TAX Questions:

Do I have to pay my taxes when I file my returns?

No, two different transactions.  We strongly suggest you pay your taxes on the due date, either electronically or by mailing a check.  You can file as early as you have all of your info and get your returns completed, but you don't have to pay until the deadline.

 

Why did I get a late payment penalty if I filed an extension and filed the returns on time?

Your taxes are due on the original filing date, even if you file an extension.  If you think you may owe some tax it's best to send in an estimated payment when you file your extension.

 

How long do I have to keep all this paperwork - my receipts and tax forms?

Keep everything at least 3 years from the time you file your returns or pay the taxes, whichever is later.  BUT there are several exceptions to this general rule that may apply to you - please ask us after we've completed your returns.

 

Do I even need to file a return - my income is below the filing requirement for my filing status?

There are reasons you may choose to file anyway - many people filed in 2020 in order to ensure their economic stimulus payments were eligible for direct deposit.  You may also be eligible for credits that may be refundable.

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PAYROLL Questions: 

Is overtime pay calculated daily or weekly?  What about if the pay period is every 2 weeks?

The DOL defines overtime as "over 40 hours in a workweek" - which it specifies as "a fixed and regularly recurring period of 168 hours"(seven days).  Some employers offer special pay for long workdays, but as of now those exceptions are not required.

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Do I need to withhold taxes on my workers, or can I just pay them straight pay without treating them like "employees"?

Danger zone!  There are very clear guidelines that determine whether a worker is an employee or an independent contractor, and the IRS does not rely on your discretion, but on the facts around how your workers do their work and several other factors.  You definitely want to speak to us about your specific situation.  The penalties can be devastating to your business if the IRS determines that you should have been paying employment taxes and withholding for your workers.

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BOOKKEEPING Questions: 

Why does my Income Statement (or Profit and Loss) not match my tax return?

There are several adjustments that might be made to your "book" income for the tax returns - including depreciation expense, vehicle mileage expense (rather than gas or actual expenses on the books), or a home office deduction if you're eligible for that.  You may also have your financial statements prepared on an accrual basis, while your tax return may be calculated on a cash basis.  So there are several reasons and it doesn't necessarily mean that anything is inaccurate on your books or returns.  You should always document these differences somewhere in your records (there is a place to do that on the tax returns as well) for future reference.

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