Falling behind on taxes can be a frustrating experience, but you want to take steps to rectify the situation as soon as possible. You might be wondering whether you can file multiple years of returns at one time. There are options available to taxpayers who need to file several years of back taxes. Whether you are an individual taxpayer or a small business owner, understanding your options when filing back taxes can help make the process less stressful and more manageable.

What Are Back Taxes?

You may owe back taxes if you have not filed or underpaid them in the past year. These taxes can be a significant problem for individuals and small business owners. Over time, it can lead to a buildup of interest and penalties, making it more difficult and expensive to fix the issue with the Internal Revenue Service.

The process of resolving these back taxes can be complicated. You will need to review and correct past tax returns and financial records in many situations. Consider working with a company specializing in small business accounting services for this task, especially if you have multiple years of back tax returns.

An experienced accountant can ensure that your tax information is accurate and up to date, helping minimize potential tax liabilities. They can also help you understand the tax laws and regulations that apply to your situation. Plus, these financial professionals will guide you through resolving any outstanding tax debts.

Unfortunately, many small business owners can fall behind on their tax obligations for many reasons, such as having fears of receiving a large tax bill, requiring clarification about the tax process, or needing to prioritize tax planning. No matter the reason, you will want to address back taxes as soon as possible. If you neglect your taxes, it can lead to significant financial consequences and legal penalties. By working with a knowledgeable South Jersey accountant, you can take a proactive approach to resolving your back taxes, putting you in a better position to succeed and grow your business in the long term.

What Happens If You Don’t Pay Back Taxes?

The consequences of falling behind on taxes can be severe. If you don’t file tax returns or pay taxes owed, it can result in a range of problems, including IRS notices and letters, wage garnishments and bank account levies, and the accrual of tax penalties and interest.

The IRS will first send notices and letters to collect taxes. In many cases, these notices contain language stating you are at risk of further enforcement action if you do not settle your tax debts. If you ignore these letters, the IRS may take additional measures to collect the taxes owed to the government.

In addition to these enforcement actions, failing to file tax returns or pay taxes owed can also result in the accrual of tax penalties and interest. The longer you wait to address your tax debts, the more penalties and interest you will incur. As a result, those financial penalties make it even more difficult and expensive to fix the issue. Remember that interest and penalties can add up quickly. They can make a significant dent in your finances, especially if you do not take action to resolve your tax obligations in a timely manner.

Can You File Two Tax Years Together?

Yes, you can file multiple back taxes at once. In fact, it is often recommended to file multiple returns at once to catch up on all of your taxes from the previous years. You can file back taxes by obtaining copies of your old returns or estimating your income and expenses for the missing years. Once you have that, you can submit the returns to the IRS.

Filing multiple tax returns for several years can be time-consuming. If you need to file multiple years of back taxes, the process can take longer, especially if your tax situation is more complex or you have many deductions and credits to claim. Filing several years of returns can take several days, even a week or more, depending on the circumstances.

If you owe taxes for multiple years and cannot pay the full amount all at once, you can work out a payment plan with the IRS. These plans can help you avoid penalties and interest. Additionally, they can give you more time to pay off your tax debt. However, setting up a payment plan does not relieve you of your obligation to file all of your missing tax returns.

Once again, it is always a good idea to seek the advice of a tax professional if you need to learn how to file back taxes or have concerns about your ability to pay your tax debt. They can help you navigate the process and ensure that your returns are filed correctly and promptly.

Get Help With Your Taxes

When you need assistance filing one or multiple years of taxes, TMD Accounting is here to help. With a track record of serving small and large companies for over four decades in Gloucester County, we have the experience to handle your payroll, tax, and bookkeeping needs. We want to help you rectify any issues you may have with past back taxes. As a family-owned and -operated business, we take pride in providing personalized and professional services to our clients in South Jersey. If you would like to schedule a consultation, call us at 1-856-228-2205.

