K. David Johnson, CPA, PC

11/21/2023

Here's some good news for those of you worried about the new 1099-K rules that were scheduled to begin this year (2023).

IRS announces delay in Form 1099-K reporting threshold for third-party platform payments for 2023; plans for a threshold of $5,000 in 2024 to phase in implementation

WASHINGTON — Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the Internal Revenue Service today released Notice 2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold for third-party settlement organizations for calendar year 2023.

As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.

Given the complexity of the new provision, the large number of individual taxpayers affected and the need for stakeholders to have certainty with enough lead time, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP).

10/04/2023

What the IRS is doing and what you can do to avoid Employee Retention Credit scams

The IRS shared new steps the agency is taking to prevent honest taxpayers from falling victim to Employee Retention Credit (ERC) scams. The IRS continues to warn small businesses about aggressive promoters encouraging filing potentially ineligible claims. The IRS urges small businesses to check with a trusted tax professional about ERC instead of relying on a promotion company.

The steps include a moratorium on processing new ERC claims through at least the year’s end to prevent further abuse from predatory promoters using the ERC to scam businesses and organizations. Special withdrawal options and settlement initiatives are being prepared to help businesses that have been misled into claim the ERC. In addition, the IRS understands the valuable impact of the ERC credit and is working to process valid ERC claims filed before the moratorium, but with increased scrutiny.

New resources to help businesses navigate complex ERC

Special eligibility checklist. The IRS created a new ERC eligibility checklist that provides a quick, high-level way for employers to figure out if they might qualify to claim the ERC or if they potentially need to resolve an improper claim. Given that some small businesses may have been misled by aggressive promoters, this checklist is an important reference tool to use along with checking with a trusted tax professional.
New FAQs. The IRS also updated the Frequently asked questions about ERC with new questions and answers.
Be aware of the warning signs of aggressive promotion for the ERC. Aggressive tactics are a red flag.

Be sure to check IRS.gov/ERC for updates and ways to report a scam involving ERC, which is also sometimes called the Employee Retention Tax Credit or ERTC.

The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021.

09/15/2023

VA residents. The VA General Assembly has reinstated the Sales Tax Holiday for school supplies, clothing, footwear, EnergyStar items, and some hurricane preparedness items.

It will be for 3 days starting Oct 20, 2023.

08/26/2023

Saturday Strategy

Reflect and Learn:

Begin by reflecting on the past week's successes and challenges. Extract valuable lessons that will inform your strategic decisions moving forward.







Equipping Leaders | Transforming Teams
www.LEADwell.Agency

08/22/2023

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08/12/2023

06/19/2021

Really looking forward to the upcoming Leadership Coaching Group.

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01/24/2021

A CONVERSATION ABOUT PERCEIVED VALUE:

A customer asked a contractor friend of mine how much it would cost to do this project.

My friend gave him a proposal: $4500

The customer responded: That’s seems really high.

My friend asked: What do you think is a reasonable price for this job?

The customer answered: $2500 maximum

My friend responded: Ok, then I invite you to do it yourself.

The customer answered: I don't know how to.

My friend responded: Alright, then how about for $2500 I'll teach you how to. So besides saving you $2000, you'll learn valuable skills that will benefit you in the future.

The customer answered: Sounds good! Let’s do it!

My friend responded: Great! To get started, you are going to need some tools. You will need a chop saw, table saw, cordless drill, bit set, router, skill saw, jig saw, tool belt, hammer, etc..

The customer answered: But I don't have any of those tools and I can't justify buying all of these for one job.

My friend responded: Ok. Well then for an additional $300 I can rent my tools to you to use for this project.

The customer answered: Okay. That’s fair.

My friend responded: Great! We will start the project on Monday.

The customer answered: I work Monday through Friday. I’m only available on the weekends.

My friend responded: If you want to learn from me then you will need to work when I work. This project will take 3 days so you will need to take 3 days off work.

The customer answered: That means I’m going to have to sacrifice my pay for 3 days or use my vacation time!

My friend responded: That’s true. Remember, when you do a job yourself you need to account for unproductive factors.

The customer answered: What do you mean by that?

My friend responded: Doing a job completely from start to finish includes time spent to plan the project, pick up materials, travel time, gas, set up time, clean up, and waste disposal amongst other things. That’s all in addition to the actual project itself. And speaking of materials, that’s where we will start on Monday so I need you to meet me at the lumberyard at 6:00am.

The customer answered: At 6am?!! My work day doesn’t usually start until 8am!

My friend responded: Well then you’re in luck! My plan is to start on the deck build by 8am. But to do so we have to start at 6am to get materials picked up, loaded and delivered to your job site.

The customer answered: You know, I’m realizing that a lot more goes in to a job than what a customer sees in the finished project. Your proposal of $4500 is very reasonable. I would like you to handle the project.

CONCLUSION:

When you pay for a job, especially a custom job, (whether it’s a physical project or digital project) you pay not only for the material and the work to be completed. You also pay for:

✔️ Knowledge
✔️ Experience
✔️ Custom Skills
✔️ Tools
✔️ Time to plan
✔️ Time to prepare
✔️ Professionalism
✔️ Work Ethic
✔️ Excellence
✔️ Discipline
✔️ Commitment
✔️ Integrity
✔️ Taxes
✔️ Licenses
✔️ Sacrifices
✔️ Liabilities
✔️ Insurance

If you request a proposal for custom work to be done, please don’t disrespect a service provider by trying to get them to lower their prices.

