The Approachable Accountant

The Approachable Accountant

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Today local nonprofits are raising mon ey through the #GiveChoose campaign, so it see ms like a great time to ta lk about how the money you gi ve is -- or is not -- deductible.

To be deductible, contributions must be ma de to an eligible organization. This mea ns that giving money to little Johnny 's baseball team may be deductible, b ut contributing to a GoFundMe so John ny can go to baseball camp is n ot. Contributions to a political candidate or P AC are not deductible.

Cash contributions from yo ur business do not decrease your bott om line unless you file as a C-co rp. For Schedule C and S-corp file rs, those deductions flow through to yo ur personal return. If you take t he Standard Deduction, the deductible limit on yo ur individual return is $300 single/$600 M FJ for 2021. This provision may go aw ay for 2022.

What about in-kind donations of goo ds and services? It depends. If y ou own a hair salon and dona te salon products, the deductible donation is yo ur cost, not the retail value of t he items. In most cases, the val ue of your time as a volunte er is not deductible (although there a re exceptions), but you can generally dedu ct your out-of-pocket expenses incurred as pa rt of volunteering.

At The Approachable Accountant, we suppo rt Loudoun Cares, an organization dedicated to connecti ng those in need with community resources.

https://www.givechoose/loudouncares/

#LoudounCares
Unclaimed 2018 IRS Refunds Deadline – D id You Know?

The IRS has issued a remind er that time is running out to cla im your 2018 tax refund if y ou did not file a 2018 feder al return. The deadline to file a 2018 I RS return and claim your refund is Apr il 18, 2022. Filing a missed 2018 retu rn may also qualify for the Earn ed Income Tax Credit (EITC) if y ou meet the requirements.

By law, there is a limit ed three year window to claim a refu nd. After that date, unclaimed 2018 feder al tax refunds will become the proper ty of the U.S. Treasury.
Reporting Cryptocurrency Transactions - Did Y ou Know?

If you had any involvement wi th cryptocurrency or other virtual currencies in 20 21, you generally must disclose this activi ty on your tax return. Form 1040 includ es the question, “At any time duri ng 2021, did you receive, sell, exchan ge, or otherwise dispose of any financi al interest in any virtual currency?”

Among oth er situations, you must check the “YE S” box for the virtual currency questi on if any of the following occurr ed in 2021:

- You received cryptocurrency as payme nt for property, goods or services.
- Y ou used cryptocurrency to pay for proper ty, goods or services.
- You received cryptocurren cy for mining or staking activities, or as t he result of a “hard fork.”
- Y ou purchased cryptocurrency through a trading platfo rm or from another individual.
- You so ld cryptocurrency for cash or exchanged it f or another real or virtual currency.
- Y ou gave away or received cryptocurrency in a transacti on that did not qualify as a bo na fide gift.

Because the IRS designates cryptocurren cy as property, any cryptocurrency transaction cou ld have tax impacts. If y ou received cryptocurrency as income, it shou ld be reported just like you wou ld if you had gotten the payme nt in cash. Other cryptocurrency transactions m ay involve a taxable capital gain. Capit al gains must be reported separately fr om ordinary income, and may be tax ed at different rates.

The U.S. Treasury h as significantly stepped up enforcement of cryptocurren cy tax rules since 2020, so t he IRS urges all taxpayers to ful ly disclose their transactions. A tax profession al can help you properly report yo ur cryptocurrency activities, and figure any resulti ng income or capital gains tax.
2021 IRA Contributions Deadline

If you choo se to contribute money to your I RA by April 18, 2022, you m ay designate the contribution for the t ax year 2021. Americans of any a ge may make 2021 IRA contributions, up to $6,0 00 if they are under 50, or up to $7,0 00 if they are 50 or older.

Ma ny taxpayers may deduct contributions to a tradition al IRA. However, if you or yo ur spouse is covered by a workpla ce retirement plan, your contributions may be on ly partially deductible or non-deductible, depending on yo ur income. Roth IRA contributions are n ot deductible, but taxpayers can receive qualifi ed distributions from their Roth IRAs t ax free.

