Teipen CPA Group, P.C.

02/05/2022

Reporting gig economy 2021 earnings
The IRS doesn’t care if it’s a full-time job or “just a side hustle.” If you earned money for any kind of work, you are obligated to pay state and federal taxes on that income.
Figuring out the how of your part-time or side work tax situation doesn’t have to be complicated. The IRS offers several resources to help gig economy taxpayers properly fulfill their tax responsibilities.
Here are some things gig workers should keep in mind:
• Earnings from gig economy work is taxable, regardless of whether an individual receives information returns.
• This is true even if the work is full-time, part-time or if an individual is paid in cash.
• The reporting requirement for issuance of Form 1099-K changed for payments received in 2022 to totals exceeding $600, regardless of the total number of transactions.
• Gig workers may also be required to make quarterly estimated income tax payments and pay their share of Social Security and Medicare taxes. (Feeling overwhelmed by this thought? Talk to one of our CPAs for help in figuring this out.)
Understanding worker classification:
• While providing gig economy services, it is important that the taxpayer be correctly classified.
• This means the business, or the platform, must determine whether the individual providing the services is an employee or independent contractor.
• Taxpayers can use the worker classification page on IRS.gov to see how they are classified.
• Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is incredibly important for taxpayers to keep records of their business expenses.
The best way to avoid an expensive April tax surprise? Pay the right amount of taxes throughout the year.
Full-time employees look to their employer to help them withhold income taxes from their pay. When you are your own boss, you should do the same.
• Gig economy workers who are not considered employees have two ways to cover their income taxes:
o Submit a new From W-4 to their employer to have more income taxes withheld from their paycheck, if they have another job as an employee.
o Make quarterly estimated tax payments to help pay their income taxes throughout the year, including self-employment tax.
Still have questions? Talk to us at Teipen CPA Group. We can help. Or go to the Gig Economy Tax Center on IRS.gov for FAQs.

02/05/2022

How small business owners can deduct home office expenses
Lots of people began working from home over the past year. Others began their own businesses. If you fall into either category, here’s what you should know about correctly claiming the home office deduction on your 2021 tax return.

Important details about this deduction to help determine if and what you may claim:
• Employees are not eligible to claim the home office deduction. (So if you work for a company that allows you to work from home, sorry – you most likely won’t qualify for this deduction.)
• The home office deduction can be calculated using Form 8829.
• The term "home" for purposes of this deduction includes:
o A house, apartment, condominium, mobile home, boat or similar property.
o Structures on the property such as unattached garage, studio, barn, or greenhouse.
o But doesn't include any part of your property used exclusively as a hotel, motel, inn, or similar business.
• There are certain expenses you can deduct including mortgage interest, insurance, utilities, repairs, maintenance, depreciation, and rent.
• You can rent or own your home to qualify but must meet specific requirements. Even then, the deductible amount of these types of expenses may be limited.


• There are two basic requirements for your home to qualify as a deduction:
o There generally must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
o Your home must generally be your principal place of business. However, you can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. (Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.)
• Expenses that relate to a separate structure not attached to the home may qualify for a home office deduction. They will qualify only if the structure is used exclusively and regularly for business.
If you believe you qualify for the deduction, you may choose one of two methods to calculate your home office expense deduction:
o The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
o When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses.
o Direct expenses are deducted in full.
If you have questions about your particular home business tax situation, we’d be happy to sit down and help you figure out how to make the most of this helpful deduction.

