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Find Qualified Tax Help

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The 2021 income tax filing deadline is on April 18th, less than five weeks away. Whether you’ve tried to prepare your own taxes or weren’t happy with your last tax preparer, you might want to find a tax preparer to help you out. Taxes can be complicated, and the rules change every year. Tax rule changes over the last few years were head-spinning, even for experienced tax pros.

Once you decide to get tax help, it’s essential to find qualified tax help. Why does this matter to you? Because you, the taxpayer, are responsible for all the information on your income tax return, no matter who prepared it. Hiring a qualified tax preparer who keeps up with all of the tax rule changes is a nonnegotiable requirement.

How do you find a qualified and experienced professional to prepare and file your income tax returns? Well, you can ask friends, hit the Internet, or head to the local tax preparation office to get the names of tax professionals to interview. Plan to interview two or three recommended tax pros to feel confident that she or he is qualified and that you feel comfortable interacting with her or him.

Follow these five tips to find qualified tax help:

  1. Ask about professional credentials, such as a Certified Public Accountant (CPA) or an Enrolled Agent (EA). Credentialed return preparers are required to fulfill annual continuing education. The IRS maintains a Directory of Federal Return Preparers with their credentials and qualifications at https://irs.treasury.gov/rpo/rpo.jsf.
  2. Verify that the preparer has a Preparer Tax Identification Number (PTIN) and enters it on your return that is electronically filed with the IRS. Tax preparers who charge a fee are required to have a PTIN and to file returns electronically or submit a valid reason for paper filing the return.
  3. Inquire about the tax preparer’s education and training, and how she or he keeps up with tax law changes and IRS processes. Tax pros who are not a CPA or EA should still get annual tax updates to keep up their knowledge.
  4. Ask about service fees and get a cost estimate in writing. Avoid tax preparers who base their fees on a percentage of the refund, or who want their fee paid by direct deposit from your refund. These are both unethical practices prohibited by IRS regulations.
  5. Make sure the tax preparer is available all year, even after tax season is over, in case you need her or him. For example, notices can come from tax agencies any time of the year. Tax projections sometimes need refreshing before estimated tax payments are due again.

Feeling confident about the tax services you get starts with selecting a qualified tax preparer who keeps up with tax law changes. Whether that person is a CPA or an EA, or not, following the five tips above are a good start to get qualified tax help. Need more details? The IRS has them for you at https://www.irs.gov/tax-professionals/choosing-a-tax-professional.

Advance Child Tax Credit Surprise

Many taxpayers with qualifying children received Advance Child Tax Credit (CTC) payments from July to December 2021. Advance payments of the CTC were part of the $1.9 trillion American Rescue Plan. Eligible families received monthly payments of up to $300 per qualifying child to help them bridge the financial gap caused by the COVID-19 pandemic. Payments were processed by the IRS using taxpayer information they already had on file.

Advance CTC payments were just that; an advance payment of the tax credit that would ordinarily be received this tax filing season, when income tax returns are filed for 2021. However, many taxpayers who are used to getting a federal tax refund could be in for a surprise when they go to file their 2021 return. Their expected refund is a lot less than they are used to getting. The reason? They got part of their tax refund in the form of six-monthly checks or direct deposits during the last half of 2021.

The tax pro-community, including me, wasn’t against the idea of advancing CTC payments to help parents with their monthly expenses. Actually, it was a terrific idea. We were concerned about the communication – or lack thereof – about how the advance payments would reduce the credit amount reported on the taxpayer’s return. Lower federal tax refunds during filing season were not explained clearly enough for most impacted taxpayers to understand.

Failing to manage expectations for a lower federal refund has resulted in an abundance of Advance Child Tax Credit Surprises. For some people, a lower refund is merely an inconvenience or an annoyance. But for others, it could create financial hardship or personal debt. For now, it doesn’t look like the Advance CTC will be reenacted. If it is, the IRS has an option to decline the advance payments and determine the credit amount when filing a federal income tax return. More information about the Advance CTC is on the IRS website at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.

They must be getting a lot of questions because the IRS also posted answers to Frequently Asked Questions about the filing of 2021 taxes this season with Advance CTC. Hopefully, your questions are addressed here https://www.irs.gov/credits-deductions/filing-season-2021-child-tax-credit-frequently-asked-questions.