Taxpayers who contribute to IRAs or AB LE (Achieving a Better Life Experience) accoun ts may also qualify for the Saver 's Tax Credit. The credit amount depen ds on a taxpayer's income and fili ng status. Because credits lower tax on a dollar-for-doll ar basis, they may result in great er tax savings than deductions. Eligible taxpaye rs may claim both the traditional I RA contribution deduction and the Saver's Credit.

If you make an IRA contribution by t he April 18th deadline and want to designa te it for 2021, you must info rm the financial institution of this choi ce. A tax professional can help y ou properly document and report your retireme nt plan contributions, to ensure that y ou get all the tax benefits y ou deserve.
Social Security Income and Taxes

If y ou receive Social Security and depending on yo ur total income, you may need to p ay federal income tax on Social Securi ty benefits. Potentially taxable payments include month ly retirement and disability benefits, along wi th survivor benefits.

To determine whether your benefi ts may be subject to federal t ax, first add up your 2021 Soci al Security payments. Then add half of th at amount to your other income f or the year, such as wages, ti ps, pension payments, traditional IRA distributions, intere st, dividends and capital gains. The resulti ng figure is your total income f or the purpose of tax on Soci al Security.

Fifty percent of the benefits m ay be taxable if you are:

- Fili ng single, head of household or qualifyi ng widow or widower with $25,000 to $34,0 00 income.
- Married filing separately and liv ed apart from your spouse for a ll of 2020 with $25,000 to $34,0 00 income.
- Married filing jointly with $32,0 00 to $44,000 income.

Up to 85% of t he benefits may be taxable if y ou are:

- Filing single, head of househo ld or qualifying widow or widower wi th more than $34,000 income.
- Married fili ng jointly with more than $44,000 income .
-
Married filing separately and lived apa rt from your spouse for all of 2021 wi th more than $34,000 income.
- Married fili ng separately and lived with your spou se at any time during 2021.

A t ax professional can help you properly repo rt your Social Security payments, and figu re any tax due on them. Supplement al security income payments are not subje ct to these rules, and are n ot taxable.
Interest Received on 2021 Tax Refunds

Duri ng 2021, the IRS paid interest to ma ny Americans who had to wait long er than usual for their 2020 feder al tax refunds. Unlike the refunds themselv es, most IRS interest payments are taxab le income. However, many people may n ot know that they received an intere st payment, since the IRS often includ ed the interest with a taxpayer's refu nd or applied it to tax owed.

If you received a federal tax refu nd during 2021, you may get Fo rm 1099-INT in the mail from t he IRS, showing any taxable interest pa id to you. (You will not g et this form if the IRS d id not pay you any interest.) Sto re the form with your tax recor ds, so you can accurately report t he interest on your 2021 tax retu rn. You can also access records of I RS payments to you by creating an onli ne account through the IRS website.

A t ax professional can help you determine wheth er any payments you received from t he IRS are taxable, and how to proper ly report all of your interest inco me. Electronically filing an accurate return is t he best way to ensure that y ou receive your 2021 tax refund as quick ly as possible.
Tax-related Text Message Scams – D id You Know?

Scammers continue to use I RS impersonation schemes to steal personal informati on or trick people out of the ir hard-earned money. In 2021, monitoring agenci es saw a dramatic increase in te xt message tax scams, many of th em related to the pandemic.

Several texting sca ms involve messages that appear to be fr om the IRS, claiming that the recipie nt is entitled to a coronavirus “stimul us payment.” The message may have a li nk to a bogus IRS or oth er official-looking website, created to harvest banki ng or other private information. Alternatively, t he scammer may request a fee to he lp collect the supposed stimulus money.

As a ru le, the IRS does not send te xt messages about personal tax matters, exce pt for verification codes for taxpayers loggi ng into their IRS accounts. Do n ot reply and do not click on a ny links.

The IRS also does not conta ct taxpayers via email to request person al or financial information, or leave urge nt or threatening phone messages. If y ou receive a suspicious phone call or messa ge from someone claiming to represent t he IRS, hang up or do n ot reply. Play it safe and conta ct the IRS directly to inquire abo ut the matter.
Social Security Income May Be Taxable

If you receive Social Security and dependi ng on your total income, you m ay need to pay federal income t ax on Social Security benefits. Potentially taxab le payments include monthly retirement and disabili ty benefits, along with survivor benefits.

