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.

Many people and organizations have turned to crowdfunding to raise money for various needs and causes. One of the most popular crowdfunding platforms available is GoFundMe. While many of the entities raising funds on GoFundMe are charitable, some people worry about whether donations they might make via the platform can be deducted from their taxes.

Whether or not donations made on GoFundMe can be deducted from your taxes depends on whether the donee is a qualified 501(c) organization. If the recipient of your donation is a qualified 501(c) organization, then you can claim your donation as a deduction on your tax return. If the recipient is not a 501(c) organization, your donation is considered personal and can’t be deducted. Here is some more information about crowdfunding donations and when they can be deducted from the tax professionals at TMD Accounting.

When Are GoFundMe Donations Tax Deductible?

Originally starting as CreateA Fund in 2008, GoFundMe changed its name in 2010 and is a crowdfunding platform that can be used to raise money for nearly anything. Donations made on the platform are considered to be personal unless they are given to a qualified 501(c) organization.

If you give money to a non-501(c) organization on the site such as an individual who is trying to raise money for any purpose, your donation will be considered to be a gift and not a tax-deductible charitable donation. Even if you make a gift for a charitable purpose, it won’t automatically qualify you for a deduction.

Another thing to watch for is how much money you donate to an individual on GoFundMe. Since these types of gifts are not considered to be charitable by the Internal Revenue Service (IRS), if you give more than the annual exclusion amount for gifts, you might have to report what you gave and file a Form 709. The recipient will not be taxed on the amount they received.

How GoFundMe Works

Individuals, groups, or organizations can all raise funds on the GoFundMe platform. The site distinguishes between types of fundraisers, including standard campaigns and certified charity campaigns. Many organizers of standard campaigns are people who are raising money for any number of reasons and who can deposit any money they raise into their bank accounts.

While many standard campaigns are for worthy causes, the gifts that are made are given to individuals instead of registered charities. Donations to them are generally not tax deductible.

By contrast, certified charity campaigns are established by registered 501(c)(3) organizations. The organizers don’t handle the funds. Instead, the money is sent directly to the charitable organization through the PayPal Giving Fund. This is a fund that was created by GoFundMe to help registered charities receive donations. When you donate GoFundMe to a registered charity, you will receive a receipt from the giving fund so that you can claim a deduction on your tax return.

When GoFundMe Donations Are Tax Deductible

There are two exceptions under which a donation on GoFundMe could be tax deductible. First, if you give money to a qualified 501(c) organization on the platform, your gift will be tax deductible. Second, GoFundMe has established a program called “GoFundMe Causes”. Through this program, qualified organizations are grouped by their causes. You can make a tax-deductible contribution to the cause you choose, and the donation will be sent directly to the group of verified charities grouped by that cause.

Understanding Gift Taxes

The annual gift tax exclusion for 2022 is $16,000. If you give more than this annual amount to non-501(c) organizations, you could be required to file a gift tax return. While there are exceptions for donations given for educational or medical expenses, the exceptions require the funds to be sent directly to the institutions instead of an intermediary. Funds given on GoFundMe rarely are sent directly to institutions through standard campaigns.

Deductions for Charitable Giving

When you give money to a nonprofit organization, your donation will normally be deductible. You can deduct up to half of your adjusted gross income for cash donations, but there are limits set at 20% or 30% that might apply. Giving money to registered 501(c) organizations on GoFundMe could be a way to reduce your tax burden, but you will need to make sure to save your receipt. To claim a deduction, you will need to itemize your deductions instead of taking the standard deduction using Schedule A. A charitable deduction might be eligible as long as it is given to one of the following:

• Nonprofit hospitals and schools
• Some veterans’ groups
• Local, state, and federal governments
• Religious organizations

Donations to the following types of organizations generally cannot be deducted:

• Political action committees (PACs) or political parties
• Foreign organizations or governments
• Individuals
• For-profit hospitals or schools
• Labor unions
• Sports or social clubs
• Homeowners’ associations (HOAs)
• Responsibilities of Donees

Gifts are generally not considered to be taxable income. However, organizers should keep records to avoid problems.

If a donee receives donations in exchange for services or goods, the IRS might consider the donations to be taxable business income. Be clear in your campaigns that donors will not receive anything of value in exchange for making donations.