02/05/2022

Five things to remember when filing 2021 income tax returns
With the 2021 tax filing season upon us, Teipen CPA Group has a checklist to help you avoid delays in tax return processing and refund delivery. Here’s what to know:
1. Collect all documents before preparing your tax return. In addition to collecting W-2s, Form 1099s and other income-related statements, you’ll need bank and investment statements, mileage, stimulus payments, charitable deductions, and the like.
2. If received, make sure the advance Child Tax Credit (CTC) information is accurate in the following ways:
• Those who received advance CTC payments can check the amount of received payments by using the CTC Update Portal available on IRS.gov.
• Eligible taxpayers who received advance Child Tax Credit payments should file a 2021 tax return to receive the second half of the credit. Eligible taxpayers who did not receive advance Child Tax Credit payments can claim the full credit by filing a tax return.
3. Third Economic Impact Payment letter 6475: The IRS began issuing letters to people who received a third payment in 2021. Here’s what to know:
• Most eligible people already received their stimulus payments. This letter will help individuals determine if they are eligible to claim the Recovery Rebate Credit (RRC) for missing stimulus payments.
• Those who are eligible for RRC must file a 2021 tax return to claim their remaining stimulus amount.
• You can also use IRS online account to view any received Economic Impact Payment amounts.
4. Use e-file and direct deposit to avoid delays. Whether you prepare your own tax return or hire a CPA, taxpayers should electronically file and choose direct deposit as soon as they have everything they need to file an accurate return.
5. Use online resources or ask your CPA before calling the IRS. Phone demand on IRS assistance lines remains at record highs. The IRS urges people to use IRS.gov to get answers to tax questions, check a refund status or pay taxes.

Still have a tax-related question? You are most welcome to call our CPAs and get an answer.

02/03/2022

What’s the difference between taking standard vs. itemized deductions?
This is an important distinction that can have an impact on how much of a tax rebate you receive, says Mike Poynter of Teipen CPA Group.
Due to recent tax law changes -- including increases to the standard deduction -- taxpayers who itemized in the past might want to switch to the standard deduction.
But let’s back up. Taxpayers have two options when completing a tax return:
1. Take the standard deduction or
2. Itemize their deductions.
Most taxpayers use the option that provides them with the lowest overall tax. Here are some details about the two options:
Taking the standard deduction increases slightly every year and varies by filing status.
• The standard deduction amount depends on the taxpayer's filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent.
• Taxpayers who are age 65 or older on the last day of the year and don't itemize deductions are entitled to a higher standard deduction.
• Most filers who use Form 1040 can find their standard deduction on the first page of the form.
• The standard deduction for most filers of Form 1040-SR, U.S. Tax Return for Seniors, is on page 4 of that form.
There are a few exceptions, of course. Not all taxpayers can take a standard deduction, which is discussed in the Instructions for Forms 1040 and 1040-SR. Those taxpayers include:
• Married individuals filing separately, whose spouse itemizes deductions—if one spouse itemizes on a separate return, both must itemize.
• Those who file a tax return for a period of less than 12 months. (Fairly uncommon and often due to a change in their annual accounting period).
• Married filing jointly filers can deduct $600 of cash gifts to q qualified charity – even when they take the standard deduction.
• Individuals who are nonresident aliens or a dual-status aliens. However, nonresident aliens who are married to a U.S. citizen or resident alien can take the standard deduction in certain situations.
Those choosing to itemized deductions will fill out Schedule A, Form 1040, Itemized Deductions, and may claim include:
• State and local income or sales taxes
• Real estate and personal property taxes
• Home mortgage interest
• Mortgage insurance premiums on a home mortgage
• Personal casualty and theft losses from a federally declared disaster
• Gifts to a qualified charity
• Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income
Some itemized deductions, such as the deduction for taxes, may be limited. Taxpayers should review the instructions for Schedule A Form 1040 for more information on limitations, or contact their CPA or registered tax preparer.

01/10/2022

Starting a new business? You likely can deduct startup costs from your federal taxes

Starting your own business can be every bit as tricky as it can be exhilarating. So it’s nice to know that new business owners can very often deduct many start-up costs from their federal business taxes.

To be sure you get all the write offs you deserve, treat all new business expenses as potential deductions – and keep all itemized receipts and invoices.

