wait. Taxes are always getting more complex and no two tax situations are the same. Our philosophy is that all tax returns are prepared and then review by a second person ensuring accuracy.
Below we offer some guidance to help with tax season.
Businesses
Every year business owners get inundated with information that is needed in order to prepare their tax returns. There are things that are needed for the typical business that should tracked all year and will take the load off the business owner at tax time. These items apply even to Sch C - Sole Proprietor businesses.
- Keep a mileage log for all business related trips as you go through the year. Remember to not count commuting miles (as defined by the IRS)
- If you physically go do work in another state you need to track the income (and expenses) for that state as there is "more likely than not" a requirement for filing a tax return in that state.
- If possible keeping even simple spreadsheets with your expenses can help cut down on time needed to prepare you tax return. Be sure that you keep your receipts. Paper audits are not that uncommon and having proof to back the numbers is a must.
- Selling items online? Be sure that you do not have a sales tax requirement that you missed during the year.
- Did you open a LLC for you business during the tax year? If yes, then be sure that if you receive 1099NEC that they are in the LLC name and EIN and you let your tax preparer know about the LLC. It is always advisable to have a conversation with your tax preparer before opening a LLC so you know if there are tax considerations.
- If using an online selling platform run year end reports and give them to your tax preparer along with your other information. Many times these report provide a breakdown of income and some expenses.
- If you do not have payroll as part of your business you will want to discuss your business with your tax preparer about possible self employment taxes and estimated tax payments due during the year. This may help save you from paying penalties at tax time.
Individuals
Things you can do for a less stressful and less expensive tax return.
- Take the time to organize your information. Those that use their tax organizer, as a check sheet, to verify they have all the same information as the year before have on average a less expensive tax return.
- Make sure your tax preparer has your current contact information at tax time
- Bring your information in or upload it to the secure portal as soon as you can to prevent having to go on extension
- During the year if something changes - you inherit, you win some lottery money, decide to purchase a second home, start a Airbnb, start a small side business or sell things on e-bay, Etsy or some other online platform - have a conversation with your tax preparer. You want to be sure there are no tax implications for you. The sooner you know the sooner you can make adjustments before tax time instead of a potential unpleasant surprise just before April 15th.
- If you receive a 1099-NEC this should be because you run a business. If you are being paid $600 or more and you are not being paid through a paycheck with withholding, you will most likely receive a 1099-NEC from the business paying you at the end of the year. If you are not running a business you may be a misclassified employee.
Piwonka CPA is always happy to give guidance to our clients on tax situations during the year so that Tax Season can be a little less stressful for everyone. Hint: Looking to start a new business? Have that conversation before or after tax season - your tax preparer will have more time to give you.