W Hal Wyatt CPA PC

04/18/2020

Filing for PUA

Filing for PUA

You can now apply for PUA, expanded eligibility for individuals who have traditionally been ineligible for unemployment benefits (e.g. self-employed workers, independent contractors, gig workers).

12/03/2019

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12/03/2019

Reasonable Compensation Simplified - RCReports

From TaxSpeaker.com:

Under the cash method, you include in gross income all items of income you actually or constructively receive during the tax year. If you receive property and services, you must include their fair market value in income.

Income is constructively received when an amount is credited to the account or made available to you without restriction. You need not have possession of it. If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations.

Cash basis entities that do not have “constructive receipt” of cash payments will not pay tax until the year the funds are received. The constructive receipt rule is not based upon actual deposit dates, rather it is based upon receipt of the customer payments in any manner including checks or credit cards, and so holding checks for deposit in the following year does not actually reduce this year’s income since the taxpayer is in constructive receipt of the funds. If the business owner has not yet billed for the project however, and if the project is for a service element rather than inventory, the delay of 2019’s billing will work to defer income for a cash basis business until 2020.

Similarly, advance payment of non-inventory operating expenses is deductible for most cash businesses under the 12-month rule. An expense paid in advance is deductible only in the year to which it applies, unless the expense qualifies for the “12-month rule.” Under the 12-month rule, a taxpayer is not required to capitalize amounts paid to create certain rights or benefits for the taxpayer that do not extend beyond the earlier of:

1. 12 months after the right or benefit begins, or

2. The end of the tax year after the tax year in which payment is made.

The 12-month prepaid expense rule is not allowed for inventory items or interest expense. Regulation 1.263(a)(4)(f) is where the 12-month rule is located. Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income.
Many small business owners rush out near year end and buy un-needed equipment in an unwise decision that uses cash for tax deductions. A much wiser decision for these cash basis businesses is to prepay the expenses that will occur, no matter what, for the next 12 months such as utilities, rent, office supplies, maintenance contracts, advertising, etc.


Example. Your client is a calendar year taxpayer and is planning on buying a new $50,000 pickup at the end of the year because they have had such a good year and “need the deduction”. The client needs to be reminded of a basic rule of business cash flow decision making:

“Do you need the truck?”

In the author’s experience the answer to this basic question is “no” much more often then “yes”. If the answer is no, they don’t need the truck, then let’s look at alternative ways to get the deduction that meets a need. When the taxpayer uses the cash method, consider the 12-month rule and have them prepay up to 12 months of:
• Utilities (Heat, water, sewer, electricity, gas)
• Internet (Cable, fiber, phone)
• Cell phone usage
• Rent (if related party only deduct if related party includes in income same year)
• Accounting and legal
• Office supplies
• Advertising
• Dues and licenses
• Continuing education
• Equipment leases
• Insurance
• But not interest or loan payments.

The advantage of the 12-month rule is it allows pre-payment and deduction of business expenses that are needed-like a savings account. If next year is a good year, the taxpayer will do it again, if not, no problem, because cash flow is improved.

10/31/2019

How Does the IRS Decide Who to Audit?

How does the IRS decide who to audit? Find out in this article.https://www.accountingweb.com/tax/individuals/how-does-the-irs-decide-who-to-audit

How does the IRS select 1040s to audit?

12/09/2018

IRS

Refunds may be different than prior years following #TaxReform. Some people may even owe an unexpected tax bill when they file their tax return. IRS urges you to do a #PaycheckCheckup now before it's too late: www.irs.gov/withholding

11/01/2018

Meals continue to be deductible under new IRS guidance

Meals continue to be deductible under new IRS guidance

The IRS issued guidance on the deductibility of meal and entertainment expenses after the modification of Sec. 274 by the TCJA.

02/15/2017

Tax Season is in full swing. Dont forget if you are an educator about your $250.00 educator expense credit available on your Federal Tax Return. $500 for married filing jointly when both taxpayers are teachers!

01/12/2017

IRS and Partners Look to Start of 2017 Tax Season; Encourage use of IRS.gov and e-File; Warn of Refund Delays

Tax Season is upon us! E-filing of returns start January 23rd and BE AWARE the IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15.