Which expenses are deductible?
• In general, eligible costs incurred before beginning to operate your new business are classified as capital expenditures that are part of their basis in the business.
• In most cases, your new business can recover costs for assets through depreciation deductions.
• Your business can generally deduct a up to $5,0000 of start-up costs and $5,000 of organizational costs, with the remaining amounts being recovered over a 180 month period.
• This 180-month recovery period starts with the month your business begins to operate active trade or as a business.

Business start-up costs
Start-up costs are amounts your business paid or incurred for creating an active trade or business, or investigating the creation or acquisition of an active trade or business.
They may include amounts paid or incurred in connection with an existing activity engaged in for profit, and to produce income in anticipation of the activity becoming an active trade or business.
Qualifying costs
A start-up cost is recoverable if it meets both of the following requirements:
• It is a cost a business could deduct if they paid or incurred it to operate an existing active trade or business, provided it is in the same field as the one the business entered into.
• It’s also a cost a business pays or incurs before the day their active trade or business begins.
Start-up costs include amounts paid for the following:
• An analysis or survey of potential markets, products, labor supply, transportation facilities, and the like.
• Advertisements for the opening of the business.
• Salaries and wages for employees who are being trained (includes instructor payments).
• Travel and other necessary costs for securing prospective distributors, suppliers, or customers.
• Salaries and fees for executives and consultants, or for similar professional services.
Nonqualifying costs
Start-up costs do not include deductible interest, taxes, or research and experimental costs.
What if you purchase an active business?

• Recoverable start-up costs for purchasing an active trade or business include only investigative costs incurred during a general search for or preliminary investigation of the business.

• These are recoverable costs only if they help in deciding whether or not to purchase a business.

• Costs incurred to purchase a specific business are capital expenses that can't be amortized.

01/10/2022

Non-traditional family? You may qualify for advance child tax credit payments
Families come in all shapes and sizes – and some families may not realize they could receive 2022 child tax credit in the new year. If a family didn’t receive advance child tax credit payments for a qualifying child they can claim for 2021, they may claim the full amount of the allowable child tax credit for that child by filing a 2021 tax return.
That’s why the IRS is urging grandparents, foster parents or people caring for siblings and/or other relatives to check their eligibility.
A qualifying child can be a taxpayer’s:
• son or daughter
• stepchild
• eligible foster child
• siblings, including stepsiblings or half-siblings
• a descendent of any of the above – for example a grandchild, niece or nephew.
Qualifications:
• For tax year 2021, a qualifying child is an individual who does not turn 18 before January 1, 2022 and the individual does not provide more than one-half of his or her own support during 2021.
• An individual — or their spouse (if married filing a joint return) must have a primary residence in one of the 50 states for more than half the year.
• The qualifying child must live with the taxpayer for more than one-half of tax year 2021. (For exceptions to this requirement, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents.)
• The qualifying child must be properly claimed as the taxpayer’s dependent.
• The individual must be a U.S. citizen, U.S. national, or U.S. resident alien.
If a family didn’t receive advance child tax credit payments for a qualifying child they can claim for 2021, they may claim the full amount of the allowable child tax credit for that child by filing a 2021 tax return.
Have questions on whether you or a family member can qualify for this tax credit? If you need more information, feel free to call or email the CPAs at Teipen CPA Group. We can help you get the information you need.