Home Office Deductions

The home office deduction topic often comes up when I speak with business owners. It’s been an even more popular subject in the last two years when COVID-19 has so many more people working from home. The thing is, however, everyone who works at home isn’t eligible for a home office deduction, even if she or he owns a business. As often happens when taxes are concerned, many rules apply for taking home office deductions.

Ask yourself these two questions to see if you are eligible for a home office deduction:

  1. Who is eligible for a home office deduction?

Only individuals who own a business can be eligible for the deduction. Yes, some employees used to be eligible under special circumstances, but those rules changed at the end of 2017. Now, only business owners who use space in her or his home exclusively and regularly to substantially conduct business operations can consider taking a home office deduction. Non-business activities cannot be conducted in the home office, including storing clothes in the closet.

  1. What home expenses can be deducted?

Deductible home office expenses are either direct or indirect. The deduction amount is based on the expense type and business percentage of the home used for business. The most common method used to calculate the business percentage is dividing the square footage used exclusively for business by total square footage of the living space. 

  • Direct Expenses: Expenses that benefit only the home area that is exclusively used for business, such as painting or repairs in the home office, are direct expenses that are fully deductible.
  • Indirect Expenses: Expenses for keeping up and running the entire home, such as the mortgage interest, real estate taxes, insurance, utilities, and general repairs are deductible based on the business use percentage, described above. Shared spaces, like hallways, cannot be included in office space calculation. Some home expenses, such as lawn care, are not deductible. 

For business owners who don’t want to hassle with tracking direct and indirect home office expenses, the IRS has a Simplified Option that allows a standard deduction of $5 per square foot, limited to 300 square feet. 

Eligibility for a home office deduction is determined by a lot of rules. The basics are addressed here, but the topic can get complicated. It’s a good idea to get more details on the home office deduction and read examples of how to apply the tax rules on the IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction.

Income Taxes for LLC Businesses

Business owners often choose to protect themselves for legal purposes by forming a Limited Liability Company (LLC). An LLC is a state-defined legal structure that business owners use to protect their personal assets in case their business is sued, or another event exposes them to financial liability. However, forming an LLC doesn’t automatically tell the business owner(s) – or the tax preparer – how the LLC operates for tax purposes

How an LLC files its business income taxes depends on the number of business owners and a few other considerations. Determining the best option depends on your objectives and circumstances. The decision can get complicated, so it’s probably a good idea to get professional advice. Here are the basics to get you started.

Income taxes for LLC businesses can be filed in one of three different ways:

  1. Sole Proprietorship

An individual business owner who has not incorporated is, by default, a Sole Proprietor. This is the simplest tax filing option. A Sole Proprietor reports income and expenses on a separate form filed with the owner’s individual income tax return, IRS Schedule C, “Profit or Loss from Business.” Net business profits are subject to income tax and to Medicare and Social Security taxes (i.e., 15.3% of net business profit).

  1. Partnership

Two or more individuals in business together without incorporating have, by default, formed a Partnership. Partnerships are considered a separate tax entity and are required to file a separate income tax return, IRS Form 1065, “U.S. Return of Partnership Income.” Partners receive an IRS Form K-1 for everyone’s pro-rata share of non-wage income, based on the operating agreement. 

  1. Subchapter S Corporation

Businesses with one to 100 domestic owners can take the Subchapter-S election. Sub-S Corps are considered a separate tax entity and are required to file a separate income tax return, IRS Form 1120S, “U.S. Income Tax Return for an S corporation.” Shareholders receive an IRS Form K-1 for their share of non-wage income, based on the operating agreement. Owners are considered employees, must be paid wages, and get a W-2.

How an LLC files its business income taxes depends on several considerations, including the number of business owners. Determining the best income tax option for your LLC isn’t easy. You’ll probably want more information, and some professional advice. Check the IRS website for income tax options and resources for business owners at https://www.irs.gov/businesses.

More Taxpayers Now Qualify for EITC

The Earned Income Tax Credit (EITC) was enacted back in 1975 to assist low- and moderate-income workers by lowering a taxpayer’s tax liability, sometimes resulting in a refund that is bigger than the amount of federal taxes withheld. Despite what a great financial boost it is, the IRS estimates that about 20% of eligible working taxpayers do not claim the EITC because they don’t know about it. And that’s too bad, especially now, when for the first time, the credit is now available to both younger workers and senior citizens.