To determi ne whether your benefits may be subje ct to federal tax, first add up yo ur 2021 Social Security payments. Then a dd half of that amount to yo ur other income for the year, su ch as wages, tips, pension payments, tradition al IRA distributions, interest, dividends and capit al gains. The resulting figure is yo ur total income for the purpose of t ax on Social Security.

Fifty percent of t he benefits may be taxable if y ou are:

- Filing single, head of househo ld or qualifying widow or widower wi th $25,000 to $34,000 income.
- Married fili ng separately and lived apart from yo ur spouse for all of 2020 wi th $25,000 to $34,000 income.
- Married fili ng jointly with $32,000 to $44,000 income.

Up to 85% of the benefits m ay be taxable if you are:

- Fili ng single, head of household or qualifyi ng widow or widower with more th an $34,000 income.
- Married filing jointly wi th more than $44,000 income.
- Married fili ng separately and lived apart from yo ur spouse for all of 2021 wi th more than $34,000 income.
- Married fili ng separately and lived with your spou se at any time during 2021.

A t ax professional can help you properly repo rt your Social Security payments, and figu re any tax due on them. Supplement al security income payments are not subje ct to these rules, and are n ot taxable.

Tax preparation, planning and strategy f or individuals and small businesses.

Operating as usual

03/29/2022

Today local nonprofits are raising mon ey through the campaign, so it see ms like a great time to ta lk about how the money you gi ve is -- or is not -- deductible.

To be deductible, contributions must be ma de to an eligible organization. This mea ns that giving money to little Johnny 's baseball team may be deductible, b ut contributing to a GoFundMe so John ny can go to baseball camp is n ot. Contributions to a political candidate or P AC are not deductible.

Cash contributions from yo ur business do not decrease your bott om line unless you file as a C-co rp. For Schedule C and S-corp file rs, those deductions flow through to yo ur personal return. If you take t he Standard Deduction, the deductible limit on yo ur individual return is $300 single/$600 M FJ for 2021. This provision may go aw ay for 2022.

What about in-kind donations of goo ds and services? It depends. If y ou own a hair salon and dona te salon products, the deductible donation is yo ur cost, not the retail value of t he items. In most cases, the val ue of your time as a volunte er is not deductible (although there a re exceptions), but you can generally dedu ct your out-of-pocket expenses incurred as pa rt of volunteering.

At The Approachable Accountant, we suppo rt Loudoun Cares, an organization dedicated to connecti ng those in need with community resources.

https://www.givechoose/loudouncares/

03/28/2022

Unclaimed 2018 IRS Refunds Deadline – D id You Know?

The IRS has issued a remind er that time is running out to cla im your 2018 tax refund if y ou did not file a 2018 feder al return. The deadline to file a 2018 I RS return and claim your refund is Apr il 18, 2022. Filing a missed 2018 retu rn may also qualify for the Earn ed Income Tax Credit (EITC) if y ou meet the requirements.

By law, there is a limit ed three year window to claim a refu nd. After that date, unclaimed 2018 feder al tax refunds will become the proper ty of the U.S. Treasury.

03/24/2022

Reporting Cryptocurrency Transactions - Did Y ou Know?

If you had any involvement wi th cryptocurrency or other virtual currencies in 20 21, you generally must disclose this activi ty on your tax return. Form 1040 includ es the question, “At any time duri ng 2021, did you receive, sell, exchan ge, or otherwise dispose of any financi al interest in any virtual currency?”

Among oth er situations, you must check the “YE S” box for the virtual currency questi on if any of the following occurr ed in 2021:

- You received cryptocurrency as payme nt for property, goods or services.
- Y ou used cryptocurrency to pay for proper ty, goods or services.
- You received cryptocurren cy for mining or staking activities, or as t he result of a “hard fork.”
- Y ou purchased cryptocurrency through a trading platfo rm or from another individual.
- You so ld cryptocurrency for cash or exchanged it f or another real or virtual currency.
- Y ou gave away or received cryptocurrency in a transacti on that did not qualify as a bo na fide gift.

