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Educator 2020 Tax Deduction

If you’re an eligible educator, you can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each) of unreimbursed trade or business expenses (https://www.irs.gov/taxtopics/tc458). Some examples of qualified expenses are:

  • Books and educational textbooks
  • Computer equipment, software, and cloud services
  • Instructional supplies (like pens, paper, craft goods, etc.)
  • Professional development courses related to curriculum or students
  • Supplementary supplies used in the classroom
  • Industry-specific equipment

Many teachers incurred unforeseen expenses due to supplies needed to help prevent the spread of COVID19. Due to the pandemic, qualified expenses also include amounts incurred after March 12, 2020, that are considered personal protective equipment (PPE). For examples of PPE, click here: https://www.cdc.gov/coronavirus/2019-ncov/hcp/using-ppe.html

With the extra funding that Montana schools are set to receive for the upcoming 2021-2022 school year, educators will have more items provided to them. Find out more about the additional $127 million here https://www.tester.senate.gov/?p=press_release&id=8517.

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Is Your Turnover Rate Keeping Your Business From Being Successful?

Having happy employees is the key to a successful business.

Have you stopped to think about what your turnover rate is costing your company? If you are an employer, you know how important it is to keep valued employees around. However, if you are not a seasoned employer, you may not realize what that turnover rate costs you. (https://www.forbes.com/…/the-cost-of-turnover-can…/…)
Experts agree, calculating the turnover costs is something employers need to maintain. In turn, the results will make a business owner take more notice of valued employees. For example, studies predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. That’s a lot!
For your business to thrive in today’s economy, finding and retaining the best employees is vital. However, retention can be especially challenging for small businesses and nonprofit organizations to compete with larger businesses and larger budgets for top talent. Benefits play a significant role in employee retention. (https://www.forusall.com/401…/employee-retention-benefits/)

Advanced Payroll Solutions is here to help with this struggle by providing payroll, workers’ compensation, and benefit options; medical, dental, vision, short-term disability, and more.

Let APS help you retain the best employees for your business.

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Revisiting Identity Theft: What to Be on The Lookout For

Sophie’s Corner

Revisiting Identity Theft: What to Be on The Lookout For

Are you concerned when you get a letter or phone call from a “Government Agency” and you don’t know if it is truly the government or someone trying to steal your identity?

Government imposter scams have been the top fraud type for 8 years and counting. Although physical mail and email are popular for scammers, their favorite is the phone call. The phone calls are generally intimidating and overly demanding. Make sure to take the time to educate yourself and others on how to avoid these imposters. Find more information here: https://www.consumer.ftc.gov/articles/how-avoid-government-impersonator-scam

Fraud happens all over the country, and more than you might think right here in Montana.  Cascade County has an annual shred day to help eliminate the possibility of fraud. According to Becky Timmons with the Montana Federal Credit Union, tearing up or tossing important documents after you no longer need them isn’t enough protection against identity theft or exposure. “We have had so much fraud lately on our accounts and it comes from different directions. It is either online or people trying to deposit checks that aren’t real, things like that. We do have stolen identity cases when somebody gets a Social Security number and starts taking out Credit or applying for loans in people’s names. So we do see a lot of that. You really can never be too careful when it comes to your personal information so that’s why we really stress properly disposing of your personal information so it doesn’t get into the hands of somebody that could use it against you,” Timmons said. Read more about Great Falls’ annual shred day here: https://www.kulr8.com/great-falls/join-our-5th-annual-shred-day-to-eliminate-the-possibility-of-identity-theft/article_64de8352-813c-531d-96a8-6aa35a52a565.html

How to Protect Your SSN

  • Ask Why They Want It and How It Will Be Handled…
  • Leave Your Card at Home…
  • Shred Mail and Documents With Personal Details…
  • Don’t Use Your SSN as a Password …
  • Don’t Send Your SSN via an Electronic Device …
  • Don’t Give It Out to Strangers…
  • Monitor Your Bank and Credit Card Accounts…

IRS will never:

  • Initiate contact with taxpayers by email, text, or social media to request personal or financial information
  • Call taxpayers with threats of lawsuits or arrests
  • Call, email, or text to request taxpayers’ Identity Protection PINs

The IRS mails letters or notices to taxpayers for a variety of reasons including if:

  • They have a balance due
  • They are due a larger or smaller refund
  • The agency has a question about their tax return
  • They need to verify identity
  • The agency needs additional information
  • The agency changed its tax return

Closing tips:

  • Check the address you receive physical from (is it a real government address?)
  • Check the email address you receive electronic mail from (is it .gov?) You can forward suspected scam emails to phishing@irs.gov
  • If you think you are a victim of fraud you can report it here ftc.gov.

