OWNERSHIP MATTERS (1)

Do You Need To File 1099s?

Did you pay any contractors during the 2021 tax year ? If so, you may be required to file a form 1099.

Form 1099 filings are due for any person or business to whom you have paid the following during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
  • At least $600 in:
    • Rents (box 1);
    • Prizes and awards (box 3);
    • Other income payments (box 3);
    • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
    • Any fishing boat proceeds (box 5);
    • Medical and health care payments (box 6);
    • Crop insurance proceeds (box 9);
    • Payments to an attorney (box 10) (see Payments to attorneys, later);
    • Section 409A deferrals (box 12); or
    • Nonqualified deferred compensation (box 14).

The 1099-MISC Form is due  by Friday, January 31, 2022

Please note that if you do not issue 1099’s timely you will be at risk of incurring penalties and fees.

Fola Financial has a quick 3 step process to help you get your 1099 forms filed and delivered to your contractors on time!

Step 1: Complete the 1099 Intake form

Step 2: Complete & Submit the Fola Founder’s Contractor Worksheet Spreadsheet Sent to you

Step 3: We will E-File your 1099’s & E-Deliver it to your Contractors for you

Remember, the deadline to file is January 31st, 2022! Don’t delay and click below to get started!

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Yes! You Can Buy It, But Can You Deduct It?

25 Purchases That May Qualify As Tax Deductions!

From major retail chains to travel, and service based businesses, there are lots of great deals available. 

But did you know that some of the items on your list (or in your shopping cart) may be considered tax deductions for our business? 

Here is list of 25 purchases that may qualify as a tax deduction! 

  1. Laptops or computers
  2. iPad, tablet, and accessories
  3. Website, domain name or hosting
  4. Travel and accomodations for business trips
  5. Software
  6. Digital storage products or services
  7. Car maintenance
  8. Meals for staff (including gift cards that can be purchased in advance and distributed as perks)
  9. Gym memberships or fitness services
  10. Office furniture
  11. Phone or accessories
  12. Camera or camera equipment
  13. Marketing services
  14. Graphic design services
  15. Cleaning services
  16. Non-cash gifts and rewards
  17. Photography services
  18. Subscriptions
  19. Ring light
  20. Vlogging equipment
  21. Airbnbs for business use
  22. Co-working space rental
  23. Electronic equipment 
  24. Makeup artists and personal services 
  25. Books

Want to learn more about how you can reduce your tax liability? Click below to apply to book a consultation!

Remote Work vs Working From Home 2

Remote Work vs Working From Home

Remote or hybrid work is the new standard for employers who want to attract and keep top talent. But does having a remote or hybrid job mean that you can qualify as “Working From Home” when it comes to filing your taxes?

The IRS has specific requirements for individuals to qualify for the home office deduction. Let’s review some of them below:

  • The home office deduction is only available to qualifying self-employed people.
  • You must use your home “regularly and exclusively” for business during the tax year.

Here is a quick chart from the IRS that helps guide you to see if you may qualify for the deduction:

If you are able to meet these requirements, you may be able to deduct part of the cost of your home expenses. Identifying which expenses you can include can be a bit challenging, so it’s always recommended that you review your proposed deductions with at CPA to make sure that you are maximizing your opportunity to claim your business expenses.

For many people who are now working remotely, this deduction will not apply to them because the work that they are doing is as an employee.

However, if you are currently an employee that is considering transitioning to a more independent option such as becoming an independent contractor, or starting a business in your spare time, you may have opportunities to deduct other expenses that are related to your business operation.

Whichever category you qualify for, it’s always important and beneficial to create a tax plan ahead of tax season, and to review that plan during the year to make sure that you are sticking with it!

Fola Financial is here to help you create a plan to meet your personal and professional goals, and evaluate how you can reduce your tax liability and maximize your deduction whether you file taxes as an employee or a business owner.

15

The Cost of Being Your Own Boss

The Great Resignation has resulted in many former employees considering or becoming their own boss. While this shift in one’s title is a level up in many ways, it comes with an increase of responsibility when it comes to paying taxes that many people aren’t aware of. This additional responsibility can actually provide benefits that W2 employees cannot take advantage of.

Let’s review some things that everyone should know if they want to work for themselves.