01/04/2022

Here’s what’s to know about the upcoming tax season
The CPAs at Teipen CPA Group strongly recommends that all taxpayers take important actions this month to help them prepare for filing federal tax returns in 2022.
There are new tax credits and deductions related to Economic Impact Payments and advance Child Tax Credit payments that you should be aware of.
Here’s what taxpayers should consider before filing:
Advance Child Tax Credit payments
Families who received advance payments will need to compare the advance Child Tax Credit payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their 2021 tax return.
• In general, taxpayers who received less than the amount for which they're eligible will claim a credit for the remaining amount of Child Tax Credit on this year’s tax return.
• Taxpayers who received more than the amount for which they're eligible may need to repay some or all of the excess payment when they file.
• Eligible families who did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the Child Tax Credit when they file their federal income tax return. (This applies to families who don’t normally need to file a return.)
In January 2022, the IRS will send Letter 6419 with the total amount of advance Child Tax Credit payments taxpayers received in 2021. Be sure to keep this and any other IRS letters about advance Child Tax Credit payments with your tax records.
Economic Impact Payments and Recovery Rebate Credits
Individuals who didn't qualify for the third Economic Impact Payment or did not receive the full amount may still be eligible for the Recovery Rebate Credit based on their 2021 tax information.
• File a 2021 tax return, even if you don't usually file, to claim the credit.
• Taxpayers will also need the amount of their third Economic Impact Payment and any Plus-Up Payments received to calculate their correct 2021 Recovery Rebate Credit amount when they file. Be sure to use the correct payment amounts to help avoid a processing delay that may slow your potential refund.
In early 2022, the IRS will send Letter 6475 out to taxpayers which will contain the total amount of the third Economic Impact Payment and any Plus-Up Payments they have received. Be sure to keep this and any other IRS letters about their stimulus payments with other tax records.
You can also log in to your IRS.gov Online Account to securely access your Economic Impact Payment amounts. Go to IRS.gov/rrc for more information.
2021 Charitable deduction changes
Taxpayers who don't itemize deductions may still qualify to take a charitable deduction of up to $600:
• The deduction is $600 for married taxpayers filing joint returns and up to $300 for all other filers for cash contributions made in 2021 to qualifying organizations.
• For more information on qualifying organizations, check out IRS.go Publication 526, Charitable Contributions.
Direct deposit is the easiest and quickest way to get your refund:
• Direct deposit gives taxpayers access to their refund faster than a paper check.
• Those without a bank account can learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator Tool.
• Veterans should see the Veterans Benefits Banking Program for access to financial services at participating banks.
Got more questions about this year’s tax filing rules and regulations?
You can always call or email us for answers to your questions, whether or not you are a client.
Or go to IRS.gov/getready.

Get ready to file your taxes. See tips that can make filing taxes easier next year. Learn about tax law changes, how to view your tax account information online, and ways to get help.

01/04/2022

Indiana taxpayers are slated to receive a $125 state tax refund
Although it may sound a bit like a scam, this bit of good news is actually completely true, according to Teipen CPA Group Mike Poynter.
Indiana Governor Eric Holcomb announced last month that all Hoosier taxpayers will receive a $125 refund after they file their 2021 taxes.
“Despite a pandemic, Indiana exceeded all expectations and closed the state fiscal year with an unprecedented amount in reserves,” said Governor Holcomb. “We have an obligation to put this money back in the hands of taxpayers instead of leaving it in the hands of government.”
How much overage is in state coffers?
• An estimated $545 million will be given back to approximately 4.3 million Indiana residents.
• The Governor says he is working with the Indiana General Assembly to make an additional 910,000 taxpayers eligible.
• Once legislation passes, the Department of Revenue (DOR) will begin processing payments.
Since the average Indiana taxpayer liability is approximately $1000, this refund represents a 12-to-13 percent one-time tax cut.
Will you still get a refund if you need to file for an extension?
According to Mike Poynter, the Indiana Department of Revenue states that taxpayers who apply for an extension will still receive the payment after they file their return.
The Department of Revenue says they expect to complete preparations of taxpayer refunds by the 2021 filing due date of April 18, 2022. Checks may begin to be mailed as early as May 1, 2022.

07/12/2021

How does a tax offer in compromise work?
An offer in compromise is an agreement between the taxpayer (or business) and the IRS that settles a tax debt for less than the full amount owed. It is an option when a taxpayer can't pay their full income tax bill owed, or when paying the entire tax bill would cause the taxpayer a financial hardship.
How does one begin the offer in compromise process?
The goal of the IRS in offering this program is coming to a unique financial agreement that suits the best interest of both the taxpayer and the agency.

