Happy New Year! The Business Guides team is excited to welcome 2023 as we wrap up 2022 tax planning for our clients, onboard some amazing new clients, and prepare for the spring tax season.
We are working hard to load all Individual Organizers into the SmartVault client portal by Tuesday, Jan. 17th. (Many of them are already there, if you want to download yours and start getting organized!) By the 18th you should receive an email notification via SmartVault that your Organizer is waiting for you in your TY22 > Client Tax Organizer folder, along with your engagement letter and a link to our Questionnaire.
Watch for another e-newsletter next week with a direct link to our NEW online, mobile-friendly Questionnaire and more tax season instructions.
We will mail out requested paper organizers after Jan. 17th. This is the final year we are offering this service for no charge; next year there will be a "paper fee." We encourage those with paper tax data to try scanning and uploading it to SmartVault. (See our suggestions below for easy PDF scanning apps for your phone or tablet.) Make 2023 the year you transition to our modern, paperless process ~ and save the trees!
Your timing ~ Pick a data deadline
New this tax season, we will ask you on our questionnaire which deadline you are aiming for to get us YOUR COMPLETE DATA.
As a reminder, we prepare your tax returns once you confirm you are DONE with data submission and we have ALL your tax data. If you typically have to wait on a K-1 form or a 1099 form from your investment firm (these often arrive after March 15th), then give yourself grace and aim for the next data deadline.
And if you know you need more time to wrap up last year's books, we appreciate knowing that you are aiming for a later data deadline. (Then we won't bug you about the spring deadlines!)
Here are your options.
Spring Data Deadlines:
Jan. 31 ~ Early Bird spring filing (only for individuals with no K1s or investment 1099s ~ rental & sole prop activity OK)
Feb. 15 ~ for filing by Mar. 15 (only for S-Corps, Partnerships, and their owners)
Mar. 15 ~ for filing by Apr. 17 (open for everyone)
Later Data Deadlines:
June 15 ~ Early Bird summer filing (open for everyone)
Aug. 15 ~ last call for filing by Sep. 15 (the IRS extension deadline for S-Corps, Partnerships, and their owners)
Sep. 15 ~ last call for filing by Oct. 17 (the IRS extension deadline for everyone else!)
Our 2022 Tax Questionnaire will have a place toward the end for you to indicate your choice.
Here are some simple steps to get ready for tax season with The Business Guides.
1. Turn your phone or tablet into a portable document scanner! Download and practice using a mobile scanning app. It's as easy as taking a picture with your device's camera, but it stores the file as a PDF. (PDFs make our tax team smile; JPEGs (picture files) make them frown. Be on the smiling side!)
All of these apps make multi-page PDFs, which will also make us happy. No more uploading 20 individual files for a 20-page document!
2. Log onto your SmartVault client portal HEREand update your password. Changing your password regularly is a best practice for sites with sensitive information. (If you forgot your password, click "Can’t sign in?" and you’ll receive a password re-set email.)
You may wish to enable Two-Factor Authentication on your SmartVault user account. Then if someone attempts to sign in to your SmartVault portal from an unrecognized device or web browser, SmartVault will send you a verification code. The email address you use to log in to SmartVault is the default verification method. But you can change it to text/SMS or an automated call. View the Two-Factor Authentication set-up instructions.
3. Create a designated "2022 Tax" folder and start saving scans of paper tax documents you receive in the mail as well as tax forms you download. Many financial institutions (banks, brokerages) no longer mail paper forms, so you have to log in and find them yourself. Check the "Tax" sections of your institutional online accounts and download your 1099 forms.
4. Sign up for an IRS account for at least one filer in your household, if you haven't already. Each year, we see more and more reasons for our clients to have access to the data the IRS keeps on file about you, whether it's confirmation of estimated tax payments, or the amount of your advance child care tax credit or your stimulus payments (remember those?). We love that you can easily make a same-day payment from within your online account, and view your payment activity. Certain IRS notices are stored here as well.