A tax credit like EITC is even better than a tax deduction because it’s a dollar-for-dollar tax liability reduction, not a reduction of taxable income. For a worker in the 22% marginal tax bracket, a deduction means 22 cents less in tax where a credit means $1 less in taxes. Even better, the EITC is a refundable credit, meaning that the refund can be even more than the amount of income tax that was withheld or paid for the year.

Five tips to determine if you’re eligible for the EITC:

  1. Single and married taxpayers with children who have Social Security numbers can claim the credit, even if their children do not have SSNs. In this instance, they would get the smaller credit available to childless workers. In the past, these filers didn’t qualify for the credit at all.
  1. For 2021, workers may choose to use her or his 2019 earned income to figure the EITC if the 2019 earned income is more than the 2021 earned income. This opportunity to get a higher EITC is part of the Taxpayer Certainty and Disaster Relief Act of 2020. 
  1. For 2021, the EITC is available to more filers without qualifying children, including those who are at least 19 years old with earned income below $21,430. The maximum EITC for filers with no qualifying children is $1,502, up from $538 in 2020.
  1. Workers and working families who have investment income can qualify for the credit. Starting in 2021, the amount of investment income they can receive and still be eligible for the EITC increases to $10,000. 
  1. Married but separated spouses can choose to be treated as not married for EITC purposes. To qualify, the spouse claiming the credit cannot file jointly with the other spouse and must have a qualifying child living with them for more than half the year. 

The EITC is now available to more taxpayers, including more people without dependent children. Don’t leave this valuable tax benefit on the table! Check to see if you qualify for EITC when you prepare your 2021 income taxes. Learn the details, rules, and exceptions at

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc.

Scam High Alert – It’s Tax Season

Tax filing season officially started last Monday. The race to meet the April 18 deadline is on! Scammers are on a deadline, too. Scam artists prey on their victims all year long, but cybercrime activity seems to spike during tax season. They just can’t resist all those opportunities to fool or intimidate taxpayers who are in the middle of an unpleasant task that makes them nervous and vulnerable, especially online. Consequently, the IRS advises taxpayers to be on Scam High Alert during this filing season.

Since 2014, the IRS has issued an annual list of the “Dirty Dozen” top tax scams. The list is based on actual scams reported to its investigative and law enforcement units. The top twelve for 2021include five scams that are more likely to occur during tax season, targeting taxpayers with malicious intent to steal their refunds, bank account number, or personal information. 

Here are five of the 2021 tax-related scams highlighted by the IRS:

  1. Fake Charities:

Criminals frequently exploit natural disasters and other times of crisis by setting up fake charities to steal from well-intentioned people trying to help in times of need. Unfortunately, this is nothing new. The current COVID-19 pandemic and recent natural disasters are examples where scammers take advantage of your compassion.

  1. Immigrant and Senior Fraud: 

IRS impersonators and other phone scammers are known to target vulnerable people, like those with limited English proficiency and senior citizens. These scams are often threatening in nature, like where a taxpayer receives a telephone call threatening jail time, deportation, or revocation of a driver’s license from someone claiming to be with the IRS.

3. Offer in Compromise Mills:

Misleading tax debt resolution companies can exaggerate the chance to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC) for a hefty fee. Later, the taxpayer learns that she or he is not one of the small number of individuals who are qualified to even apply for an OIC, after the fee is paid and it’s too late.

4. Unscrupulous Return Preparers:

Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season. They commit fraud, harming innocent taxpayers, or talk taxpayers into doing illegal things, like inflating deductions. These scammers may also have taxpayers deposit refunds into tax preparer accounts.

  1. Unemployment Insurance Fraud: 

Unemployment fraud often involves individuals acting in coordination with or against employers and financial institutions to get state and local assistance to which they are not entitled. These scams include submitting fraudulent applications and using stolen or fake identification information to perpetrate an account takeover.


The IRS helps taxpayers to be on Scam High Alert all year round, but especially during tax filing season, by issuing its annual “Dirty Dozen” top tax scam list. To learn more about these scams for the 2021 filing season, check out the IRS website at https://www.irs.gov/newsroom/irs-dirty-dozen-list-warns-people-to-watch-out-for-tax-related-scams-involving-fake-charities-ghost-preparers-and-other-schemes.