 

 

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2020 Unemployment Benefits Tax Exclusion: IRS to Issue Automatic Refunds for Those Who Qualify

The legislation, signed on March 11th, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude unemployment compensation. Those who are married and filing jointly can exclude up to $20,400, and all other eligible taxpayers can exclude up to $10,200. The legislation excludes only 2020 unemployment benefits from taxes. Unemployment benefits are generally treated as income. The new tax break is an “exclusion” — meaning workers can exclude jobless benefits from their 2020 taxable income. Individuals should receive a Form 1099-G (find the form here: 1099-g form), showing their total unemployment compensation last year.

Because the change occurred after some people filed their taxes, IRS will recalculate taxes on 2020 unemployment benefits and automatically issue refunds. The first refunds are expected to be made in May and will continue into the summer. For those who have already filed and figured their tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation and tax. Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed.

For those who have already filed, the IRS will do these recalculations in two phases, starting with those taxpayers eligible for the up to $10,200 exclusion. The IRS will then adjust returns for those married and filing jointly taxpayers who are eligible for the up to $20,400 exclusion and others with more complex returns. There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.

The IRS strongly encourages people who have not already filed their federal income tax returns to do so electronically. It has worked with the tax return preparation software industry to incorporate the tax implications of the American Rescue Plan “so people who choose to file electronically simply need to respond to the related questions when electronically preparing their tax returns.

Watch President Biden’s interview regarding the legislation here:
benefits-tax-exempt-10200-explained

Stay informed with us by following our Facebook page!
https://www.facebook.com/APSBILLINGS
www.aps-peo.com

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Has Your Information Been Compromised? Are You at Risk of Falling Victim to Identity Theft

If you think your information has been compromised, you are not alone! Identity theft and fraud continue to be major problems. Prevalent categories of fraud are employment or tax-related fraud, and phone or utility fraud. Credit card fraud remains the highest reported (86% of global consumers fall victim to identity theft), followed by employment or tax-related fraud. If you think your identity has been compromised, the first place you should visit is https://www.irs.gov/identity-theft-central.

Identity theft has been on the rise for years, and 2020 was no different. In fact, because of the Covid-19 restrictions, many of us found ourselves relying on the internet for all kinds of shopping. We were online more than ever, creating a significant up-tick in identity theft claims. Thanks to Covid, hackers found another opportunity to wreak havoc on people’s lives. Because of the stimulus checks, thieves began conspiring ways to direct those payments to themselves. “Economic Impact Payments were designed to reach the neediest, not to line the pockets of criminals.  The Eastern District of Texas is committed to fighting fraud and criminal activity related to the COVID-19 pandemic,” read more here: https://www.justice.gov/. Some states, such as Pennsylvania, have recommended filing your taxes early to avoid identity theft.

If you are a taxpayer and want to protect your identity when filing your federal tax return, you can request an identity protection PIN from the IRS.  An Identity Protection PIN is a six-digit number that prevents someone else from filing a tax return using a taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, and this step helps the IRS verify the taxpayer’s identity when they file their electronic or paper tax return.

Don’t know if your information has been hacked? Find out how to check. If you find out it has been hacked, here are your next steps.

Follow our FB page for weekly tips & updates: https://www.facebook.com/APSBILLINGS

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Manage Your Business, Not The Paperwork

According to SCORE, the majority of small business owners spend more than 41 hours on tax preparation each year. And this is on top of the nearly 40 hours per month that you spend handling payroll and HR-related tasks.

Running a business is hard work. Having a great bookkeeper or accountant can help. So how is Advanced Payroll Solutions different than another service you may have used in the past or are using now?

Some accountants have hidden fees. We do not. For example, our customers will never see a charge for stationary, W2 filings, state and federal filings, or an extra charge for adding another employee to the payroll. Our prices are inclusive, so it makes it simpler for you to manage your cash flow.

Some agencies will help assist with unemployment insurance filings and workers’ compensation filings. But we can do you one better. As a licensed Professional Employer Organization, we not only automatically take care of all the filings, but we manage all unemployment and workers’ compensation claims.

When you use our services, we are taking full responsibility for onboarding your employees. For example, if you have an employee who is paying into child support, not only do we make sure the garnishment is taken out correctly, but we also facilitate any necessary paperwork and handle all the correspondence.

Aside from all the paperwork, you no longer need to be glued to your phone. Because we are a licensed Professional Employer Organization, we handle all the tax agency calls, garnishment inquires, and even hospital billing calls (if an employee filed a workers’ comp claim).

We are truly your one-stop-shop. And we didn’t even get to the risk management, benefits, and IRS tax consultations!