If you raise more than $600, the third-party payment processor will send you and the IRS a Form 1099. While the money you raise should not be considered taxable, you will have the burden to show that it was not income. Report the funds you receive on your tax return and then show a reduction of the same amount while including an explanation.

Talk to TMD Accounting

If you are unsure about whether your donations might qualify for deductions, you should talk to the professionals at TMD Accounting. Call us today at 1-856-228-2205.

Self-employed people and small business owners are generally allowed to deduct business travel expenses when they are required to travel away from home for business purposes. However, you need to ensure that you understand the definition of home from the Internal Revenue Service (IRS) and what ordinary and necessary expenses are to ensure you deduct your business travel expenses accurately. Here is what to know about the business travel tax deduction from TMD Accounting.

What Are Ordinary and Necessary Expenses?

The first thing you should understand is how the IRS defines ordinary and necessary expenses. Ordinary expenses are those that are accepted and common within your industry. Necessary expenses are those that are appropriate and helpful for your company.

How the IRS Defines Home

Your business travel expenses can be claimed when you are away from your business home, which is not necessarily where you live. The city in which your business is located is your business’s tax home, which might not be the same place where your family lives.

For example, imagine that you live in Colorado Springs, Colorado and have a permanent business location in Denver. Just because you might stay during the workweek in hotels in Denver and eat out, you won’t be able to deduct those expenses from your taxes or the costs of your transportation when you drive back to Colorado Springs on the weekends. This is because Denver will be your business’s tax home, so you can’t take deductions for your ordinary and necessary expenses during your time there.

Deductible Transportation Expenses

If you have to travel for business by bus, train, or plane, you can deduct the cost of your ticket and baggage fees. If you have to pay for a last-minute ticket, you can claim the higher price as an expense. However, if you pay for the ticket using your frequent-flyer miles, you won’t be able to deduct it.

Transportation expenses can be deducted when you have to travel away from your business’s location for business reasons. For example, if you have to fly from Denver to Los Angeles for a work conference, you can deduct the cost of your airfare to and from Los Angeles. You can also deduct the cost of renting a car in LA while you are there. The IRS allows you to deduct the actual costs or the standard mileage rate. During the first half of 2022, the standard rate was 58.5 cents per mile. For the second half, the mileage standard rate was increased to 62.5 cents per mile. You can also deduct parking fees and tolls you might have to pay during your business trip.

Deductible Taxi Fares

While you are away on business, you can also deduct the fares you pay for taxis or shuttles. The following types of fares you pay can be deducted:

• Fares paid to get to and from the airport, train station, and your hotel
• Fares paid to and from your hotel and your work location
• Fares paid to and from clients in the city

For car rentals, you can deduct the expense as long as you exclusively use the vehicle for business. if you also use it for personal reasons, only deduct the portion of the rental costs that you used for business. For example, if you are in LA and drive to the conference and then back and forth to a few client locations, you can deduct the mileage and rental car expenses for those trips. However, if you later decide to go out to dinner or a movie from your hotel, you can’t deduct the expenses involved with that.

Deductible Incidental Expenses

You can also deduct the costs of your hotel, business meals, and tips as long as they are reasonable under the circumstances. Your meal deduction is limited to half of the actual cost of your meal or the standard meal allowance. The meal allowance is based on the federal per diem rate based on when and where you travel.

In general, business travelers can only deduct 50% of their meals. However, in 2022, the IRS is allowing business travelers to deduct the full cost of business-related meals and beverages that they purchase at a restaurant. If you decide to take the standard meal allowance, the deductible amount for incidental expenses is $5 per day for tips given to staff at your hotel, baggage carriers, or porters. It is still a good idea to keep receipts and track of the actual costs you pay.

What Qualifies as a Business Trip?

To qualify as a business trip and qualify for the business travel tax deduction, your trip must meet each of the following criteria:

• Your trip caused you to leave your business’s tax home for more than a normal work day
• Your trip must primarily consist of business
• Your trip should qualify as an ordinary and necessary expense
• Your trip should be planned in advance

Speak to an Accounting Professional

If you are unsure which expenses you can deduct under the business travel deduction, you should speak to the accounting and tax professionals at TMD Accounting. We can review your receipts and the purpose of your trip and explain what can and can’t be included. To learn more, call us today at 1-856-228-2205.

