Monthly Archives: October 2022

Inflation Reduces Income Tax

Posted on by

Article Highlights:

IRS Inflation Adjustments
Impact of 2023 Adjustments Will Be Felt in 2024 Tax Season
Standard Deduction
Tax Brackets
Other Tax Attributes

As the country emerges from the COVID pandemic and supply chain issues, along with the fallout from the war in Ukraine, the country has been experiencing high inflation rates that negatively impact the cost of everyday living, including food, gas for your vehicle, utilities and more.
But there is one shining light: tax-related inflation adjustments that will benefit most taxpayers. However, many media outlets have been touting the IRS’ recently released inflation adjustments for 2023 as if taxpayers will see the benefits this coming spring when they file their tax returns. What much of the hype fails to mention is that the 2023 increases will show up on your 2023 tax return which will be filed in 2024. So most people will have to wait until 2024 to see the approximately 7% inflation adjustment to tax benefits.
But there was an approximately 3% inflation adjustment for 2022 from which you will benefit when you file your 2022 tax return in early 2023.
If you are an employee, you may notice some reduction in the amount of income tax withheld from your wages starting in January, as the 2023 tax withholding calculation will take into account some of the items affected by the inflation adjustments, such as the increased standard deduction and widened tax rates.
Standard Deduction: The table illustrates the increases in the standard deduction for 2022 and 2023. As shown in the table, for taxpayers filing married joint returns the increase was $800 from 2021 to 2022 and $1,800 between 2022 and 2023. For a married couple filing jointly these amounts are not subject to income tax. Taking this a step further, if that married couple were in the 22% tax bracket their tax savings would be $176 (0.22 x $800) in 2022 and $396 (0.22 x $1,800) in 2023.

Basic Standard Deduction

Filing Status
2021
2022
2023

Married Joint
25,100
25,900
27,700

Head of Household
18,800
19,400
20,800

Single
12,550
12,950
13,850

Married Separate
12,550
12,950
13,850

Tax Brackets: Tax brackets are also affected by the inflation adjustments as illustrated in the tables below. For example, you will note that for an unmarried taxpayer using the single filing status for 2022 the table shows that when the individual’s taxable income reaches $89,076 the marginal tax rate increases from 22% to 24%. However, that transition between 22% and 24% occurs at $95,376 for 2023, or a difference of $6,300 that is taxed at 2% less than in 2022. Inflation adjustments are made annually for all the marginal rate brackets.

Individual Taxpayers (Single) Tax Rates

Marginal Rate
2022 Taxable Income
2023 Taxable Income

10.0%
$0 -10,275
$0 – $11,000

12.0%
$10,276 – $41,775
$11,001 – $44,725

22.0%
$41,776 – $89,075
$41,776 – $89,075

24.0%
$89,076 – $170,050
$95,376 – $182,100

32.0%
$170,051 – $215,950
$182,101 – $231,250

35.0%
$215,951 – $539,900
$231,251 – $578,125

37.0%
$539,901 and above
$578,126 and above

Heads of Household Tax Rates

Marginal Rate
2022 Taxable Income
2023 Taxable Income

10.0%
$0-$14,650
$0 – $15,700

12.0%
$14,651 – $55,900
$15,701 -$59,850

22.0%
$55,901 – $89,050
$59,851 -$95,350

24.0%
$89,051- $170,050
$95,351 -$182,100

32.0%
$170,051 – $215,950
$182,101 -$231,250

35.0%
$215,951 – $539,900
$231,251 -$578,100

37.0%
$539,901 and above
$578,101 and above

Married Individuals Filing Joint Returns and Surviving Spouses (Joint) Tax Rates

Marginal Rate
2022 Taxable Income
2023 Taxable Income

10.0%
$0 – $20,550
$0 – $20,550

12.0%
$20,551- $83,550
$22,001- $89,450

22.0%
$83,551 – $178,150
$89,451- $190,750

24.0%
$178,151 – $340,100
$190,751- $364,200

32.0%
$340,101 – $431,900
$364,201- $462,500

35.0%
$431,901 – $647,850
$462,501- $693,750

37.0%
$647,851 and above
$693,751 and above

Married Filing Separately Tax Rates

Marginal Rate
2022 Taxable Income
2023 Taxable Income

10.0%
$0 – $10,275
$0 – $11,000

12.0%
$10,276 – $41,775
$11,001 – $44,725

22.0%
$41,776 – $89,075
$44,726 – $95,375

24.0%
$89,076 – $170,050
$95,376 – $182,100

32.0%
$170,051 – $215,950
$182,101 – $231,250

35.0%
$215,951 – $323,925
$231,251 – $346,875

37.0%
$323,926 and above
$346,876 and above

Besides the standard deduction and tax brackets there are a large number of other tax attributes that are subject to inflation adjustment as well. Here are some examples.