IRS YouTube Videos When Will I Get My Refund: English | Spanish Claiming EITC or ACTC? Your Refund May Be Delayed: English

12/09/2015

Individual Mandate Penalty You Pay If You Don't Have Health Insurance Coverage

Did you have health insurance for 2015? If not the penalty has increased from 1% to 2%. Check this link for more information about the penalty and if you could qualify for an exemption from the penalty.
https://www.healthcare.gov/fees/fee-for-not-being-covered/

Read about why you need health insurance. You may have to pay a fee (individual mandate penalty) and more. Learn about the Health Insurance Marketplace.

05/20/2015

IRS Marks National Military Appreciation Month; Free Tax Guide Focuses on Tax Benefits for...

May is National Military Appreciation Month. Check out this link for tax benefits for the Military.


http://www.irs.gov/uac/Newsroom/IRS-Marks-National-Military-Appreciation-Month;-Free-Tax-Guide-Focuses-on-Tax-Benefits-for-Members-of-the-Military

IRS YouTube Videos Español Military Tax Tips: English | Spanish | ASLCombat Pay: English | Spanish

05/20/2015

W Hal Wyatt CPA PC

05/20/2015

Untitled Album

01/07/2015

The 2014 tax breaks you'll be able to take

Make sure you are aware of tax credits that have been extended to use in 2014!


http://money.cnn.com/2014/12/16/pf/taxes/tax-breaks-passed/

Congress waited until the last minute to decide what to do with a slew of expired tax breaks. They extended most of them, and a handful will affect individuals directly.

08/07/2014

www.irs.gov

Do you have a premium tax credit for healthcare? Remember to report any changes to ensure that you are receiving the right amount of assistance

http://www.irs.gov/pub/irs-pdf/p5152.pdf

11/26/2013

Be sure to take advantage of the 8 Tax Breaks expiring at the end of 2013!!

http://finance.yahoo.com/news/8-tax-breaks-expiring-end-170659429.html

11/12/2013

2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations...

Due to the government shutdown the 2014 filing season will begin between Jan 28th and Feb 4th.


http://www.irs.gov/uac/Newsroom/2014-Tax-Season-to-Start-Later-Following-Government-Closure;-IRS-Sees-Heavy-Demand-As-Operations-Resume

WASHINGTON — The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure.

11/07/2013

IRS Warns of Pervasive Telephone Scam

IRS warns of widespread phone scam and offers tips to beat the crooks!

http://www.irs.gov/uac/Newsroom/IRS-Warns-of-Pervasive-Telephone-Scam

WASHINGTON — The Internal Revenue Service today warned consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country. Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the...

09/17/2013

Health Insurance Marketplace, Affordable Care Act

AFFORDABLE CARE ACT: Starting October 1, 2013 the new healthcare marketplace will be open. This website will offer ways to get affordable health coverage that will be required for everyone by January 1,2014. There is a $95 fine for not having healthcare in 2014 and will increase to over $600 by 2016. Follow these links to IRS website and the new Healthcare marketplace opening Oct 1st.
https://www.healthcare.gov/ and also http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-for-Individuals-and-Families

Learn how the health care law affects you at Healthcare.gov. The official site of the Health Insurance Marketplace. See your health insurance choices.

07/11/2013

Summer Job Tax Information for Students

Have a summer job? Click here for six things the IRS want students to know about. http://www.irs.gov/uac/Newsroom/Summer-Job-Tax-Information-for-Students

When summer vacation begins, classroom learning ends for most students. Even so, summer doesn’t have to mean a complete break from learning. Students starting summer jobs have the opportunity to learn some important life lessons. Summer jobs offer students the opportunity to learn about the working…

06/11/2013

Keep the Child Care Credit in Mind for Summer

Don’t forget about the Child Care Credit for your taxes. Click here for 8 key points from the IRS about receiving the credit. http://www.irs.gov/uac/Newsroom/Keep-the-Child-Care-Credit-in-Mind-for-Summer

If you are a working parent or plan to look for work this summer, you may need to pay for the care of your child or children. These expenses may qualify for a tax credit that can reduce your federal income taxes. The Child and Dependent Care Tax Credit is available not only while school’s out for su...

05/29/2013

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