COVID-19 has had an unprecedented impact on all aspects of American businesses, but perhaps none have been as severely affected as small business owners. Surviving this disaster will require more than just time: you will need to take a pragmatic view of what has happened and what steps you are willing and able to take in order to bounce back. Here are our suggestions:
January 2 – Time to Call for Your Tax Appointment
January is the beginning of tax season. If you have not made an appointment to have your taxes prepared, we encourage you to do so before the calendar becomes too crowded.
January 10 – Report Tips to Employer
If you are an employee who works for tips and received more than $20 in tips during December, you are required to report them to your employer on IRS Form 4070 no later than January 10.
January 15 – Individual Estimated Tax Payment Due
It’s time to make your fourth quarter estimated tax installment payment for the 2019 tax year.
January 31 – Individuals Who Must Make Estimated Tax Payments
If you didn’t pay your last installment of estimated tax by January 15, you may choose (but aren’t required) to file your income tax return (Form 1040 or Form 1040-SR) for 2019 by January 31. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of the last installment. If you can’t file and pay your tax by January 31, file and pay your tax by April 15.
January 2020 Business Due Dates
January 15 – Employer’s Monthly Deposit Due
If you are an employer and the monthly deposit rules apply, January 15 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for December 2019. This is also the due date for the nonpayroll withholding deposit for December 2019 if the monthly deposit rule applies. Employment tax deposits must be made electronically (no paper coupons), except employers with a deposit liability under $2,500 for a return period may remit payments quarterly or annually with the return.
January 15 – Farmers and Fishermen
Pay your estimated tax for 2019 using Form 1040-ES. You have until April 15 to file your 2019 income tax return (Form 1040 or Form 1040-SR). If you don’t pay your estimated tax by January 15, you must file your 2019 return and pay any tax due by March 2, 2020, to avoid an estimated tax penalty.
January 31 – 1099-MISCs Due to Service Providers & the IRS
If you are a business or rental property owner and paid $600 or more to individuals (other than employees) as nonemployee compensation during 2019, you are required to provide Form 1099 to those workers by January 31. “Nonemployee compensation” can mean payments for services performed for your business or rental by an individual who is not your employee, commissions, professional fees and materials, prizes and awards for services provided, fish purchases for cash, and payments for an oil and gas working interest. In order to avoid a penalty, copies of the 1099s also need to be sent to the IRS by January 31, 2020. The 1099s must be submitted on optically scannable (OCR) forms. This firm prepares 1099s in OCR format for submission to the IRS with the 1096 submittal form. This service provides both recipient and file copies for your records. A business or individual who is required to file 250 or more information returns (i.e., 1099s among others) must file those forms electronically. Please call this office for preparation assistance.
January 31 – Form 1098 and Other 1099s Due to Recipients
Form 1098 (Mortgage Interest Statement) and Forms 1099, other than 1099-MISC when box 7 is used, are also due to recipients by January 31. The IRS’ copy is not due until February 28, 2020, or April 1, 2020 if electronically filed. These 1099s may be reporting the following types of income:
- Dividends and other corporate distributions
- Amounts paid in real estate transactions
- Amounts paid in broker and barter exchange transactions
- Payments to attorneys
- Payments of Indian gaming profits to tribal members
- Profit-sharing distributions
- Retirement plan distributions
- Original issue discount
- Prizes and awards
- Medical and health care payments
- Debt cancellation (treated as payment to debtor)
January 31 – Employers – W-2s Due to All Employees & the Government
EMPLOYEE’S COPY: All employers need to give copies of the W-2 form for 2019 to their employees. If an employee agreed to receive their W-2 form electronically, post it on a website and notify the employee of the posting. GOVERNMENT’S COPY: W-2 Copy A and Transmittal Form W-3, whether filed electronically or by paper, are due January 31 to the Social Security Administration.
January 31 – File Form 941 and Deposit Any Undeposited Tax
File Form 941 for the fourth quarter of 2019. Deposit any undeposited Social Security, Medicare and withheld income tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return.
January 31 – File Form 943
All farm employers should file Form 943 to report Social Security, Medicare taxes and withheld income tax for 2019. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.
January 31 – W-2G Due from Payers of Gambling Winnings
If you paid either reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of the W-2G form for 2019.
January 31 – File 2019 Return to Avoid Penalty for Not Making 4th Quarter Estimated Payment
If you file your prior year’s individual income tax return and pay any tax due by this date, you need not make the 4th Quarter Estimated Tax Payment that was otherwise due earlier in January.
January 31 – File Form 940 – Federal Unemployment Tax
File Form 940 (or 940-EZ) for 2019. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if
you deposited the tax for the year in full and on time, you have until February 10 to file the return.