Because the IRS designates cryptocurren cy as property, any cryptocurrency transaction cou ld have tax impacts. If y ou received cryptocurrency as income, it shou ld be reported just like you wou ld if you had gotten the payme nt in cash. Other cryptocurrency transactions m ay involve a taxable capital gain. Capit al gains must be reported separately fr om ordinary income, and may be tax ed at different rates.

The U.S. Treasury h as significantly stepped up enforcement of cryptocurren cy tax rules since 2020, so t he IRS urges all taxpayers to ful ly disclose their transactions. A tax profession al can help you properly report yo ur cryptocurrency activities, and figure any resulti ng income or capital gains tax.

03/22/2022

2021 IRA Contributions Deadline

If you choo se to contribute money to your I RA by April 18, 2022, you m ay designate the contribution for the t ax year 2021. Americans of any a ge may make 2021 IRA contributions, up to $6,0 00 if they are under 50, or up to $7,0 00 if they are 50 or older.

Ma ny taxpayers may deduct contributions to a tradition al IRA. However, if you or yo ur spouse is covered by a workpla ce retirement plan, your contributions may be on ly partially deductible or non-deductible, depending on yo ur income. Roth IRA contributions are n ot deductible, but taxpayers can receive qualifi ed distributions from their Roth IRAs t ax free.

Taxpayers who contribute to IRAs or AB LE (Achieving a Better Life Experience) accoun ts may also qualify for the Saver 's Tax Credit. The credit amount depen ds on a taxpayer's income and fili ng status. Because credits lower tax on a dollar-for-doll ar basis, they may result in great er tax savings than deductions. Eligible taxpaye rs may claim both the traditional I RA contribution deduction and the Saver's Credit.

If you make an IRA contribution by t he April 18th deadline and want to designa te it for 2021, you must info rm the financial institution of this choi ce. A tax professional can help y ou properly document and report your retireme nt plan contributions, to ensure that y ou get all the tax benefits y ou deserve.

03/16/2022

Social Security Income and Taxes

If y ou receive Social Security and depending on yo ur total income, you may need to p ay federal income tax on Social Securi ty benefits. Potentially taxable payments include month ly retirement and disability benefits, along wi th survivor benefits.

To determine whether your benefi ts may be subject to federal t ax, first add up your 2021 Soci al Security payments. Then add half of th at amount to your other income f or the year, such as wages, ti ps, pension payments, traditional IRA distributions, intere st, dividends and capital gains. The resulti ng figure is your total income f or the purpose of tax on Soci al Security.

Fifty percent of the benefits m ay be taxable if you are:

- Fili ng single, head of household or qualifyi ng widow or widower with $25,000 to $34,0 00 income.
- Married filing separately and liv ed apart from your spouse for a ll of 2020 with $25,000 to $34,0 00 income.
- Married filing jointly with $32,0 00 to $44,000 income.

Up to 85% of t he benefits may be taxable if y ou are:

- Filing single, head of househo ld or qualifying widow or widower wi th more than $34,000 income.
- Married fili ng jointly with more than $44,000 income .
-
Married filing separately and lived apa rt from your spouse for all of 2021 wi th more than $34,000 income.
- Married fili ng separately and lived with your spou se at any time during 2021.

A t ax professional can help you properly repo rt your Social Security payments, and figu re any tax due on them. Supplement al security income payments are not subje ct to these rules, and are n ot taxable.

03/14/2022

Interest Received on 2021 Tax Refunds

Duri ng 2021, the IRS paid interest to ma ny Americans who had to wait long er than usual for their 2020 feder al tax refunds. Unlike the refunds themselv es, most IRS interest payments are taxab le income. However, many people may n ot know that they received an intere st payment, since the IRS often includ ed the interest with a taxpayer's refu nd or applied it to tax owed.

If you received a federal tax refu nd during 2021, you may get Fo rm 1099-INT in the mail from t he IRS, showing any taxable interest pa id to you. (You will not g et this form if the IRS d id not pay you any interest.) Sto re the form with your tax recor ds, so you can accurately report t he interest on your 2021 tax retu rn. You can also access records of I RS payments to you by creating an onli ne account through the IRS website.

