The PTA Ledger
April 2022
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The Peak Is Not The End
Image credit: BBC News
Tax Day is our Mount Everest! And while reaching the peak is always a welcome accomplishment, we still have more work to do on the "descent."
Even though that final push to the summit (a.k.a. April 18th) is behind us, we're still busy bees as we:
- complete work on extensions,
- prepare payroll quarterly taxes,
- and look to you for how we can help you be proactive in 2022.
With you during the summits and the descents,
—Carla, Sandy & the PTA team
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Tax & Accounting ➡ Individuals
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Surprised By Your Tax Return Results?
It's April, and the results of 2021 tax returns and extension filings are still fresh on our minds.
And there were some surprises.
(OK, there were a lot of surprises, especially for those with investment accounts.)
>> For example, dividends and gains in investment accounts are taxable once realized (when an investment is sold) even if the proceeds are reinvested.
What should you do if you were surprised?
If you found yourself scrambling at the last minute to cover taxes from your investment gains (or any other reason!), we highly recommend you take advantage of our tax planning services this year.
What's required for tax planning calculations?
Your monthly brokerage statement for the preceding month if you have investments, along with a current paystub and projections for your total 2022 income.
When is the best time to do tax planning?
Anytime is a good time for tax planning!
- Now is great for discussing your 2022 withholding or estimated tax payment requirements.
- Oct-Dec is good timing for planning for investment gains.
- When you predict a change in profits from your small business, it's time to plan ahead.
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Tax & Accounting ➡ Small Businesses
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 Can I Pay My Employee's
Personal Expenses?
When your business pays for an employee's personal expenses (often referred to as "fringe benefits"), these are either taxable to the employee OR they're tax-free.
What's taxable to the employee?
- Typically, any cash or benefit provided to an employee is considered compensation and is therefore taxable.
- These items must be added to an employee's wages on their W2 and the business must pay the required FICA and income taxes.
- Examples of taxable benefits include:
- gym memberships
- prizes & awards
- personal use of company vehicle
- anything not specifically identified as tax-free by the IRS
What's tax-free?
- Fringe benefits are taxable (considered wages) unless specifically excluded by the Internal Revenue Code.
- What's excluded and not taxable to the employee:
- education expenses (up to an annual limit)
- health insurance premiums paid by the employer
- meals provided for the employer's convenience
- De minimus benefits - Non-recurring small items that are too small to account for (Think office donuts.)
- Need more details? Check out the IRS's Fringe Benefit Guide created for government entities (the same rules apply to for-profit entities).
A bit more:
- A word about job-related expenses: If you have employees incurring job-related expenses while working from home or traveling, these expenses can be deductible business expenses with an accountable plan.
- Owners of S-corporations or partnerships, do not qualify for tax-free benefits and reporting requirements for expenses like health insurance premiums differ. A different set of rules exist for owners and partners, so the above lists do not apply to your own personal expenses.
- Check out this story about free airline tickets—and if these tickets were partially taxable to a retired airline pilot.
Got questions about benefits? We've got answers! Set up a time with our team to review your reporting requirements.
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INDIVIDUALS
Jun 15 - Q2 2022 estimated taxes due
Extension filers now have until Oct 18 to file their Form 1040.
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SMALL BUSINESSES
Apr 30 - Q1 2022 payroll tax return forms due
Extension filers now have until Sep 15 to file their Forms 1120S & 1065.
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How can we help?
The PTA team is here to support you with
your tax and accounting needs.
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