As the year’s first quarter approaches, businesses should prepare for the upcoming tax season. During this time, you want to have a comprehensive plan in place to ensure the accuracy of the tax return and minimize any unexpected financial liabilities for your business. Early planning can help you achieve a more streamlined and stress-free process when filing your taxes. Here are a few tips to prepare your business for the upcoming tax season.

Know All the Deadlines

As a business owner, you need to be aware of the important dates related to tax filing. Keeping track of estimated quarterly payments, form due dates, and other deadlines is essential to ensure that you are meeting your tax obligations promptly and accurately. If you want to stay organized, you can maintain a calendar of all the necessary tax deadlines. During the quarter, you should regularly review and update it to ensure that you stay informed about any changes.

Remember, some dates will vary from year to year due to weekends and holidays. You should double-check the calendar each year to avoid missing any critical deadlines. Staying informed about important tax dates can help you take the necessary steps to ensure that your business complies with tax laws and regulations.

Get Those Books in Order

You want to ensure that all financial documents and books are ready for the tax season. Make sure that all business transactions are recorded in your general ledger. These transactions should be categorized accurately and consistently. When you have a consistent system, it can help you to avoid errors. Contact a professional accounting team or bookkeeper if you need help organizing your transactions.

It is essential to reconcile your books with your bank records to ensure a complete and accurate record. You always want to avoid any discrepancies in your books. Additionally, you will want to separate personal and business expenses. If you don’t do this immediately, it can create headaches during tax time. When expenses are mixed in one account, it takes more time to sort through them, and you might miss deductions. Consider opening a separate small business account as soon as possible to simplify the process.

Collect Your Statements and Records

If you want to prepare your business for tax season, you will need to have the proper documents for your tax preparer or accountant. There are three crucial financial statements that you will need for tax time: the income statement, balance sheet, and cash flow statement.

The income statement is a report that details your company’s revenue and expenses over a specific period, showing your net profit or loss. On the other hand, the balance sheet is a snapshot of your company’s financial standing at a particular moment, showing what your business owns and owes. Finally, the cash flow statement tracks the movement of cash in and out of your business, giving you an idea of the company’s overall financial health and liquidity.

If you don’t have these statements, you should contact a company specializing in small business accounting services to help you compile these documents. Even after tax time, these documents are a valuable tool to help you track your company’s financial health.

Stay Current With Payroll Obligations

Staying organized during tax season is crucial for small businesses to ensure an accurate return. One way to maintain order is by keeping a payroll checklist that covers all necessary information. You will want to verify employee information, report special procedures, and document additional compensation and benefits information. With a list, you can reduce the chance of missing important details during the tax preparation process.

Set Aside Money for Taxes

No one wants to pay taxes, but you must have the funds to cover your tax obligations. You should set aside sufficient funds to pay your taxes for the year. With that, you can avoid any potential penalties and interest that might result from underpayment. Many individuals and businesses will use a 30% rule. Setting aside 30% of your income ensures you have enough money to pay your federal taxes. Remember that this is a general estimate and may not reflect your tax situation. You should always consult with a tax professional or utilize tax estimating tools to get a more accurate assessment of your tax liability.

Hire an Accountant

Preparing and filing taxes can be overwhelming. You should seek professional support from an accountant. While they can assist you during tax season, these professionals provide invaluable services to businesses throughout the year. Many times, you will want to consult with an accountant before making decisions for your business.

Hiring an accountant can provide several benefits for your business, including tax savings, cost reduction, and an increase in profitability. Along with that, an experienced accountant can offer valuable insights and guidance to help you make informed decisions that can positively impact your bottom line. It may seem like another expense for your business, but hiring a South Jersey accountant can be a huge relief for you during tax season and the rest of the year.

We Can Help Get You Ready for Tax Season

Let us help you take care of your tax needs efficiently and effectively. TMD Accounting is the top choice for small and large businesses in Gloucester County. With over 40 years of experience in the industry, we can help you with your payroll, tax, and bookkeeping needs. If you want to schedule a consultation, call us at 1-856-228-2205.

