W-2 | Filing Support

It’s that time, April is coming up fast and many people start stressing. Let’s go back to the basics to better understand W-2’s so you don’t have to worry about the word, Deadline.

What is a W2?s

A W-2 is a tax form used in the United States to report an employee’s annual wages and the taxes withheld from those wages. Employers are required to provide their employees with a W-2 form by January 31st each year. The W-2 form includes information such as the employee’s total wages earned during the year, the amount of federal, state, and local income taxes withheld from their paycheck, and the amounts of Social Security and Medicare taxes withheld. Employees use this information to file their federal and state income tax returns.

What if I still don’t have my W-2?

If you do not receive your W-2 form by January 31st, you should first contact your employer to inquire about the status of your W-2. It’s possible that your employer may have sent it to the wrong address or there may be some other delay.

If you still do not receive your W-2 form by mid-February, you should contact the IRS for assistance. You can call the IRS at 1-800-829-1040 and they will contact your employer on your behalf to request a copy of your W-2.

Filing and Extension| Form 4868

Form 4868, also known as the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, is a tax form used by taxpayers in the United States to request an automatic extension of time to file their federal income tax return.

If you are unable to file your tax return by the April 15th deadline, you can use Form 4868 to request an automatic extension until October 15th. However, it’s important to note that Form 4868 only extends the time to file your tax return, not the time to pay any taxes owed. You must still estimate and pay any taxes owed by the April 15th deadline to avoid penalties and interest charges.

Disclaimer: The information provided above is not meant to
be legal or tax advise. You should consult your CPA and attorney to
determine the best course of action for your situation.

Mitzi E. Sullivan, CPA is a cloud based professional services provider
specializing in cloud accounting.

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For the Employee – W-4 Forms Explained and Tips on Filling Them Out

Form W-4 – Explained

Form W-4, formally known as “Employee’s Withholding Certificate,” is a form created by the IRS that informs employers how much tax to withhold from each of their employee’s paycheck. This form is used to calculate payroll tax withholdings in order to remit these taxes to the IRS and state (if applicable), on the employee’s behalf.

 

Step 1: Fill out your personal Information

 

Fill out your legal name, address, Social Security number and tax-filing status.

 

Step 2: Accounting for multiple jobs

 

If you or your wife (if you file jointly) is working more than one job or have self-employed income, see below to get accurate withholding:

• The W-4 for the higher paying job, fill out steps 2 to 4(b) of the form and leave those steps blank for the other jobs.
• If you are your spouse both earn the same amount and are married filing jointly, you can check the box associated with Step 2(c) “If there are only two jobs total…”. Please note, however, that both spouses need to fill out their W-4s if you check this box.
• If you are filling out your W-4 and don’t want your employer to know that you have a second job or other income, there are a few options, including:
• On line 4(c), you can instruct your employer to withhold an extra amount of tax from your paycheck; or
• Don’t factor your extra income into your W-4, but instead, send in estimated tax payments to the IRS yourself.

Step 3: Claiming dependents, including children

 

If you have kids and dependents and your total income is under $200,000 ($400,000 married filing jointly), you can enter the number of dependents (including children) and multiply them by the credit amount for the corresponding year. See this overview for the IRS Rules for Claiming a Dependent.

 

Step 4: Personalizing your withholdings

 

If you want to either withhold extra tax because you would rather overpay and receive a refund or you expect to claim deductions other than the dependents in Step 3 and the standard deduction,

 

Step 5: Turn in your W-4

 

Sign and date your W-4 and turn it into your employer’s payroll or human resource team.

Disclaimer: The information provided above is not meant to be legal or tax advise. You should consult your CPA and attorney to determine the best course of action for your situation.

Mitzi E. Sullivan CPA, PLLC is a cloud based professional services provider specializing in cloud accounting.

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What Small Businesses Starters Should Be Aware of When Considering Debts, Leases and Rents

Starting a small business can be an exciting endeavor. However, it can also be overwhelming, particularly when it comes to finances. One of the biggest financial challenges that small businesses face is managing debt, leases, and rent payments. In this blog post, we will explore how small businesses can bury themselves before they even start working by not managing their debts, leases, and rent effectively.

Debts

Many small businesses rely on debt financing to get their businesses off the ground. However, taking on too much debt can be detrimental to the long-term success of the business. Small businesses should be cautious when taking on debt and ensure that they have a plan in place for paying it back. Failing to make payments on time can lead to high-interest rates, penalties, and damage to the business’s credit score.

Leases

Leasing space for a small business is often a more affordable option than purchasing property. However, leasing comes with its own set of challenges. Small business owners should carefully review the terms of the lease agreement before signing. They should pay attention to details such as rent increases, maintenance responsibilities, and early termination fees. Failing to understand the terms of the lease can result in unexpected expenses that can put a strain on the business’s finances.

Rent

Rent is one of the most significant expenses for small businesses, particularly for those in high-cost areas. Small business owners should consider their budget when choosing a location for their business. They should look for areas with lower rent costs or consider sharing space with other businesses. Paying too much for rent can put a significant strain on a business’s finances, making it difficult to cover other essential expenses such as inventory, equipment, and salaries.