Tax Attributes
2022
2023

Maximum Earned Income Tax Credit (with 3 or more children)
$6,936
$7,430

Adoption Credit
$14,890
$15,950

Maximum Foreign Earned Income Exclusion
$112,000
$120,000

Annual Gift Tax Exclusion
$16,000
$17,000

As of this writing, the IRS has not yet released the 2023 maximum contributions to IRAs, 401(k)s and other retirement plans. It is anticipated that these amounts will also increase substantially due to the adjustment for inflation.
Please contact this office if you have any questions.

Posted in Tax

2023 Social Security Cost-Of-Living Increase Highest In 40 Years

Posted on by

Article Highlights:

2023 Social Security COLA Increase
Historical COLA Increases
Keeping Inflation At Bay
Medicare Premium Decrease
Medicare Income Adjusted Tables for 2023
Modified Adjusted Gross Income
How Gambling Can Affect Medicare Premiums
Social Security Trust Fund

The Social Security Administration recently announced that Social Security beneficiaries will get an 8.7% increase to their benefits in 2023. Thanks to the current high inflation this is the highest increase in 40 years, and the second year in a row that there’s been a substantial increase, 5.9% in 2022 and now 8.7% for 2023. The table below reflects the COLA benefits going back to 1976. As you will note, the COLA increases have been relatively stable in recent years except for 2008.

HISTORICAL SS COLA RATES (Percent)

YEAR
COLA
YEAR
COLA
YEAR
COLA
YEAR
COLA
YEAR
COLA

1976
6.4
1986
1.3
1996
2.9
2006
3.3
2016
0.3

1977
5.9
1987
4.2
1997
2.1
2007
2.3
2017
2.0

1978
6.5
1988
4.0
1998
1.3
2008
5.8
2018
2.8

1979
9.9
1989
4.7
1999
2.5
2009
0.0
2019
1.6

1980
14.3
1990
5.4
2000
3.5
2010
0.0
2020
1.3

1981
11.2
1991
3.7
2001
2.6
2011
3.6
2021
5.9

1982
7.4
1992
3.0
2002
1.4
2012
1.7
2022
8.7

1983
3.5
1993
2.6
2003
2.1
2013
1.5
–
–

1984
3.5
1994
2.8
2004
2.7
2014
1.7
–
–

1985
3.1
1995
2.6
2005
4.1
2015
0.0
–
–

Rate for a particular year is effective for the following year’s benefit payments

The Social Security Administration will mail notices to Social Security beneficiaries during the month of December letting them know what their 2023 benefit will be. The COLA adjustment will boost retirees’ monthly payments by an average of $146 to an estimated average of$1,827 per month for 2023.
The COLA increases are about keeping the roughly 70 million Social Security recipients up with inflation and not really providing any increase in buying power. The 8.7% increase will be included in the January 2023 benefits.
Medicare Premiums – The Centers for Medicare and Medicaid Services also recently announced the 2023 Medicare premiums. Seniors will also see a rare but small drop in the Medicare premium rates. Both Medicare B (Medicare premiums) and Medicare D (Medicare prescription drug coverage) are treated as medical insurance premiums that may be tax deductible by a taxpayer who itemizes their deductions and for some self-employed individuals. Medicare premiums are not a fixed amount for all retirees. The amounts paid or withheld from the individual’s Social Security income is based on the taxpayer’s modified adjusted gross income (MAGI) from the two years previous. The following tables reflect the 2023 Medicare Part B monthly premiums and the Medicare Part D monthly supplement based upon a taxpayer’s 2021 MAGI. To determine the amount that will be withheld from your monthly Social Security benefit add together the Part B and D amounts.

