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Did Your Business Make Bank in 2022? Minimize Your Tax Bill with These Tips

If you are one of the lucky business owners whose business is flourishing, you may be wondering how to keep as much of your earnings as possible as tax season nears. While you definitely need to pay the tax due on your earnings from all sources, you shouldn’t set yourself up to pay more tax than is necessary. This summary of tax brackets for 2022 will help you plan your actual tax obligations based on your income so you can take informed action to reduce the amount of tax you pay as much as possible. Keep in mind that in

Breaking News on Payment Platform Tax Reporting: The IRS Delays $600 Reporting Threshold for 1099-Ks

The IRS has just announced a delay in the income reporting thresholds for third-party settlement organizations (TPSOs) such as PayPal, Venmo, and CashApp . This is a key change which may impact your 2022 tax filing. Until now, the IRS was set to start scrutinizing business-related transactions and the income derived from them on third-party payment platforms more closely in the 2022 tax year with a much lower reporting threshold of just $600 and a requirement that these companies report on a 1099-K Form. This change has been delayed until 2023. Currently, the reporting threshold applies when a taxpayer completes

Freelancer Crypto Income: Get Up to Speed on New IRS Guidance and Reporting Requirements for Digital Assets

Last year the introduction of the Infrastructure Investment and Jobs Act clarified and expanded the rules for reporting of information on digital assets by brokers. The United States Treasury Department and the Internal Revenue Service (IRS) have just announced that brokers are not required to report additional information related to the dispositions of digital assets until final regulations are issued, likely in 2023. Brokers and taxpayers are still required to comply with existing laws and regulations despite this transitional guidance. Here are some key points to keep in mind when you are completing your 2022 tax return and planning for

Reduce Your Freelance Tax Bill with These Top Year-End Deductions

Between the increase in expenses due to inflation and potential end-of-the-year deductions you can take, there is a lot to consider as you work to finalize your freelance business finances before Dec. 31. For this tax season, however, it is important to consider how inflation may play into your calculus, especially when it comes to deductions or if you raised prices to keep up with inflation. Many of the changes that were introduced in the Inflation Reduction Act will not go into effect until January 1, 2023, but there are still deductions you can take advantage of now that can

Is Your Freelance Side Hustle a Hobby or a Business? Use This Checklist to Determine Your Tax Obligations

As the end of the year approaches, it’s key to make sure that you are keeping your records up to date in regard to all income and taxable revenue you are generating from any source. This includes hobby businesses. Many freelancers have multiple streams of revenue, some of which may involve a special hobby that they try to monetize. If this applies to you, it is important to determine if your hobby is actually a business because the IRS will require you to pay taxes on the income derived from it. If you do not meet the qualifications for a

It’s the Final Countdown for Extended Freelance Tax Returns Don’t Miss It the October 17 Deadline!

Did you run short of time last April when the regular tax filing deadline came? Hopefully, it was a rare occurrence and you took the smart step of filing an extension for your 2021 taxes. If so, the six-month window to get your taxes filed without additional failure to file and late payment penalties is rapidly closing. It will slam shut on October 17, 2022, so if you haven’t already, now is the time to make good on your commitment to filing by this date. Doing so will take it off your to-do list and reduce your tax penalty burden

Are You Facing Failure-to-File Penalties for Your Freelance Taxes? The IRS Just Announced Relief for 2019 and 2020 Penalties

The IRS just announced that it will automatically provide relief from failure-to-file penalties including a broad range of tax and information returns for 2019 and 2020 tax years. This could be good news if you did not file your taxes for these years. If you have already paid the penalties, the IRS will also automatically issue you a credit. Here are some answers to some common questions about the new IRS failure-to-file penalties: Which tax and information returns does the penalty abatement apply to? The penalty abatement applies not only to your federal individual and business taxes (Forms 1040, 1041,

The New Student Debt Relief and Your Taxes: What Freelancers Need to Know

There has been lots of talk about student loan forgiveness recently, especially after the past two years of Covid chaos which had a negative financial impact on many taxpayers. Now with inflation rising, the government has finally pushed through the American Rescue Plan legislation including student loan debt relief which may help your financial situation as a freelancer. A key caveat: The net benefit of this new legislation may largely depend on where you live, according to how each state enacts it. Here are the details of how the American Rescue Plan may help individual taxpayers: If you are an

Four Key Tax Changes for Freelancers in the New Inflation Reduction Act

The Inflation Reduction Act (IRA) was passed by the U.S. senate and signed into law this month. When this happens, there will be some notable tax changes. Here is a summary of the ones with the most significance for freelance business owners: 1. Enhanced IRS enforcement could increase your risk of an audit. The IRA has big time funding for the IRS to the tune of a $3.1 billion to increase for IRS taxpayer services, $45.7 billion for IRS enforcement, $25 billion for IRS operations support and $4.7 billion for IRS technology upgrades. This means the IRS is going to

Traveling for Your Freelance Business? Don’t Let Tax Deduction Details Trip You Up

Business travel expenses can provide a freelancer with significant business expense deductions. However, deductible business expenses are subject to numerous rules which must be carefully followed, or you risk an unpleasant surprise if you are audited. Let’s start with what qualifies as a business travel expense. The rules changed, temporarily, due to Covid and they will revert to the original IRS definition beginning January 1, 2023, for some business expenses. However, pre-Covid and post-Covid, business travel expenses must be ordinary and necessary expenses while traveling for your business, away from your tax home. This applies to you as a freelance

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