Managing Debts, Leases, and Rent

Small businesses can avoid burying themselves in debt, leases, and rent by taking a proactive approach to financial management. They should have a clear understanding of their financial situation and create a budget to help them manage their expenses. It is essential to prioritize debt payments and make them on time to avoid incurring additional fees and penalties. Small business owners should also negotiate the terms of their lease agreements to ensure that they are fair and affordable. It is important to review the lease agreement regularly to ensure that the terms are being followed and that there are no unexpected expenses.

When it comes to renting, small business owners should be strategic in choosing a location and negotiating the rent. They should look for areas with lower rent costs or consider sharing space with other businesses. They should also negotiate the rent and ensure that it is fair and affordable.

In conclusion, small businesses can bury themselves in debt, leases, and rent if they do not manage their finances effectively. Small business owners should take a proactive approach to financial management, prioritize debt payments, negotiate lease agreements, and be strategic when choosing a location and negotiating rent. By managing their finances effectively, small businesses can increase their chances of long-term success.

Disclaimer: The information provided above is not meant to
be legal or tax advise. You should consult your CPA and attorney to
determine the best course of action for your situation.

Mitzi E. Sullivan, CPA is a cloud based professional services provider
specializing in cloud accounting.

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What is Bonus Depreciation and Section 179 Depreciation?

As a business owner, you are likely familiar with the concept of depreciation. Depreciation is a tax-deductible expense that allows businesses to spread out the cost of purchasing and owning an asset over its useful life. This helps businesses save money on their taxes and manage cash flow. To further assist businesses in recouping the costs of large capital purchases, the IRS has introduced two powerful depreciation methods: bonus depreciation and Section 179 depreciation.

Bonus depreciation is a tax incentive that allows businesses to deduct a larger portion of the cost of qualifying assets in the year of purchase. It was introduced in the Tax Cuts and Jobs Act of 2017 and is set to expire in 2026. The current bonus depreciation rate is 100%, meaning a business can deduct the full cost of eligible assets in the year of purchase.

Section 179 depreciation is another powerful tax incentive that allows businesses to deduct the cost of certain property and equipment purchases in the year of purchase. The current Section 179 deduction limit is $1 million, with a phase-out threshold of $2.5 million. This means that businesses can deduct up to $1 million of qualifying assets in one year.

Bonus depreciation and Section 179 depreciation are great ways for businesses to save money on taxes and manage cash flow. They can be used in tandem to maximize the tax benefits of large capital purchases. However, it’s important to note that each has its own set of rules and requirements. Be sure to speak with a tax professional to determine which depreciation method is best for your business.

Disclaimer: The information provided above is not meant to
be legal or tax advise. You should consult your CPA and attorney to
determine the best course of action for your situation.

Mitzi E. Sullivan, CPA is a cloud based professional services provider
specializing in cloud accounting.

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Pros and Cons of Using QuickBooks Online Payroll

QuickBooks Online (QBO) Payroll is a cloud-based payroll processing software designed for small businesses.

If you are just now starting to run payroll or are considering switching from another 3rd party payroll provider, here are some of the pros and cons of using QBO Payroll:

Pros

1. Easy to use: QBO Payroll has an intuitive and user-friendly interface that makes it easy for business owners and managers to process payroll.
2. Affordable: QBO Payroll offers affordable pricing plans that include all payroll and tax services.
3. Automated payroll processing: QBO Payroll automates many of the payroll processing tasks, such as calculating employee pay and taxes, generating pay stubs, and sending direct deposit payments.
4. Time-saving: QBO Payroll automates many payroll tasks such as calculating and filing taxes, issuing paychecks, and managing employee data, which saves time and reduces the chance of errors.
5. Tax compliance: QBO Payroll stays up-to-date with the latest tax laws and regulations, making it easier for businesses to stay compliant. In addition, you can utilize the auto payroll payments and filings feature so that QBO automatically makes all your payments and files all payroll forms on time.
6. Integrations: QBO Payroll integrates seamlessly with other QuickBooks products, as well as with a variety of other business software and tools.
7. Customer support: QBO Payroll offers customer support through phone, chat, and by appointment, which is available Monday through Friday, 6 a.m. to 6 p.m. Arguably, the most helpful feature they offer is the callback feature, you put in your information and typically get a call within 5-10 minutes so that you aren’t waiting on hold. This ensures that businesses can get help in a timely fashion.

CONS

1. Potential for errors: While QBO Payroll automates many payroll tasks, there is still the potential for errors, especially if data is entered incorrectly.
2. Internet access required: Since QBO Payroll is a cloud-based software, users need a reliable internet connection to use it effectively, which can be a drawback for businesses in areas with poor connectivity.

Depending on the nature and size of the client, a lot of times we advise our clients to get their company set up in QBO so that they can keep track of everything in an efficient and timely matter. The Online version of QuickBooks is especially helpful for collaboration with different parties. Get with your accountant in order to determine which QuickBooks subscription is suited best to your business needs.

Disclaimer: The information provided above is not meant to be legal or tax advise. You should consult your CPA and attorney to determine the best course of action for your situation.

Mitzi E. Sullivan CPA, PLLC is a cloud based professional services provider specializing in cloud accounting.

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