Most Americans dread tax season even if they will not have to pay the government. Most of the dread comes with gathering the documents needed, figuring out which tax forms have to be filed, and taking the time to put it all together. This all needs to be done whether you are filing your personal taxes or own a business. One of the best ways to make tax season less stressful is to hire a professional to handle the stress for you. Today, the tax preparation pros at TMD Accounting will explain the main reasons why letting a professional prepare your taxes can not only relieve stress but also ensure that your taxes are filed properly.

Free Up Your Time

The average time it takes the average person to complete their taxes is 20 hours. With people living very busy lifestyles today, giving up 20 hours can be extremely difficult. This is the equivalent to half a work week for most Americans and it could be time spent with family and friends, focusing on your business or doing things that are more important to you. Also keep in mind the amount of time it may take should your return be audited by the IRS, something that is less likely to happen if you use small business accounting services.

Lower Your Tax Burden

You may ask “why should I hire an accountant for my small business to do my taxes?” The fact professionals undergo significant training so that they understand the complicated tax code as well as the many changes that can occur year-to-year is one of the primary reasons to use a qualified tax professional. Companies like TMD Accounting know what needs to be done as well as what should not be done to get you the biggest refund possible while following IRS rules and regulations.

In addition, tax preparation services are aware of deductions that you may not know exist and the cost of tax preparation may be deductible, which also saves you money. The more deductions you are eligible to take, the lower your tax burden is, giving you a higher refund or at least reducing the amount you must pay to the IRS.

Avoid Costly Errors

There is research that shows as many as 80 percent of Americans make mistakes on their taxes. Most of them are minor, but they often cost you money in the form of a reduced refund or higher tax bill. However, some errors can be catastrophic and could result in high penalties and fees. They could also result in criminal charges filed, even if the mistake was unintentional. Small business accounting services can help prevent those errors. If you are audited, they will work with you and the IRS to explain the situation.

Less Stress

There is no question that completing your taxes can be stressful, complicated and confusing. When asking yourself “why should I hire an accountant for my small business,” consider that tax professionals are trained to deal with all of the complicated processes that come with taxes. All you have to do is deliver them your information and they will put it all together and make it make sense to the IRS. You don’t need to worry that you file the wrong form or that you put the wrong number on the wrong line. They are trained to be sure that all the numbers are entered correctly and that the proper forms are filed.

Audit Assistance

One of the best features of using small business accounting services to prepare your taxes is that, should you be audited, a professional will help you through the entire process. If there was an error on their part, many tax professionals will pay any fees or penalties you incur as a result of that error. Even if the error was on your part, such as a missed W2 or interest statement, they can work with the IRS to help minimize the impact of the error. This is another layer of stress relief that comes with hiring a professional to prepare your personal and/or business taxes.

Major Life Changes

If you have prepared yourself in the past, there may be other reasons why you should look to an expert to prepare them this year. If you experienced a major life event, such as getting married, buying a home, receiving an inheritance or moving to a different state, you may want to get a professional to prepare them for you this year. Life changes can lead to additional deductions, or they may lead to a higher than normal tax burden.

Even if you have not experienced a major life change, there are circumstances where you should think “maybe I should hire an accountant for my small business this year.” If you are self-employed or you own rental property, a professional is highly recommended. The same is true of you are an active stock trader or you have foreign accounts. All of these situations can lead to complicated tax structures that only a professional can unravel for you.

Contact a Tax Preparation Service Today

If you are ready to prepare your taxes, consider reaching out to TMD Accounting first. Our amazing team can prepare your taxes for you, relieving stress and helping reduce your tax burden as much as possible. You can learn more about our services by giving us a call today at 1-856-228-2205 or visiting us online. Those 20 hours you spend on taxes can be better spent with your family. Let the professionals handle your taxes for you.

The end of the year is approaching and that means you will realize that “the accountant for my small business is going to need my tax information soon.” For some small business owners, that can send them into a panic as they realize they have not thought about taxes since they were filed earlier in the year. These tips from TMD Accounting can help you begin to prepare for tax season and help you stay prepared all throughout the year.

