With the start of the new tax year, it’s critical that we all get our financial houses in order. What follows is our Hot Tip Tuesday column from 2019 concerning the Tax Cuts and Jobs Act that took effect January 1, 2018. Its tips remain timeless, but be sure to attend our webinar An Inside Look at the IRS and Tax Saving Strategies—presented February 1 at 2:00 pm (EST) by IRS Problem Solvers Phil Liberatore, CPA and David Maracine, CPA—to discover what has recently changed and to learn valuable tax tips.
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Tips for 2022:
1. Sooner really is better. Start gathering your paperwork. Of course, you already have all your business expenses entered into a spreadsheet or software program, and all the receipts to back them up in a file, right? If you use an accountant, get in touch to make an appointment, find out what you will need, and send over your paperwork. It’s always a good idea to get everything filled out in advance, so you know whether you owe or are getting a refund. If it’s the former, you can wait until the deadline to file with the IRS; if it’s the latter, put it in the mail immediately and get your check. (Filing early also helps protect you from fraud – see #4 below.)
2. Be organized. The more organized you are, the more deductions you can claim and the faster you can file. It’s not necessary to tape each receipt into a scrapbook and file them in chronological order, but storing all your business expenses in one file—and keeping a running tally of the totals for each category in QuickBooks or even Excel—takes just a few minutes and goes a long way toward making the process simple when April 15 rolls around.
3. Keep your data safe. This is prime time for scammers, who love to access the Social Security numbers of unsuspecting folks and beat you to the punch by filing for your refund. So always be sure to use a secure server when filing taxes or sending information to an accountant. Ask about the steps he or she takes to guard your personal information and whether the information is backed up and stored safely.
4. If the phone rings, it’s not the IRS calling. If you ever receive a call from the IRS telling you that you owe money for taxes or a threatening email asking for personal information, just ignore it. The IRS contacts taxpayers only through the address on its tax forms.
Here are some of the law’s highlights, according to Phil Liberatore:
For W-2 Income Earners
- There is NO penalty for not having health insurance coverage.
- Miscellaneous tax deductions (claimed on Schedule A) will NO longer be tax deductible. That means all unreimbursed work-related expenses (home office, business travel, meals, business use of telephone, membership dues and subscriptions) are no longer deductible.
For Incorporated Travel Agents and Sole-Proprietor Travel Agents
- A NEW 20% deduction on income from pass-through income entities (Schedule C, LLC, S-Corp, Partnership) for Qualified Businesses Income of $315,000 (married) or $157,500 (single).
- TAX SAVINGS TIP: CONSIDER INCORPORATING. The Schedule C is subject to a higher level of scrutiny because it’s essentially the entry/beginner level for closely-held businesses. There is an overall assumption that preparation of a Schedule C comes with a lower level of proficiency with Tax Law. It’s presumed that these taxpayers are more prone to commit mistakes and typically have co-mingling of personal accounts with business expenses. Consequently, it is vital that you seek the advice of a CPA or tax attorney.
One final tip…
And we can’t say it enough: it’s always a good idea to seek the advice of a certified public accountant or other tax professional to help you avoid making costly mistakes.
NOTE: The information and opinions provided in this article, the upcoming tax webinar, and related materials are not intended to constitute advice of any kind or the rendering of consulting, or other professional services. The Travel Institute does not endorse but merely suggests all individuals research the proposed advice or actions as it may relate to their individual interests.
This week’s Hot Tip Tuesday was provided by Phil Liberatore, CPA and includes information contained in a Travel Market Report article.