Taxpayers begin by filling out an application. Both business and personal forms can be found on IRS.gov or your CPA can help you begin the process. Since most CPAs have had experience with pulling together the paperwork involved in settling tax bills, they are a great place to start – especially if your small business is in arrears.

Once the taxpayer has filled out the form and the paperwork, the IRS will review the application. The IRS is very circumspect in considering the taxpayer’s unique set of facts and any special circumstances affecting the taxpayer’s ability to pay, including:
• Income
• Expenses
• Asset equity

Individual taxpayers and business owners can use the IRS’s recently updated Offer in Compromise Booklet to learn how an offer in compromise works and decide if it could help them resolve their business or personal tax debt.

The booklet covers everything a taxpayer needs to know about submitting an offer in compromise, including:
• Who is eligible to submit an offer
• How much it costs to apply
• How the application process works

The IRS Offer in Compromise booklet also includes the forms that taxpayers must complete as part of the compromise process. Although the current application fee is $205, taxpayers who meet the definition of a low-income taxpayer don’t have to pay this fee.

The CPAs at Teipen CPA Group can also work on your behalf with the IRS to help navigate the confidential process, and negotiate a settlement – in most cases, in less time than the taxpayer alone can. We’re here to help.

07/12/2021

New Social Security beneficiaries should know benefits may be taxable
Frequently, those new to receiving Social Security benefits are surprised to find out they may pay federal income tax on a portion of their benefits. However, which portion is taxable depends on the taxpayer's income and filing status.
Social Security benefits include monthly retirement, survivor, and disability benefits. They don't include supplemental security income payments, which aren't taxable.
How will you know if you owe?
Mike Poynter, CPA with Teipen CPA Group, suggests determining this in advance of tax season to avoid an unwanted financial surprise. To find out, taxpayers should take half of the Social Security money they collected during the year and add it to their other income (including pensions, wages, interest, dividends, and capital gains).
• If the taxpayer is single and that total comes to more than $25,000, then part of their Social Security benefits may be taxable.
• If they are married filing jointly, they should take half of their Social Security, plus half of their spouse's Social Security, and add that to all their combined income. If that total is more than $32,000, then part of their Social Security may be taxable.
Here’s the IRS breakdown:
50% of a taxpayer's benefits may be taxable if they are -
• Filing single, single, head of household or qualifying widow or widower with $25,000 to $34,000 income.
• Married filing separately and lived apart from their spouse for all of 2020 with $25,000 to $34,000 income.
• Married filing jointly with $32,000 to $44,000 income.
Up to 85% of a taxpayer's benefits may be taxable if they are -
• Filing single, head of household or qualifying widow or widower with more than $34,000 income.
• Married filing jointly with more than $44,000 income.
• Married filing separately and lived apart from their spouse for all of 2020 with more than $34,000 income.
• Married filing separately and lived with their spouse at any time during 2020.
If all this sounds very complicated, you’re not alone! Give one of our Teipen CPA Group CPAs a call, and we’ll help you figure out your (taxable) bottom line.