First 2022 Tax Filing Deadline Coming Up

It seems like we just rang in the new year, but, unbelievably, the first tax filing deadline is already upon us. By January 31st, businesses, nonprofits, and others who make certain payments must report them on IRS Form 1099. In general, Form 1099 must be completed and filed for each person or unincorporated business to whom $600 or more was paid during the year for rents, nonemployee income payments, and other payments defined by the IRS. 

Here are four tips to meet the Form 1099 Tax Filing Deadline:

  • Payments are reported on Form 1099-NEC (i.e., nonemployee compensation). The payor must report the name, tax ID, and amount paid for each applicable entity to whom $600 or more was paid during the year. For more information about Form 1099-NEC, including instructions, go to https://www.irs.gov/forms-pubs/about-form-1099-misc.
  • The due date for filing Form 1099-NEC is January 31st for the calendar year ending December 31st. There is no extended filing deadline for submitting this form.
  • Reporting on Form 1099-NEC does not apply to personal payments. The form is only used for payments made as part of a business, nonprofit, trusts of qualified pension or profit-sharing plans of employers. Like many IRS rules, there is an exception – payments to attorneys for legal fees. 
  • Some payments do not have to be reported on Form 1099-NEC, although they may be taxable to the recipient. For example, payments to a C or S corporation, payments of rent to real estate agents or property managers, and business travel allowances paid to employees are generally not reportable on a Form 1099. 

If you make payments as part of your business, nonprofit, trusts of qualified pension or profit-sharing plans of employers, your first tax filing deadline for 2022 could be coming up. Use these four tips to see if payments that you made in 2021 need to be reported to the IRS by January 31st

Need more details? The IRS has them for you at https://www.irs.gov/businesses/small-businesses-self-employed/am-i-required-to-file-a-form-1099-or-other-information-return

Keeping Your Tax Information Secure

The IRS announced last week that the 2022 tax filing season starts on January 24th. Most people will not have all their necessary tax documents for 2021 by then, but it’s the first day that the IRS will accept and start processing income tax returns for last year. As you’re gathering those W-2s, 1099s, 1098s, P&Ls, and the rest of the alphanumeric “soup” that comprises your tax information, how are you keeping it secure?

Most taxpayers receive or download their tax documents electronically and save them in a folder on a home computer. While the “work at home” aspect of the pandemic shed light on the need for enhanced cybersecurity at home, tax time reminds us how important it is to protect against identity theft. The IRS collaborates with the tax software and preparer communities to secure the tax filing process. Taxpayers have a role in keeping their tax information secure, too.

Here are three tips from the IRS for taxpayers to protect online personal and financial data from identity thieves:

  1. Keep Your Computer and Mobile Phone Secure 

Use firewall and security software on every device that contains confidential information and set it for automatic updates. Use strong, unique passwords and consider using a password manager to keep it all straight. Implement Multi-Factor Authentication. Only give personal information over encrypted websites, those with a “https” address. Periodically back-up your data onto an external drive as an “insurance policy” against ransomware or a crashed drive.

  1. Avoid Phishing Scams and Malware 

Identity thieves use phishing emails to trick users into giving up passwords and other information. Don’t take the bait. Before opening messages in your inbox, look out for emails that pose as trusted source (e.g., your bank) and for emails with an urgent message (e.g., update your account now!) with a link or attachment. Never download software or apps from pop-up advertising. Talk to your family members who also go online (i.e., everyone) about online security, both with computers and mobile devices. 

  1. Protect Your Tax Return 

Taxpayers who can validate their identities can obtain an Identity Protection PIN. An IP PIN is a six-digit code that prevents an identity thief from filing a fraudulent tax return using your Social Security number. After the IRS issues an IP PIN, that taxpayer’s tax return cannot be filed without entering the IP PIN to “unlock” the taxpayer’s return for that year. Learn more about getting an annual IP PIN at www.irs.gov/ippin

The 2022 tax filing season starts next week, on January 24th. As you receive or download all the tax documents that comprise your tax information, how are you keeping them secure? The IRS has tips for taxpayers to keep their confidential tax and other financial information secure. Read all about it here at https://www.irs.gov/pub/irs-pdf/p4524.pdf.