If their proposal exceeds your budget, there’s nothing wrong with getting other proposals.

Just remember.. you get what you pay for.

👉🏼 SERVICE PROVIDERS: Know your worth and be confident in it.

👉🏼 CONSUMERS: Recognize their worth and be respectful of it.

Sharing this to support all my friends, family and clients who are Entrepreneurs, Business Owners and Tradesman.

08/03/2020

What taxpayers should do if they get a letter or notice from the IRS.

Every year the IRS mails letters or notices to taxpayers for many different reasons.

Here are some do’s and don’ts for taxpayers who receive one:

Don’t ignore it. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do.

Don’t panic. The IRS and its authorized private collection agencies do send letters by mail. Most of the time, all the taxpayer needs to do is read the letter carefully and take the appropriate action.

Don’t reply unless instructed to do so. There is usually no need for a taxpayer to reply to a notice unless specifically instructed to do so. On the other hand, taxpayers who owe should reply with a payment. IRS.gov has information about payment options.

Do take timely action. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return. Acting timely could minimize additional interest and penalty charges.

Do review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records. NOTE: Often notices of taxes owed are INCORRECT. Do NOT just pay them, review the information carefully.

Do respond to a disputed notice. If a taxpayer doesn’t agree with the IRS, they should mail a letter explaining why they dispute the notice. They should mail it to the address on the contact stub included with the notice. The taxpayer should include information and documents for the IRS to review when considering the dispute. People should allow at least 30 days for the IRS to respond. NOTE: With the prolonged shutdown, IRS responses may take much longer.

Do remember there is usually no need to call the IRS. If a taxpayer must contact the IRS by phone, they should use the number in the upper right-hand corner of the notice. The taxpayer should have a copy of their tax return and letter when calling the agency. If you're unsure about the tax issue, we recommend you get professional assistance in dealing with the IRS.

Do avoid scams. The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure if they owe money to the IRS can view their tax account information on IRS.gov.

07/28/2020

Special tax benefits for members of the military and their families

Members of the military may qualify for special tax benefits. For instance, they don’t have to pay taxes on some types of income. Special rules could lower the tax they owe or allow them more time to file and pay their federal taxes.

Here are some of these special tax benefits:

Combat pay exclusion: If someone serves in a combat zone, part or all of their pay is tax-free. This also applies to people working in an area outside a combat zone when the Department of Defense certifies that area is in direct support of military operations in a combat zone. There are limits to this exclusion for commissioned officers.

Other nontaxable benefits: Base allowance for housing, base allowance for subsistence and uniform allowances are among several government pay items excluded from gross income, which means they are not taxed.

Moving expenses: Some non-reimbursed moving expenses may be tax deductible. To deduct these expenses, the taxpayer must be a member of the Armed Forces on active duty and their move must be due to a military order or result of a permanent change of station.

Deadline extensions: Some members of the military – such as those who serve overseas – can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.

Earned income tax credit: Special rules allow military members who get nontaxable combat pay to choose to include it in their taxable income. One reason they might do this is to increase the amount of their earned income tax credit. People who qualify for this credit could owe less tax or even get a larger refund.

Joint return signatures: Both spouses must normally sign a joint income tax return. However, if military service prevents that from happening, one spouse may be able to sign for the other or get a power of attorney. Service members may want to consult with their installation’s legal office to see if a power of attorney is right for them.

Reserve and National Guard travel: Members of a reserve component of the Armed Forces may be able to deduct their unreimbursed travel expenses on their return. In order to do so, they must travel more than 100 miles away from home in connection with their performance of services as a member of the reserves.

ROTC allowances: Some amounts paid to ROTC students in advanced training are not taxable. However, active duty ROTC pay is taxable. This includes things like pay for summer advanced camp.

07/16/2020

How taxpayers can quickly and easily check their refund status

Taxpayers can use the Where’s My Refund? tool to start checking on the status of refund 24 hours after the IRS acknowledges receipt of the taxpayer’s e-filed tax return. Currently, the IRS is experiencing delays in processing paper tax returns due to limited staffing as a result of COVID-19.

The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who filed a paper tax return and expect a refund may experience a significant delay beyond the normal time frame of four to six weeks from the time they mailed the return. The IRS will process these returns in the order received and there is no need to file a second tax return or call the IRS.

Taxpayers can access the Where’s My Refund? tool two ways:
•Visiting IRS.gov
•Downloading the IRS2GO app

To use the tool, taxpayers will need:
•Their Social Security number or Individual Taxpayer Identification Number
•Tax filing status
•The exact amount of the refund claimed on their tax return

The tool displays progress in three phases:
•Return received
•Refund approved
•Refund sent

The tool is updated once every 24 hours, usually overnight, so there’s no need to check the status more often.

Where’s My Refund? follows a tax return from receipt to completion. It will tell the taxpayer when their return is in received status and if the refund is in approved or sent status. When the status changes to approved, it means the IRS is preparing to send the refund as a direct deposit to the taxpayer’s bank account or directly to the taxpayer in the mail by check to the address used on their return. Taxpayers should wait five days after the IRS sends the refund as a direct deposit to check with their bank. It could take several weeks before a refund check is received by mail.

Taxpayers who file an amended return should check out the Where’s My Amended Return? tool.