January 31 – File Form 945
File Form 945 to report income tax withheld for 2019 on all non-payroll items, including back-up withholding and withholding on pensions, annuities, IRAs, gambling winnings, and payments of Indian gaming profits to tribal members. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 10 to file the return.
Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.
1300 SW 5th Avenue
Portland, Oregon 97201
Throughout your life there will be certain significant occasions that will impact not only your day-to-day living but also your taxes. Here are a few of those events:
“Home office” is a type of tax deduction that applies to the business use of a home; the space itself may not actually be an office. One of the following must apply to be able to deduct home office expenses.
If So, Your 20% Flow-Through Tax Deduction May Be Limited
- 20% Flow-Through Deduction
- Qualified Trade or Business
- Specified Service Trade or Business
- Deduction Table
- Listing of Service Businesses
- Specified Service Trade or Business
- Sec. 199A Deduction
- Defined Contribution Retirement Plans
- Defined Benefit Retirement Plans
- Tax Savings
- Home Office
- Actual-Expense Method
- Simplified Method
- Income Limitation
- Employee Deduction
“Home office” is a type of tax deduction that applies to the business use of a home; the space itself may not actually be an office. This category also includes using part of a home for storing inventory (e.g., for a wholesale or retail business for which the home is the only fixed location); as a day care center; as a physical meeting place for interacting with customers, patients, or clients; or the principal place of business for any trade or business.
Generally, except when used to store inventory, an office area must be used on a regular and continuing basis and exclusively restricted to the trade or business (i.e., no personal use). Two methods can be used to determine a home-office deduction: the actual-expense method and the simplified method.
Actual-Expense Method – The actual-expense method prorates home expenses based on the portion of the home that qualifies as a home office; this is generally based on square footage. These prorated expenses include mortgage interest, real property taxes, insurance, heating, electricity, maintenance, and depreciation. In the case of a rented home, rent replaces the interest, tax, and depreciation expenses. Aside from prorated expenses, 100% of directly related costs, such as painting and repair expenses specific to the office, can be deducted.
Simplified Method – The simplified method allows for a deduction equal to $5 per square footage of the home that is used for business, up to a maximum of 300 square feet, resulting in a maximum simplified deduction of $1,500.
Even if you qualify for a home-office deduction, your deduction is limited to the business activity’s gross income—not, as many people mistakenly believe, its net income. The gross-income limitation is equal to the gross sales minus the cost of goods sold. This amount is deducted on a self-employed individual’s business schedule.
The good news is that, under the tax reform, the home-office deduction is still allowed for self-employed taxpayers. The bad news is that this deduction is no longer available for employees, at least for 2018 through 2025. The reason for this change is that, for an employee, a home office is considered an employee business expense (a type of itemized deduction); Congress suspended this deduction as part of the tax reform.
If you have concerns or questions about how the home-office deduction applies to your specific circumstances, please give this office a call.
Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler NW is to earn our clients trust as their primary business and financial advisors.
1300 SW 5th Avenue
Portland, Oregon 97201
- Payroll Withholding
- 2018 Tax Projection
- Adjusting Withholding
With all of the tax reform changes and the corresponding reductions in most taxpayers’ income tax withholding, there are serious concerns that the reduction in withholding, although providing more take-home pay now, could end up resulting in unexpected taxes due at tax time next year. For that reason, taxpayers should be overly cautious about their payroll withholding for 2018. One need only look at the W-4 instructions to realize that an individual without any substantial tax training can quickly become lost when filling out the worksheets. It is not business as usual. Read more
Article by Jared Hecht | Found on Entrepreneur
If you’re a business owner, there are dozens of reasons to have a credit card. For one thing, they are a great way to keep track of all your business expenses in one place. They also offer opportunities to earn points or rewards on purchases you would make anyway. Not to mention, they can be an excellent option for financing your business, especially if you are in the startup phase and can’t yet qualify for a small business loan. Read more
Article By Sarah Landrum | Found on Forbes
Millennials. They grow up so fast. America’s “Generation Y” is now moving into management roles in the workplace. They’re also starting families. And all this “grown-up stuff” inevitably means one thing for them — Goodbye, work-life balance.
The generation who works harder for less money than Boomers now needs to juggle the responsibilities of gainful employment as well as leading their households. One ever-more-popular solution for reclaiming a few hours throughout the week is working from home. And millennials are making it work for them in a big way.
Right now, about a third of working millennials say achieving and maintaining this balance feels out of reach, which is probably why, as of 2015, the average worker in the U.S. telecommutes to work two days out of each month and why WFH has risen in popularity by 80% in just a little over 10 years. Read more