Contact Us
office@taxsherpa.com
(678) 944-8367
Follow Us:
Our Blogs
On our blogs you will find our Tax Sherpa Stories series as well as additional posts covering all manner of tax topics. Some items are timely as there are multiple tax filing dates throughout the year and some items are important larger concepts.
The IRS is on a Hiring Spree: How Solopreneurs and Small Businesses Can Stay Ahead
Welcome to another insightful episode of Tax Sherpa Stories. Our goal is always to shed light on critical tax matters, and today, we discuss the IRS and its recent developments.
With an injection of billions from the Inflation Reduction Act, the IRS is aggressively scaling up their manpower, hiring computer scientists, revenue agents, and more. Their objective is to ensure the tax system remains fair and caters to the needs of its citizens.
However, there's a catch. As solopreneurs, gig economy workers, and small business owners, you might be particularly vulnerable. Why? The IRS is setting its sights on Schedule C filers. Even if you earn less than $400,000, the top line revenue might place you at risk. Our suggestion? Transition from being a Schedule C to having an S Corp or even an LLC partnership, depending on your unique circumstances. This strategic move could reduce your risk of being audited by over tenfold.
Stay informed, stay ahead, and always consult with professionals. Let's ensure we're not just compliant, but also protected from undue scrutiny. Remember, knowledge is power.
Links mentioned in the video:
- IRS press release: https://www.irs.gov/newsroom/irs-announces-sweeping-effort
- IRS publication 1415: https://www.irs.gov/pub/irs-pdf/p1415.pdf
- IRS Linkedin: https://www.linkedin.com/company/irs/
Frequently Asked Questions
Q:
What's the difference between tax advisory and just filing my taxes?
Filing your taxes each year is a necessary task, but it is always backwards looking. Tax advisory works with you throughout the year to make sure that you are on the right track when it comes to your taxes and have strategies in place to save money now.
Q:
I've heard about tax write-offs for small businesses. What exactly can I write off, and how does it benefit my business?
Tax write-offs, also known as tax deductions, are expenses that a business incurs that can be subtracted from its revenue to reduce the amount of taxable income. Common write-offs include office supplies, mileage, rent for a business location, and advertising expenses, among many others. By writing off legitimate business expenses, you can significantly reduce your taxable income, which can lead to a lower tax bill. It's essential, however, to maintain proper records and ensure that the expenses are truly business-related.
Q:
What's the difference between a tax deduction and a tax credit?
A tax deduction reduces the amount of your income that is subject to taxation, which in turn can lower your tax liability. Common deductions include expenses like mortgage interest, student loan interest, and business expenses. A tax credit, on the other hand, is a direct reduction of your tax bill. This means if you owe $1,000 in taxes and have a $200 tax credit, your tax due would be reduced to $800. Some popular credits include the Child Tax Credit, the Earned Income Tax Credit, and credits for energy-efficient home improvements.
Q:
I'm thinking of hiring an independent contractor instead of an employee. Are there different tax implications for each?
Yes, there are significant tax differences between hiring an employee and an independent contractor. When you hire an employee, you're responsible for withholding federal and possibly state income taxes, Social Security, and Medicare taxes from their paychecks. You also typically pay unemployment taxes on wages paid to employees. Independent contractors, on the other hand, are responsible for their own taxes. As a business owner, you'd provide them with a Form 1099-NEC (if you pay them $600 or more during the year) instead of a W-2, and they would be responsible for their own self-employment taxes. It's important to correctly classify your workers, as misclassifying can lead to penalties.
Get in touch with us
Have questions? Use the form here and one of our knowledgable staff will get back to you as soon as possible.
(678) 944-8367
office@taxsherpa.com
3900 CROWN RD SW STE 16709
Monday - Friday, 10:00 am - 5:00 pm
Send us a message
Follow Us
Follow Us
Disclaimer: The content presented on this website is intended for informational purposes only and is not tailored to the needs of any specific individual or entity. It should not be considered as financial, investment, or tax advice. The information provided is general in nature and does not account for individual circumstances or financial positions. Before making any financial or tax-related decisions, we strongly advise consulting with a qualified professional who can provide guidance tailored to your individual situation. All information on this site is provided in good faith, but we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the site. Use of this site and reliance on its content is solely at your own risk.
Services
More
Contact Us
office@taxsherpa.com
(678) 944-8367
3900 CROWN RD SW STE 16709
Monday - Friday, 10:00 am - 5:00 pm
© Copyright 2024. Online Tax Solutions Group LLC dba Tax Sherpa. All rights reserved.