Medicare Part B Monthly Premium

Status
Modified AGI (2 YRS PRIOR)
2023

IndividualsMarried Filing Joint1
$97,000 or less$194,000 or less
$164.90-

IndividualsMarried Filing Joint1
$97,001 – $123,000$194,001 – $246,000
$230.80-

IndividualsMarried Filing Joint1
$123,001 – $153,000$246,001 – $306,000
$329.70-

IndividualsMarried Filing Joint1
$153,001 – $183,000$306,001 – $366,000
$428.60-

IndividualsMarried Filing Joint1
$183,001 – $499,999$366,001 – $749,999
$527.50-

IndividualsMarried Filing Joint1
$500,000 & above$750,000 & above
$560.50-

Married Filing Separate1(if lived apart from spouseall year, use Individual)
$97,000 or less$97,001 – $402,999$403,000 & above
$164.90$527.50$560.50

Monthly Medicare D Supplements*

Status
Modified AGI (2 YRS PRIOR)
2023

IndividualsMarried Filing Joint2
$97,000 or less$194,000 or less
0.00-

IndividualsMarried Filing Joint2
$97,001 – $123,000$194,001 – $246,000
$12.20-

IndividualsMarried Filing Joint2
$123,001 – $153,000$246,001 – $306,000
$31.50-

IndividualsMarried Filing Joint2
$153,001 – $183,000$306,001 – $366,000
$50.70-

IndividualsMarried Filing Joint2
$183,001 – $499,999$366,001 – $749,999
$70.00-

IndividualsMarried Filing Joint2
$500,000 & above$750,000 & above
$76.40-

Married Filing Separate2(if lived apart from spouseall year, use Individual)
$97,000 or less$97,001 – $402,999$403,000 & above
0.00$70.00$76.40

*These amounts are in addition to any drug plan premiums.1Premium amount is for each spouse enrolled in Medicare B2Supplemental amount is for each spouse enrolled in Medicare D
The modified AGI used when determining amounts from the tables is the Federal AGI plus:

Tax-exempt interest income;
United States savings bonds interest used to pay higher education tuition and fees if the interest was excluded from income on Form 8815;
Excluded foreign earned income and housing costs;
Income derived from sources within Guam, American Samoa, or the Northern Mariana Islands; and
Income from sources within Puerto Rico.

There is a tax quirk that can unknowingly increase the MAGI. Gambling winnings, even if there’s a net loss for the year, can increase the cost of health insurance premiums for individuals enrolled in Medicare coverage.
The reason for that is gambling losses are an itemized deduction and not netted against gambling winning. Thus, even though a taxpayer itemizes deductions and deducts their gambling losses, the full amount of the gambling winnings is included in their AGI, and as discussed above, their MAGI is used to determine the cost of the Medicare insurance. An example: an individual who recreationally gambles and makes $80,000 in bets during the year and has $75,000 of losses will an see an $80,000 increase in their MAGI even though they only netted $5,000 in winnings.
The Future of Social Security – There is also some concerning news that goes along with the Social Security benefits increase. The increase will have an adverse impact on Social Security’s already shaky finances. The funds that pay the benefits to retirees, survivors and the disabled will be exhausted by 2035 and only Medicare taxes collected from workers will be available to pay Social Security benefits. Thus there will not be enough funds to pay the full benefits going forward unless Congress intervenes and tackles the long-term funding shortfall.
If you have tax questions related to Social Security benefits, deducting your Medicare premiums or how you can save for retirement with tax beneficial retirement plans, please give this office a call.

Use QuickBooks Online Effectively: 7 Best Practices

Posted on by

“Best practices” is a phrase that human resources professionals have been using for decades. But every type of profession has its own best practices, whether they call it that or not. These guidelines are not enforceable rules, though some managers may build them into their official policies. They just describe the way work should be done to achieve optimal outcomes and keep data organized and secure.
You may have heard of Generally Accepted Accounting Principals (GAAP). Public companies are required to adhere to them, and many other businesses large and small follow these rules and procedures.
We’re not going to discuss GAAP in this month’s column. Rather, we’re going to talk about more general best practices for accounting, actions you can build into your QuickBooks Online work to make that time more productive and in line with what other successful businesses do.
How Do They Help?
Accounting best practices have numerous benefits. For example, they:

Help maintain the integrity of your QuickBooks Online data files.
Improve the accuracy of your accounting work.
Save time.
Provide insight on the financial health of your business.