A t ax professional can help you determine wheth er any payments you received from t he IRS are taxable, and how to proper ly report all of your interest inco me. Electronically filing an accurate return is t he best way to ensure that y ou receive your 2021 tax refund as quick ly as possible.

03/09/2022

Tax-related Text Message Scams – D id You Know?

Scammers continue to use I RS impersonation schemes to steal personal informati on or trick people out of the ir hard-earned money. In 2021, monitoring agenci es saw a dramatic increase in te xt message tax scams, many of th em related to the pandemic.

Several texting sca ms involve messages that appear to be fr om the IRS, claiming that the recipie nt is entitled to a coronavirus “stimul us payment.” The message may have a li nk to a bogus IRS or oth er official-looking website, created to harvest banki ng or other private information. Alternatively, t he scammer may request a fee to he lp collect the supposed stimulus money.

As a ru le, the IRS does not send te xt messages about personal tax matters, exce pt for verification codes for taxpayers loggi ng into their IRS accounts. Do n ot reply and do not click on a ny links.

The IRS also does not conta ct taxpayers via email to request person al or financial information, or leave urge nt or threatening phone messages. If y ou receive a suspicious phone call or messa ge from someone claiming to represent t he IRS, hang up or do n ot reply. Play it safe and conta ct the IRS directly to inquire abo ut the matter.

03/07/2022

Social Security Income May Be Taxable

If you receive Social Security and dependi ng on your total income, you m ay need to pay federal income t ax on Social Security benefits. Potentially taxab le payments include monthly retirement and disabili ty benefits, along with survivor benefits.

To determi ne whether your benefits may be subje ct to federal tax, first add up yo ur 2021 Social Security payments. Then a dd half of that amount to yo ur other income for the year, su ch as wages, tips, pension payments, tradition al IRA distributions, interest, dividends and capit al gains. The resulting figure is yo ur total income for the purpose of t ax on Social Security.

Fifty percent of t he benefits may be taxable if y ou are:

- Filing single, head of househo ld or qualifying widow or widower wi th $25,000 to $34,000 income.
- Married fili ng separately and lived apart from yo ur spouse for all of 2020 wi th $25,000 to $34,000 income.
- Married fili ng jointly with $32,000 to $44,000 income.

Up to 85% of the benefits m ay be taxable if you are:

- Fili ng single, head of household or qualifyi ng widow or widower with more th an $34,000 income.
- Married filing jointly wi th more than $44,000 income.
- Married fili ng separately and lived apart from yo ur spouse for all of 2021 wi th more than $34,000 income.
- Married fili ng separately and lived with your spou se at any time during 2021.

A t ax professional can help you properly repo rt your Social Security payments, and figu re any tax due on them. Supplement al security income payments are not subje ct to these rules, and are n ot taxable.

I’m not like other accountants.

I help individuals and small business es use and understand tax strategies to p ay the least tax legally possible. I d ig for deductions and research possibilities li ke every return was my own, a nd offer suggestions for minimizing your t ax liability in the year ahead.

I help my business clients understa nd that the end game of go od accounting is more than just a t ax return. Well designed, current accounting practic es provide decision-ready financial information so y ou know whether it’s time to acce pt a new project, hire a n ew employee, or open a new locati on.

Too many accountants are too bu sy building empires to worry about yo ur business. They disregard your potential a nd decline your business if your month ly contract won’t be in the thousan ds. At the same time, they wa nt to automate everything so they c an scale their businesses and grow ri ch -- and guess what happens to person al service?

While other accountants are busy buildi ng empires, I’m busy building relationships.

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Happy St. Patrick's Day from T he Approachable Accountant
The Approachable Accountant

Location

Products

Tax planning, tax prep (individuals & sma ll business), bookkeeping, management accounting

Website

Address


880 Harrison Street SE
Leesburg, VA
20175

Opening Hours

Monday 8am - 4pm
Tuesday 8am - 5pm
Wednesday 8am - 5pm
Thursday 8am - 5pm
Friday 8am - 4pm
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