Tax Payments

  • Self-employed people receive compensation that does not withhold their required tax payments. Instead, they are responsible for paying quarterly estimated taxes on their income. Due to this, it’s important to track monthly and quarterly income and set aside money for tax payments.
  • Instead of receiving a W2, the self-employed receive a Form 1099 from each entity that has paid them, this document details the amount they have earned. Making accurate quarterly estimated tax payments throughout the year can reduce tax liability at the end of the fiscal year.
  • Self-employment taxes are 15.3% of earned income, of which 12.4% goes toward Social Security and 2.9% goes toward Medicare.

Tax Savings

  • Self-employed people benefit from being able to claim deductible business expenses on their taxes. They can write off half of the self-employment levy, phone bills, internet expenses, costs associated with a home office, and more.
  • Self-employed people are eligible to open a simplified employee pension plan, known as a SEP IRA. Through this plan, 25% of net earnings from self-employment can be saved.
  • Health insurance premium payments can be claimed as a tax deduction for the self-employed.
  • Entrepreneurs with businesses filed as pass-through entities, including S-corporations and LLCs may also benefit from the 20% qualified business income deduction that is subject to limits based on income level and industry.

Of course, everyone’s individual situation will vary, which is why speaking with a CPA can help you to create a plan that will help you plan your tax strategy before tax season even begins.

If you recently made the transition to being self-employed and want to prepare for the upcoming tax season, consider scheduling a consultation call with Fola Financial to learn more about how our services can help you to create a smart tax strategy and reduce your tax liability. Click here to get started!

OWNERSHIP MATTERS (2)

Tax Planning Is For EVERYONE!

We’ve all seen the news about how some of the wealthiest people in America reduce their tax liability every year. This isn’t a benefit exclusive to the wealthy, it’s available to EVERYONE who takes time for tax planning!

Tax planning is an essential part of wealth accumulation and sustainability.

The purpose of tax planning is to ensure tax efficiency through the implementation of strategic analyses and strategies aimed to reduce your tax liability.

However, tax planning takes place year-round — not just when you’re preparing for tax season.

Here are a few strategies that you can implement that can make an impact:

  • – Analyzing your business tax structure
  • – Hiring your kids
  • – Paying yourself via payroll
  • – Contributing to retirement accounts
  • – Pre-paying expenses

Of course, working with a tax professional is the best way to help you assess your current tax liability, and make strategic changes to reduce your liability in preparation for the upcoming tax season.

Fola Financial offers clients quarterly tax planning packages that help individuals and businesses plan their tax strategy year-round!

If you’re ready to learn more about how you can benefit from tax planning, book a consultation with Fola Financial today!

retire young plan

Retirement Planning 101

Nowadays it’s more common for people to switch jobs or careers every 4.2 years than it is for them to stay at the same job until retirement. Whether you are a full-time employee, have a part-time hustle, are fully self-employed, or have employees of your own, it’s important to understand the different ways to plan for retirement in order provide yourself (or your employees) with the best options for retirement.

Here’s a quick overview of the most common retirement plans :

401K

What is it?

  • A tax-advantaged, defined-contribution retirement account offered by many employers to their employees.
  • Workers can make contributions to their 401(k) accounts through automatic payroll withholding, and their employers can match some or all of those contributions.
  • The investment earnings in a traditional 401(k) plan are not taxed until the employee withdraws that money, typically after retirement.

Roth IRA

What is it?

  • A special retirement account where you pay taxes on money going into your account, and then all future withdrawals are tax-free. Roth IRAs are best when you think your taxes will be higher in retirement than they are right now.
  • You can’t contribute to a Roth IRA if you make $140,000 as a singles individual or $208,000 as a married couple.
  • In 2021, the contribution limit is $6,000 a year unless you are age 50 or older—in which case, you can deposit up to $7,000

Roth 401K

What is it?

  • A Roth 401(K) is a tax-advantaged retirement savings vehicle that combines features from traditional 401(k) plans and Roth IRAs
  • Contributions and earnings can be withdrawn tax-free as long as certain criteria are met
  • For 2020 and 2021, the contribution limit is $19,500 and those 50 and over can contribute an additional $6,500

If you are starting a new job and are unsure which plan to select, here’s something to consider!

A Roth 401(k) can be rolled over into a Roth IRA when you leave your job or retire which will eliminate the Required Minimum Distribution(RMD) Requirement. This is best used if your retirement savings and retirement income (Social Security, pension, etc.) are currently heavily weighted towards tax-deferred assets.

Do you have specific questions about retirement planning and establishing generational wealth?

Click here to register for a free webinar on August 19th, 2021!