Having a small-business tax advisor can help your business save money on taxes by working with you year-round. This is a certified professional who prepares and files business tax returns, provides financial and tax advice, and represents businesses when they are audited by the Internal Revenue Service (IRS). Certified tax advisors also perform record-keeping duties and help with tax planning to maximize your business’s returns. The tax advisor you choose should be experienced, qualified, and have specific knowledge about business taxes. Here is some information from TMD Accounting about how to find the right tax advisor for your small business.

What Are Tax Advisors for Small Businesses?

The IRS allows anyone to serve as a small-business tax consultant as long as they get a preparer tax identification number (PTIN) from the agency. However, you should look for a professional firm that offers both small business account services and business tax advice. The professional you choose should also be certified as a tax advisor by the IRS. Certified tax advisors have additional education, skill, and expertise requirements and can also represent you in case of an audit.

Enrolled agents are licensed tax professionals who must pass a specialized exam showing their tax proficiency and/or have worked for the IRS for at least five years.

Certified public accountants (CPAs) must pass the CPA exam and follow the requirements for CPAs. They are accounting professionals offering multiple services, including tax advice, preparation, and filing.

Finally, attorneys must pass the bar exam to obtain a license to practice law in their state. While all lawyers are included in this category, a business owner should look for an attorney who focuses on tax law and business taxes.

If you are searching for a tax advisor for your business, you should choose someone who falls into one of the three categories listed above. Make sure the professional you choose has experience with business taxes instead of personal taxes. Finding a certified tax advisor who is also familiar with your industry and with small businesses is even better.

How a Tax Advisor Can Benefit Your Small Business

A good business tax advisor can help your business in numerous ways throughout the year instead of just at tax time. Your tax advisor should provide you with all of the following benefits:

• Providing important information and advice to aid you in tax decisions
• Setting up a record-keeping system tailored to your business and its needs
• Preparing business tax forms and helping your business claim all of the deductions to which it should be entitled and highlighting red flags that could get your business in trouble with the IRS
• Providing advice and guidance when you are dealing with the IRS
• Representing you before the IRS during audits and investigations

Finding a Tax Advisor for Your Small Business

The first place to start is to ask your business’s accountant or bookkeeper for referrals and recommendations. If you are already working with a CPA for small business accounting services, they might also have the necessary experience to provide you with business tax advising services. You can also ask other business owners that you know and trust for their recommendations for business tax advisors in your area.

You can also ask your friends, banker, family, or attorney for recommendations and referrals to qualified business tax advisors in your area. Get several names. Look for listings in newspapers, directories, trade journals, referral panels, and professional associations. Look for CPA societies in your area or check online at www.cpadirectory.com for a CPA. If you want to find an enrolled agent, you can ask for help from the National Association of Enrolled Agents at www.naea.org. However, if you check an organization, you should consider referrals as the organization’s certification that it recommends the CPAs or EAs or that the names provided to you are competent professionals.

Once you have a small list of names, interview a minimum of three firms or individuals. Treat the consultation like an interview. You want to both test the prospective advisor’s knowledge and ensure that they are a good fit for your company. Ask them about their experience, certification, and their knowledge of your industry and of working with small businesses. Ask about the types of tax issues small businesses might face and how they address them. Ask if the prospective advisor represents clients during audits before the IRS.

Ask the tax advisor about any success stories they can share and the types of strategies they employ when dealing with tax problems. You want to make sure the advisor you choose doesn’t use overly aggressive strategies that could potentially get your business in trouble.

Once you have completed your consultations, don’t rush to make a decision. Consider which prospective advisor made you feel confident in their knowledge and ability to help your business with its taxes. Make sure you choose an advisor with whom you feel comfortable since you will have an ongoing professional relationship. Finally, search for a tax advisor in the fall or summer instead of trying to find someone during tax season.

Find an Accountant for My Small Business

If you are searching for a full-service accounting firm to handle all of your business’s accounting and tax needs, you should consider TMD accounting. We provide a full range of accounting services for small businesses, including tax advice and preparation. Call us today for a consultation at 1-856-228-2205.