Review Your Income

This is the time to review your income over the past year, according to small business accounting services. During the pandemic, you may have seen your company income drop but now that things are getting back to normal, your bottom line may have improved substantially. For some businesses, however, the inflation has kept their profits lower than expected. If you have seen an increase in net revenue this year, now is the time to look for additional tax deductions to lower your tax burden after the first of the year. By the same token, if your income is lower than you expected, you may find yourself eligible for additional deductions you were not eligible to use in the past.

Check Your Business Entity

This is the perfect time to review whether you are using the right business entity, whether you are a sole proprietor, S-Corp, LLC, partnership or C-Corp. Even though you may have had the same entity for years, your income level can have an impact on which option is best for you. If your company is bringing in $50,000 or less, it is likely that you will not want to go through the process of becoming an S- or C-Corp. If this is your current business entity, you may want to talk to a small business accountant to see if it is time to change. If your company has done exceptionally well this year, you are reaching six figures in net revenue, but are still a sole proprietorship or partnership, you may want to ask, “can the accountant for my small business help me change my business entity?”

Review Retirement Plans

If it looks like you will owe a significant amount to the IRS this year, consider reviewing your retirement plans. This is the perfect time to invest in retirement plans such as an SEP IRA or a Solo 401(k), depending on your business. You could even combine a 401(k) with a Cash Balance Pension Plan. Although you will still be writing a check, it is much preferable to write that check to yourself in order to use it in retirement than it is to write it to the IRS. At TMD Accounting, we can help you create a retirement account that will not only prepare you for your golden years, but also reduce your tax burden.

Are You Working from Home More Often?

One of the things that came out of the pandemic was a realization that working from home can be an option for many people, even business owners. If you have moved some of your operations to a home office, you may be eligible for the home office deduction, even if you were not eligible in previous years. The answer to the question “can the accountant for my small business tell me if I can take the home office deduction” is absolutely yes, but there are a few things you need to know. In order to take the deduction, you must meet certain criteria, so talking to your accountant is the best way to determine if this is an option. If you can take the deduction, you could save hundreds if not thousands on your taxes.

Take the Time to Get Organized

December is the time to get all your business finances organized. Pull out the shoebox of receipts and begin organizing them. The best way to do this is to sort them into piles related to your deductions. For instance, create a pile for office supplies, one for meals and entertainment, one for vehicle costs related to business and so on. Even if you use an electronic financial system, organizing your backup documentation can be beneficial should the IRS flag one of your deductions. The best way to do this, however, is to do it all year so that it does not feel so overwhelming at the end of the year.

Consider Deferring or Accelerating Income

Did you do a large project for a client that could be billed in December? Consider delaying the invoice until January which allows you to defer the income, so it is taxable in the next tax year. However, if you believe your tax rate will increase next year due to higher net revenue, you may want to accelerate the income by issuing the invoice as soon as possible and trying to get payment from the client before the year ends. You can do the same with your expenses. If you expect your tax bracket to be higher next year, you may want to delay paying any expenses you can until after January 1. However, if your tax bracket is higher this year than it will be next year, try to pay as many expenses as possible before the end of the year. A small business accounting service can help you understand if accelerating or deferring income and expenses would benefit your tax situation.

If you are in need of an accounting services, we here at TMD Accounting are ready to help you. We have over 40 years’ experience in the tax industry, are family-owned and operated, working under the motto that “numbers matter and people count.” Arrange for a no obligation consultation by calling 1-856-228-2205 or fill out the easy online form today.

There are several reasons why some married couples opt to file taxes as married filing separately. However, this tax filing status can prevent individuals from claiming certain types of tax credits and deductions they might otherwise be entitled to if they filed their taxes jointly. Here is some information to understand about this filing status and its impact on the child tax credit (CTC) and the child and dependent care tax credit (CDCTC) from the accounting professionals at TMD Accounting.

Why Would People Choose to File Taxes as Married Filing Separately?

When couples file tax returns as married filing separately, they can’t claim many credits to which they would otherwise be entitled. Before the passage of the Tax Cuts and Jobs Act (TCJA) in 2018, there was somewhat of a “penalty” for married couples who filed jointly because the standard deduction for joint filers was not twice that of single filers. However, the TCJA changed the tax brackets to make the standard deduction for joint filers double that of single filers, eliminating this so-called penalty.

Even though filing as married filing separately might make some people ineligible for certain tax credits, it might be advantageous for people in the following types of situations:

• When a spouse has unpaid student loan or tax debt to avoid a refund being seized to pay for it
• When one spouse believes the other is inflating deductions or otherwise being dishonest on their tax return and does not want to be liable by signing a joint return
• When one spouse is applying for income-contingent student loan repayment plans
• When one spouse’s income is substantially lower than the other spouse’s, and the lower-earning spouse does not want to be liable for the higher-earning spouse’s tax bill
• When one spouse is unwilling or unable to sign a joint tax return
• When the spouses are planning to separate or divorce
• When the taxes owed on the separate returns equal the taxes owed on a joint return to avoid liability for each other’s tax bills

If you do have a good reason for choosing the filing status as married filing separately, here’s how that might impact your ability to claim the child tax credit and the child and dependent care tax credit.

Understanding the Child Tax Credit vs. the Child and Dependent Care Tax Credit

The child tax credit (CTC) is a tax credit parents can claim for each qualifying child they have up to age 17. This credit can be used for any type of expense and is provided in recognition of the fact that parents who have children have less disposable income and more expenses than others who make the same levels of income.

By contrast, the child and dependent care tax credit (CDCTC) is a tax credit a parent can claim to offset the cost of the child or dependent care so the parent can work. The CDCTC is available only to parents who have to pay for child care or adult dependent care so that they can work. On the other hand, the CTC is available to parents who have children younger than age 17 regardless of whether they have to pay for care to work.

Effect of Married Filing Separately Filing Status on the Child Tax Credit

The American Rescue Plan Act of 2021 temporarily expanded the child tax credit during that year, increasing the CTC of $2,000 for children younger than age 17 to $3,600 for children under age six and $3,000 for children ages six to 17. Eligible parents also could receive advanced payments of one-half of the child tax credit each month while receiving the remainder when they filed their 2021 income tax returns.

However, the enhanced CTC was allowed to expire at the end of 2021 and has not yet been renewed. While some people believe the expanded child tax credit might be renewed, it hasn’t been thus far. This means that the existing child tax credit of $2,000 for children ages 17 and younger is currently what might be available to tax filers when they file their 2022 returns.

People who file their tax returns as married filing separately can only claim a reduced child tax credit. The amount that someone with this filing status can claim is one-half of the available credit, and only one parent can claim it.

Effect of Married Filing Separately on the Child and Dependent Care Credit

In general, married couples can only claim the child and dependent care credit if they file joint returns. However, there are a couple of exceptions under which one spouse might be able to claim the credit even when their tax filing status is married filing separately.

According to the Internal Revenue Service (IRS), someone who is living apart from their spouse or who is legally separated might still be able to claim the child and dependent care credit. If you are legally separated from your spouse, the IRS does not consider you to be married and allows you to take the CDCTC if you file as head of household instead of married filing separately. To file as head of household, your child must primarily live with you, and you must pay at least 50% of the costs of supporting them during the year. You will also need to pay for care so that you can work.

If you are married and living apart from your spouse, you can claim the

CDCTC if the following criteria apply:

• You file a separate tax return from your spouse
• You maintain a separate household for you and the qualifying dependent for more than half of the year.
• Your spouse does not live with you during the last six months of the tax year.
• You pay more than 50% of the costs of maintaining your home.
• You pay for child or dependent care during the year for the qualifying dependent so that you can work.

Get Help from TMD Accounting

Understanding the best filing status to choose for your situation and the potential impact on your available credits is important. To learn more about optimizing your taxes, contact TMD Accounting today at 1-856-228-2205.