When you incorporate best practices into your work, you may even find that your relationships with customers and vendors get better because you’re handling their businesses ? conscientiously.
7 Suggestions For You
Here are seven guidelines that we try to follow. We hope you will, too.
Track your 1099 vendors

If your business employs contractors, make sure that you indicate their 1099 status in their vendor records.

Changes in the economy over the last few years have led some people to take on part-time (or even full-time) contract work. You should be creating vendor records for these individuals. Click Expenses in the tool bar and then select the Vendors tab. As you’re completing a record, you’ll see a section labeled Additional info. Check the box in front of Track payments for 1099. You can create and deliver your 1099s using QuickBooks Online when the time comes.
Reconcile, reconcile, reconcile
Once you’ve downloaded cleared transactions from your financial accounts, it’s important that you reconcile them. This is probably one of your least favorite tasks to undertake, but QuickBooks Online simplifies it for you some, walking you through the process. Reconciling accounts regularly can help you:

Discover errors and missing transactions.
Get a more accurate picture of your cash flow.
Make your reports more precise

Keep your lists up to date
Your QuickBooks Online company file can grow substantially over the years. Though the site has great search capabilities, you may still be scrolling to find the entries you want. This isn’t as big a problem for lists like Payment Methods or Terms, but overly lengthy lists of Products and Services, Customers, and Vendors can become unwieldy over time. Try to keep them current. If you don’t want to delete them completely, you can make individual records inactive by clicking an Action link in the listing table for each.

If your QuickBooks Online Lists are getting too lengthy, you may be able to make some of the records Inactive.

Categorize and classify everything that you can
Your QuickBooks Online company file consists of hundreds or thousands of individual records and transactions. Though each is a separate entity, there will be many times when you want to be able to assemble groups of related ones. For example, you might want a list of all of your customers in a specific ZIP code or all services that go into the creation of a marketing program.
There’s more than one way to get this information quickly. You can customize reports. Assign Classes, Categories, and Tags. View a Project. Whatever method(s) you choose, do use them consistently. They can provide insight in a wide variety of ways that will help you make better business decisions.
Warning: Before you start making lists of these classification tools and assigning them, think carefully about what they should be. You can always add to and edit the lists, but you’ll want to make them as focused and flexible as you can. Let us know if you need help with this.
Assign user permissions carefully
QuickBooks Online makes it possible to restrict users to specific areas and functions on the site. Use these tools. You can find them by clicking the gear icon in the upper right and then Manage users. You trust your employees or you wouldn’t have hired them, but you need to put controls in place to protect your sensitive company data.
Use QuickBooks Online’s reports
Are you taking advantage of QuickBooks Online’s report templates? It’s absolutely essential that you keep up with reports in areas like Who owes you and What you owe. We can help with this. We can also generate and analyze the standard financial reports that you occasionally need, like Statement of Cash Flows and Profit and Loss.
Don’t leave QuickBooks Online running and walk away
This should go without saying if you’re in a multi-person office. Also, don’t use the QuickBooks Online mobile app on a public Wi-Fi network when you’re out and about. Your company file contains information about your customers, vendors, and employees that should never be compromised.
More Than Common Sense
These best practices may seem like common sense to you if you’ve been using QuickBooks Online for a while. But when you first start using web-based financial applications, they might not be second nature to you. That’s why we’re sharing them with you, to remind you that conscientious use of QuickBooks Online is critical to the safety, accuracy, and usefulness of your company data. As always, we’re here to answer any question you have.

Are You Missing Out on the Increased Child Tax Credit?

Posted on by

Article Highlights:

American Rescue Plan Act
2021 Enhanced Child Tax Credit
Credit Phaseout
Advance Payments
TIGTA Report
Millions Entitled to But Did Not Receive the Credit
Credit Still Available to Those That Qualify

The American Rescue Plan Act of 2021, also referred to as the COVID-19 Stimulus Package or ARPA, was a $1.9 trillion bill passed by Congress to stimulate the U.S. economy as the country emerges from the pandemic.
Included in that legislation was a one-year groundbreaking enhancement of the child tax credit for 2021 only. Though it made no changes to the rules about dependency, the law boosted the existing credit from $2,000 to $3,000 for parents of a child aged 6 to 17 (this is a one-year increase from the normal age 16 cutoff).
The credit is intended for lower income families and includes a phaseout that reduces the credit by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified gross income exceeds the thresholds illustrated in this table.

2021 MAGI PHASEOUT – CHILD TAX CREDIT

Filing Status
Threshold

Married Filing Joint
150,000

Heads of Household
112,500

Others
75,000

Not only did the bill increase the credit, it also required the IRS to provide monthly payments to parents of up to half of the amount of the credit from July through December of 2021, with the balance credited to them when they filed their 2021 tax return.
This is where implementing the credit got complicated for the IRS. They needed to determine, based on prior tax filings, who was entitled to pre-payments. As you might imagine this is where things could go awry, and they did. Many individuals not entitled to the advance payments received them and many who should have received them did not.
A recent report from the Treasury Inspector General for Tax Administration (TIGTA) shows the IRS, between July and November of 2021, made payments to approximately 1.5 million taxpayers who were not entitled to the payments totaling more than $1.1 billion. The report also found that there were 4.1 million eligible taxpayers who did not receive payments totaling nearly $3.7 billion.
If you were entitled to but did not receive advance payments, it may be because your income in prior years was below the filing requirement and the IRS did not have the data needed to determine if you qualified for an advance payment. It may also be the case if you were required to file and simply didn’t do so. You may also be missing out on the credit, which is refundable even if you have no tax liability, if you have not filed for 2021 because your 2021 income is below the filing requirement. Or, you may have had a new child in 2021 and have not filed yet.
This credit is still available. So, whatever the reason, if you think you might qualify and didn’t receive the full amount of the credit by pre-payments or on your 2021 return if you’ve already filed it, give this office a call so your circumstance can be reviewed to make sure you are not leaving a substantial tax refund on the table.

November 2022 Business Due Dates

Posted on by

November 10 – Social Security, Medicare and Withheld Income Tax File Form 941 for the third quarter of 2022. This due date applies only if you deposited the tax for the quarter in full and on time.November 15 – Social Security, Medicare and Withheld Income Tax If the monthly deposit rule applies, deposit the tax for payments in October. November 15 – Nonpayroll Withholding If the monthly deposit rule applies, deposit the tax for payments in October.

Posted in Tax

November 2022 Individual Due Dates

Posted on by

November 10 – Report Tips to Employer If you are an employee who works for tips and received more than $20 in tips during October, you are required to report them to your employer on IRS Form 4070 no later than November 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

Posted in Tax

Is This an Opportune Time to Convert Your Traditional IRA to a Roth IRA?

Posted on by

Article Highlights:

Stock Markets Downward Slide
Traditional IRA to a Roth IRA Conversions
Younger Individuals
Here Is How It Works
Marginal Tax Rates
Example When Using the Marginal Table
Conversions Cannot Be Undone.
Non-deductible Traditional IRA Contributions

If your traditional IRA is invested in stocks and/or mutual funds, the recent substantial downward slide by the stock markets may provide a unique opportunity to convert your traditional IRA to a Roth IRA at a low cost, and then benefit when the markets recover. Why would you want to do that? Because Roth IRA distributions provide tax free retirement benefits while payouts from Traditional IRAs are taxable. Of course there is no assurance that the markets will not continue to decline, and this may not be the most opportune time to make a conversion in your specific circumstances but is something you may want to consider. Conversions provide the most benefit to younger individuals who can look forward to many years of the tax-free growth provided by a Roth IRA. You don’t have to convert all of your traditional IRA in one year. You can convert what you can afford to pay the tax on each year. Here Is How It Works – The tax code allows individuals to convert any portion of their traditional IRA to a Roth IRA by paying tax on the conversion as though taking a distribution from the traditional account. Thus, if you make a conversion you are taxed on the conversion based upon the tax rates that apply to your normal income plus the traditional IRA amount being converted. Of course, if in 2022 you have abnormally lower income, that could make the conversion tax even less. The following table includes the marginal tax rates for 2022.

Marginal Tax Rates for 2022

Marginal Rate

Filing Status

—
Single
HH
MFJ
MFS

10.0%
10,275
14,650
20,550
10,275

12.0%
41,775
55,900
83,550
42,775

22.0%
89,075
89,050
178,150
89,075

24.0%
170,050
170,050
340,100
170,050

32.0%
215,950
215,950
431,900
215,950

35.0%
539,900
539,900
647,850
323,925

37.0%

–
–
–

Example When Using the Table – Let’s say you are filing single and your taxable income without an IRA conversion amount is $45,000, which has a marginal rate of 12%, and you are converting $40,000. This brings your taxable income to $85,000, which is still in the 12% bracket (it’s more than $41,775 but less than $89,075, the start of the next rate). This means the tax on the conversion would be $4,800 (12% of $40,000). If you did the conversion in a year when your other income was more and when combined with the conversion amount you are in the 22% bracket, the tax on the conversion would be $8,800, $4,000 more than when you are in the 12% bracket. Other Issues:

There is no income limitation on making a conversion, thus anyone can do a conversion.
Higher income taxpayers can use the conversion to circumvent the AGI limits for contributing to a Roth IRA.
Once a conversion is made it cannot be undone.
Some individuals for various reasons have made non-deductible contributions to their traditional IRAs. For distribution or conversion purposes, all an individual’s IRAs (except Roth IRAs) are considered as one account and any distribution or converted amounts are deemed taken ratably from the deductible and non-deductible portions of the traditional IRA, and the portion that comes from the deductible contributions would be taxable.

Give this office a call if you would like to explore the possible benefits of a traditional to Roth IRA conversion.

What Is an Offer in Compromise?

Posted on by

Carrying long-term debt is a challenge, but when the money is owed to the government and you see no way to pay what you owe, it can bepsychologicallyand emotionally debilitating. Some people think they can turn to bankruptcy, but that is not the case – bankruptcy specifically will not discharge tax debts. One of the few options available for settling tax debt is an IRS program called an Offer in Compromise, or OIC.
An OIC is not something that the IRS agrees to lightly. Roughly one in three applications for the program are approved. Still, it may be worth your time and effort to determine whether you qualify.
The Three Steps to Applying for an Offer in Compromise

Fill out IRS form 433-A and IRS form 656. If you plan to appeal the debt itself, you will also need to fill out IRS form 656-L.
Pay the nonrefundable application fee of $205. If your income is below the IRS low-income guidelines, the fee may be waived.
Propose paying an alternative amount to the IRS

This is a simple summary of a complex process that requires providing a significant amount of detail about your income and expenses. Though the form asks for a lot of information, the more diligent you are in demonstrating your inability to pay both your bills and your tax debt, the better your chances of being approved. It is also notable that 20% of the amount that you are offering to pay within your application must be included with your application in order for it to be considered. If your Offer in Compromise is rejected, the money will be applied toward your debt.
Eligibility for Applying for an OIC
Qualifying for an OIC is difficult in large part because the IRS has such strict rules about who is eligible to apply, as well as regarding what is needed to qualify.
Let’s look at the question of whether you can apply first.  In order for your application to be accepted, you must make sure that you meet the following criteria:

You have answered all questions on the forms
You are current in having filed your tax returns
You must have submitted the $205 application fee or successfully had it waived
There must be at least one tax debt in your Offer in Compromise for which you have not received a bill
You must have submitted all of your estimated tax payments for the current year
You must not be in the midst of a bankruptcy proceeding
You must continue paying taxes and filing your tax returns while the IRS response to your offer is pending
Your case cannot have been sent to the Justice Department by the IRS

If any of these items are not in evidence, the IRS will send your application back for correction and resubmission.
Qualifying for an Offer in Compromise
The decision-making process that the IRS uses when considering taxpayers’ Offers in Compromise is an objective calculation, based on the financial information that’s been submitted to them, about whether and how much payment they are likely to be able to recover – a number referred to as “Reasonable Collection Potential.” That financial information considered includes all of your assets, your income, and your earnings potential as well as your cost of living and your debts. The IRS is extremely granular in their analysis, working to determine whether the amount of payment that you have suggested in your Offer in Compromise is less than, equal to, or greater than the Reasonable Collection Potential.
When the IRS accepts an Offer in Compromise, it is generally because they agree that your circumstances make it a hardship for you to pay, because there is a question about the actual amount that you owe, or because they believe that they’re never going to be able to collect the amount that you owe in full.
What the IRS Offer May Look Like
If the IRS decides to grant your request for an Offer in Compromise, they will do so in one of two ways. You will either be able to pay your debt off within five months or under a 24-month payment plan.
It is important to remember that under either of these plans, the IRS will already have received 20% of your offer amount and it will be considered the first payment under either of these payment options.
What Happens While You’re Waiting for the IRS to Respond
Upon receipt of your Offer in Compromise and all supporting documentation, all IRS collection activities will cease. If there are tax liens in place they will remain in place pending a decision and until you have made all payments if your offer is accepted. You will continue receiving any tax refunds that you are owed unless it is received via an amended return after an Offer in Compromise has been activated.
If your tax refund has been garnished and you are waiting for an IRS response to your Offer in Compromise proposal, you can request an offset bypass refund based on economic hardship that you will have to prove.
Rejection of your Offer in Compromise is appealable, and there are other options available — including installment plans or a “currently not collectible” status that can help you relieve extreme financial stress.
If you are struggling with tax debt that you believe you will simply be unable to pay, an Offer in Compromise may be the answer. For help identifying the best option available for your specific circumstances, contact us today to set up a time to meet.

Hurricane Ian SBA Disaster Assistance

Posted on by

Article Highlights:

Counties that Qualify For Loans
Application Deadlines
Types of Disaster Loans
Interest Rates
Hurricane Ian Disaster Fact Sheet
Application Assistance

The Small Business Administration (SBA) provides disaster assistance for homeowners, renters, nonprofits, and businesses of all sizes affected by Hurricane Ian. Caution: The following list of qualifying counties is preliminary and can change as damage assessments are concluded. Florida Areas Eligible for SBA Disaster Loans – In the Florida counties of: Charlotte, Collier, DeSoto, Hardee, Hillsborough, Lee, Manatee, Pinellas, and Sarasota. For Economic Injury Only Loans: in the contiguous Florida counties of: Broward, Glades, Hendry, Highlands, Miami-Dade, Monroe, Pasco, and Polk.
Application Filing Deadlines:

Physical damage: November 28, 2022
Economic injury: June 29, 2023

Types of available disaster loans:

Home Disaster Loans – Loans to homeowners or renters to repair or replace disaster-damaged real estate and personal property, including automobiles.
Business Physical Disaster Loans – Loans to businesses to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery and equipment. Businesses of any size are eligible. Private, non-profit organizations such as charities, churches, private universities, etc., are also eligible.
Economic Injury Disaster Loans (EIDL) – Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.

Interest Rates:

LOAN INTEREST RATES

Physical Damage Loans

Home Owners
With Credit Available Elsewhere
4.375%

–
Without Credit Available Elsewhere
2.188%

Businesses
With Credit Available Elsewhere
6.080%

–
Without Credit Available Elsewhere
3.040%

Non-Profits
With Credit Available Elsewhere
1.875%

–
Without Credit Available Elsewhere
1.875%

Economic Injury Loans

Businesses & Small Agricultural Cooperatives
Without Credit Available Elsewhere
3.040%

Non-Profit Organizations
Without Credit Available Elsewhere
1.875%

More detailed information can be found in the Hurricane Ian disaster fact sheet.
Get help with your application
Applicants are encouraged to apply online for a disaster loan. Please call the SBA at 800‐659‐2955 if you have any loan questions.
For any disaster related tax issues please give this office.

Will a Small Business Grant Help Your Organization? Breaking Things Down

Posted on by

According to one recent study, there are currently more than 32 million small businesses operating in the United States. For the sake of discussion, know that this term refers to those organizations with fewer than 500 employees. To put that number into perspective, those small businesses create more than 1.5 million new jobs every year according to the same research from above. That breaks down to about 64% of all new jobs annually. All told, over 90% of all businesses fall into this category – making them one of the biggest drivers of economic growth that there is. At the same time, any seasoned entrepreneur can tell you that starting your own business is not easy regardless of its size. It takes a lot of time, effort, passion, and money to get a company off the ground in any industry. That, in essence, is what small business grants are designed to aid with. They may not be able to help with the time or effort parts, but they can and often do provide the necessary capital to get a company off the ground and moving in the right direction. But what are small business grants, where do they come from, and how do you take advantage of them in your own situation? The answers to questions like those require you to keep a few important things in mind. What is a Small Business Grant? At its core, a small business grant is exactly what it sounds like – seed money that has been given to a startup company or project, typically by a government agency or nonprofit organization, that is used to give you the best chance possible at success. The major advantage of getting a grant of any type is that it gives you access to funds you wouldn’t have otherwise had. In the context of a small business, this can help secure that perfect location for your physical storefront or hire enough employees to get started on developing your products and services. There’s also no rule that says you can only apply for and receive one grant during your lifetime – there are many that you can apply for so long as you qualify. All told, there are several different types of grants that you can apply for depending on your needs. Take those offered by the Small Business Administration, for example. The SBA regularly offers grants for the purposes of research and development under the Small Business Technology Transfer program. This is money designed to encourage you to focus on R&D opportunities that have “a high potential for commercialization if successful.” Another type of grant offered by the SBA has to do with those aimed at management and technical assistance. This is offered under the appropriately named Management and Technical Assistance Program. When it comes to the SBA in particular, however, there are a number of important things to keep in mind when it comes to qualifying. For starters, the SBA does not actually provide grants for starting or expanding a business. So opening your doors or continuing to grow can’t be your priority – you need to fall into one of the categories outlined above. You should also be aware that new grant programs are being developed all the time based on what is happening in the world, as was evidenced by the COVID-19 relief program that went into effect in 2020. So even if you don’t qualify for something with the SBA now, you should continue to check to see what is available on a regular basis because you never know what might happen. Is a Small Business Grant Right for my Organization? Generally speaking, a small business grant is a good choice for your company if A) you need the capital it would provide you with, and B) you meet the qualifications of whatever program you’re looking at, to begin with. Remember that because it is a grant, the money typically does not have to be repaid. Of course, there are some potential disadvantages of grants that you should be aware of moving forward. For starters, the process itself is very time-consuming. Not only do you have to research available grants to make sure that you qualify, but you’re going to have to write a proposal to outline exactly what you’ll be doing with that money and to prove that you qualify. Grants are also very difficult to receive in a lot of situations because funds are limited. There isn’t an endless pool of money to draw from – only a handful of organizations may get selected for a grant in any particular year. In some cases, only one organization may get selected. For both of these reasons, it’s not a good idea to rely solely on grants alone when it comes to making your long-term plans as a small business owner. Speaking of long-term plans, just because you received a small business grant once doesn’t mean that you’ll automatically do so again. Renewal is not a guarantee, which again can make the future uncertain. Finally, depending on the specific grant and who is giving out the money, there may be strings attached that you are uncomfortable with. Once you submit your proposal for example and outline exactly what you’ll be doing with the funds, you have to stick to that plan to the letter. So if you find yourself in a situation where the grant money would offer significant benefits and none of the potential downsides are a deal breaker, exploring the opportunities of a small business grant is definitely the right move to make. Where Do I Find Small Business Grants? Finding small business grants is something that you can do in a myriad of different ways. As mentioned, you can use the Small Business Administration’s website to get started. There are also many sites like Digital.com that compile lists of small business grants that you can apply for in the given year. It is also encouraged that you use the Internet to find Small Business Development Centers in your area, as well as local incubators. All of these can be great sources of information throughout this process. How to Apply For (and Win) Small Business Grants Applying for small business grants typically involves following the directions listed on the grant’s website. Again, you’ll need to make sure you qualify and provide any documented proof that is required. You’ll also likely need to submit a proposal outlining where that money will be going and why it matters. Be as convincing and as passionate as possible in your proposal while making sure that it falls within the listed guidelines. Show someone the real, tangible impact that capital will make. The more compelling you are, the better your chances of winning that grant. In the end, small business grants certainly bring with them many distinct advantages. However, you do need to get your expectations in order before you apply. Winning one is often not a guarantee and you shouldn’t depend on this as your only source of income for any period of time. But the money can and often does help small businesses of all types succeed, regardless of the industry that they’re operating in. If nothing else, it is a resource that is worth exploring. If you want to talk over your business or possible startup idea, give this office a call.