Record Your Odometers
It's not too late to capture odometer readings for the vehicles you drive for business. Ideally these are noted at the very beginning or end of the calendar year, but early January readings will help you estimate "the total mileage for the year" on your vehicle for 2022.
Now's the time to make an odometer-recording reminder for Jan. 1st to recur annually.
NOTE: Due to a special adjustment to standard mileage rates for the second half of 2022 (based on rising gas prices), you will need to provide The Business Guides with total business miles from January-June, separate from total business miles from July-December.
Pay in more by January 17th to avoid IRS penalty
If you didn't do tax planning with our team, you may be unsure whether you've paid enough tax to the IRS over the course of the year. You have one more chance to make an additional 2022 tax payment to reduce or eliminate the IRS's "under-payment penalty," which currently is 7% compounded daily (up from 5% six months ago).
The Q4 payment deadline this year is Tuesday, Jan. 17, 2023. Read more about how to make a payment, and why.
Generally, if you pay at least 90% of your actual tax liability or 110% of what you paid the prior year (whichever amount is smaller), you can avoid the under-payment penalty.
To see what you owed the prior year, take a peek at last year's filed tax return and on the summary page we provide, find the amount for Total Tax. The same number should be on Line 24 of your Form 1040. Subtract your wage withholding and any other estimated tax payments made in 2022, and that's your target payment.
Of course, there are subtleties to determining this number, and that's why we love to do tax planning for you.If you consistently owe more tax in April than you expected, let's do tax planning in the fall of 2023!
How to file W-2s & 1099s online
As announced in an earlier e-newsletter, The Business Guides will no longer provide paper forms in our office for 1099s, W-2/W-3s, etc. Supply chain issues with the IRS are forcing us to discontinue this service. But we believe once you experience the convenience of an e-filing and e-delivery site, you'll never look back.
W-2s
Did you know that the Social Security Administration has a FREE "W-2 Online" service for small businesses? You can enter up to 50 W-2s and 25 W-2cs and submit them electronically.
For more information, watch this video: How to Use SSA's Free W-2 Online Website.
Now's the time to get your SSA Business Services Onlineaccount set up before W-2s are due to your employees by January 31st. New this year, confirmation of new registrations and password changes will be mailed to the business address via USPS. So give yourself time to receive a snail-mailed activation code. Learn more about these changes and register here.
1099s
There are plenty of online IRS-authorized e-file providers that charge a couple of dollars per form. We have been using Tax1099.com with ease and success. You can print and mail forms from within the site.
The newly launched IRS Information Returns Intake System (IRIS) gives small businesses a "quick, easy, and free" way to prepare, file and distribute any type of 1099 forms, completely online. Apply to be an early adopter (you will need an IRS account first). Read more.
For more information, watch this video: How to Use the Information Returns Portal
The deadline to file Forms 1099 is January 31st. Generally, unless paid to a corporation, total payments in a year of at least $600 for rents and services "made during the course of conducting a trade or business" are required to be reported to the IRS and to the payee on Forms 1099. There are many forms in the 1099 series, such as Form 1099-NEC for non-employee compensation, Form 1099-MISC for rent, and Form 1099-INT for interest. There are stiff penalties for late filings or not filing your 1099s. Please reach out to us if you have questions that this IRS publication can't answer.
1099-K Update
The IRS gave us a year-end gift: the news that their new 1099-K reporting rules are delayed and will not take effect until 2023. We were anticipating confusion over these new rules, so the delay is welcome. Read more.
The existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions will remain in effect for 2022. You may receive 2022 1099-K forms even if your 3rd-party payment activity is under these thresholds. Submit them with your tax data, as always. We'll take it from there.
These e-newsletters contain important and timely information for our clients and colleagues that is not replicated in other communications. We appreciate your attention to them!
Here are three suggestions:
