There are also new things for business owners to know when it comes to filing this year.
Blake Rowley (CPA, MACC) is a staff accountant with Blodgett Mickelsen & Adamson.
Rowley says business owners can take advantage of the employee retention credit if they have losses in any quarter of 2021 or 2022 for keeping people on. This can save money when it comes to payroll taxes.
Another important thing is that self-employed people can get credits if they took days off while sick, caring for someone else, or watching kids if school was canceled. Similar to sick leave.
These are a few things to consider when talking with your CPA this year.
“If you at least tell them ‘Hey, this is how COVID has affected my business.’ If your CPA is current on tax law, it can give them a good idea of ‘Okay, here’s some things that may apply to you that you can take advantage of that is part of the new tax legislation’” said Rowley.
Additionally, businesses should know the parameters for paying other businesses for goods and services using apps like Venmo or using cash and card options.
“If you’re paying someone for services in the course of your business you’re required to report on a 1099 form to the IRS the total dollar amount you paid them for their services during the year,” said Rowley.
Rowley says you only have to report it on a 1099 form if it’s a business transaction between two businesses. Not personal expenses.
“For example, if you go and hire a bookkeeper to keep the books for your business and you pay them 500 bucks a month, throughout the course of the year you’ve paid them over 600 dollars. You’re required to report that amount to the IRS,” said Rowley.
Rowley says there are exceptions to issue or file the 1099. If you paid that business less than 600 dollars or if they are an S or C corporation.
But if a business pays another business more than 600 dollars in any form, it needs to be reported using the 1099.
“That rule applies to any transfer of money. Whether it’s cash, whether it’s through Venmo, PayPal, whatever. It doesn’t matter. It’s just if you pay somebody for goods and services no matter what provider you use to do that,” said Rowley.
Either way, Rowley says income a business makes in general needs to be reported to the IRS—whether that be cash, card or something like Venmo.
“You still have to report anything that is income. And if they were to be examined the IRS would be looking at their bank statements and things like that. So it’s still important to report that income even if it’s not on a 1099,” said Rowley.
Finally, for married couples filing joint, there are new changes to deductions for charitable contributions.
Rowley says you have standard or itemized deductions. If you take standard deductions, you could get up to 300 dollars per spouse this year if you are married filing jointly.
Article Source: Fox 11