07/12/2021

Everything you need to know about the Child Tax Credit
The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March, 2021. Normally, the IRS will calculate the payment based on a family’s 2020 tax return, including those who use the Non-filer Sign-up Tool. However if that return is not available because it has not yet been filed or is still being processed, the IRS will instead determine the initial payment amounts using the 2019 return or the information entered using the Non-filers tool that was available in 2020.
The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.
The Treasury Department and the Internal Revenue Service wants those who quality to take advantage of the Child Tax Credit special monthly advance payments scheduled to begin on July 15.
You can find information on the new Child Tax Credit Eligibility Assistant on IRS.gov. By answering a series of questions about yourself and family members, families can quickly determine whether they qualify for the credit.
Although anyone can use this tool, it may be particularly useful to families who don’t normally file a federal tax return. The eligibility assistant works in concert with other features on IRS.gov to help people receive this important credit. The IRS is working hard to deliver the expanded Child Tax Credit, and will be rolling out additional help for taxpayers in the near future.
Step 1:
Visit IRS.gov/childtaxcredit2021 for the most up-to-date information about the credit and the advance payments. Among other things, the page already features a link to:
• Non-filer Sign-up Tool
• Child Tax Credit Eligibility Assistant
• Child Tax Credit Update Portal
For security reasons, the Child Tax Credit Eligibility Assistant does not request any personally-identifiable information for any family member.
Step 2:
After checking the Eligibility Assistant, Non-filer Sign-Up Tool is available to help those who don’t normally file tax returns. This tool, an update of last year’s IRS Economic Impact Payment Non-filers tool, is also designed to help eligible individuals who don’t normally file tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.
What you will be asked for:
• Name, address, and social security numbers
• Qualifying information about their children age 17 and under, their other dependents
• Direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account.
• This is available only on IRS.gov.
The Non-filer Sign-Up tool should not be used by anyone who has already filed a 2019 or 2020 federal income tax return.
Step 3:
• No action needed by most other families. Those who already filed or plan to file 2019 or 2020 income tax returns should not use the Non-filer Sign-Up Tool.
• Once the IRS processes their 2019 or 2020 tax return, the information will be used to determine eligibility and issue advance payments.
• Families who want to claim other tax benefits, such as the Earned Income Tax Credit for low-and moderate-income families, should not use this tool and instead file a regular tax return. For them, the fastest and easiest way to file a return is the Free File system, available only on IRS.gov.
Step 4:
The IRS urges everyone to be on the lookout for scams related to both Advance Child Tax Credit payments and Economic Impact Payments.
Watch out for scams using email, phone calls or texts related to the payments. Remember, the IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental web site.
Community partners can help
The IRS is urging community groups, non-profits, associations, education organizations and anyone else with connections to people with children to share this critical information about the Advance Child Tax Credit as well as other important benefits.
If you know of someone needing assistance in obtaining information related to the Advance Child Tax Credit, give us a call. We will be happy to provide assistance and answer questions.

Find details about the advance Child Tax Credit payments, including how to get them or stop getting them.

07/12/2021

Businesses can now claim the employee retention credit for the first and second quarters 2021
There is new guidance for employers claiming the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, according to TEIPEN CPA Group Mike Poynter, CPA.
Notice 2021-23 explains the changes modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, which affect the first and second calendar quarters of 2021. The changes include:
• an increase in the maximum credit amount
• expansion of the category of employers that may be eligible to claim the credit
• modifications to the gross receipts test
• revisions to the definition of qualified wages, and
• new restrictions on the ability of eligible employers to request an advance payment of the credit.

In essence, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees from December 31, 2020, through June 30, 2021.
Qualified wages are limited to $10,000 per employee, per calendar quarter in 2021. The maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 for the first two calendar quarters of 2021.
Importantly, employers can get the employee retention credit for the first two calendar quarters of 2021 before filing their employment tax returns by reducing employment tax deposits.
If you are a small business, you may request advance payment of the credit on Form 7200, Advance of Employer Credits Due to COVID-19, after reducing deposits. As with any tax program, some limits and eligibility requirements apply. In 2021, for instance, advances are not available for large employers.
There’s a lot to process here, and the business-savvy CPAs at TEIPEN CPA Group are here to help. We can help businesses calculate and claim the employee retention credit for the first two calendar quarters of 2021.
And yes, under the American Rescue Plan Act of 2021, the employee retention credit will be available to eligible employers for wages paid during the third and fourth quarters of 2021. The Department of the Treasury and the IRS will provide further guidance on this later.
If it’s business related, TEIPEN CPA Group is here to help.