Call us today! 406-894-2626. Follow us on Facebook to stay up-to-date with us https://www.facebook.com/APSBILLINGS

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Attention New Businesses! Common Payroll Mistakes That You Should Avoid at all Cost

With user-friendly payroll programs, such as QuickBooks, it can be easy to feel confident in your payroll accuracy. Although the software has come a long way, it is vital as a business owner to remember that the program is only as good as the information you put into it. You probably won’t be getting a reminder call from the QuickBooks headquarters to let you know it’s time to send those 1099 forms, which is unfortunate because those fines range from $50-$280 per 1099. Those who do utilize QuickBooks, or other similar programs, will find a plethora of videos & articles online to help keep your business on the right track. For example, a quick google search landed me this nifty article: https://www.inc.com

But that’s not why you’re here. Let’s go over the most common (in our opinion) costly payroll mishaps.

This one is often overlooked and yet, potentially the most expensive mistake. Not properly handling garnishments, levies, or child support. Your employees depend on you to maintain these transactions. If you fail to do so, your employee may find a new employer that they can depend on.  As any seasoned business owner knows, employee turnover is more than just a headache, it’s a high-priced reality of owning a business. Although not heard of often, if you’re not withholding child support as required, you may find yourself in contempt of court. We won’t get into the tax liability you will incur for not responding to employee levies, but let’s just say, it’s not something you want to miss.

Don’t be late! Penalties are 15% of taxes due for deposits still unpaid more than 10 days after the date of the first notice Depositing employment taxes late. For the State of Montana you’re looking at a $50 minimum, or. 5% of the outstanding tax per month. Up to a maximum of 25% of the tax due (might want to keep this bookmarked: https://mtrevenue.gov/taxes/penalty-and-interest).

As a business owner, you can expect to be audited at some point. Having disorganized, inaccurate, or inadequate records may result in significant penalties. Both federal and state agencies can charge interest on those penalties, which is a major cause of businesses going under. If you ignore the IRS, they won’t forget about the audit. It’s worth reading up on:
https://www.hrblock.com/tax-center/irs/ignore-audit-will-go-away-right/
https://k2radio.com/irs-delays

Time is of the essence! Miscalculating or failing to pay overtime is easy to do, and a pain to fix. Guidelines must be followed when managing overtime pay. Basic miscalculations can be costly…100% of overtime pay owed, civil penalties of up to $1,000 per violation, and any additional state penalties. Over recent years, litigation has been increasing claiming that employees who were treated as “exempt” employees and therefore not entitled to overtime were misclassified. A simple tip, make sure you are calculating overtime weekly, instead of every 2 weeks. The Montana Department of Labor and Industry has a great reference guide available here: https://erd.dli.mt.gov/labor

Does your contractor have a time-card? Does he/she wear your company logo? If they do, they are not a contractor, they are your employee! Mis-classifying employees and contractors is a major blunder to make. Here’s why: The penalty for classifying an employee as an independent contractor: 1.5% of all wages paid to the employee, $50 fine for failure to file Form W-2, 40% of employee FICA taxes, and 100% of employer FICA taxes. Penalty if the misclassification is determined to be intentional: Up to 20% of all wages paid to the employee, 100% of employee and employer FICA taxes, and criminal penalties of up to $1,000 and/or one year in PRISON.
The penalty for classifying a non-exempt employee as exempt: 100% of unpaid overtime owed to the employee dating back three years from the employee claim. I’ll leave you with this: https://www.irs.gov/newsroom

Payroll doesn’t need to be stressful. Stay informed, and when in doubt, call https://aps-peo.com/

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Stimulus Checks & Tax Season

With tax season in full swing and the next stimulus payment hitting bank accounts, you may want to know if the payments received in 2020 have an impact on your filings. The stimulus payments are not considered income by the tax agency and not tax-deductible. Because the payments are not considered income, they can be treated like a refundable tax credit. To put it simply, you can treat your stimulus check as an advance on money you would have received anyway as part of your tax refund in 2021. Keep in mind, this may not be the case when filings in 2022.

Did you qualify for a payment in 2020 but didn’t receive one or both? If for some reason, you didn’t get any stimulus payment last year, you can get it this year when you file your 2020 tax return by claiming the Recovery Rebate Credit.

Those who opted in for Direct Deposit will receive the current round of stimulus payments first (deposits began on March 12th. Checks will begin to be issued on March 17th. You can check the status of your payment by going to https://www.irs.gov/coronavirus/get-my-payment.

To qualify for the third round, individual taxpayers must be earning less than $75,000 and joint filers earning under $160,000.

The Treasury Department will use your 2019 federal return or your 2020 return if you have filed one already. This can make things a bit complex for a couple of reasons. For one, the IRS will be including makeup stimulus money from the first two checks with your tax refund this year. It also means the IRS will likely use whichever tax return it has on file most recently. If your income was too high for a payment based on your adjusted gross income for 2019 but you think you may be eligible based on your circumstances from last year, you should file your tax return as soon as you can.

 

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941 Federal Tax Deposit Deadline Approaching

941 Federal Tax Deposits are due quarterly, to avoid penalties, make sure yours is filed by Monday, March 15th!

What are they?

Employer’s Quarterly Federal Tax Return, or for short, IRS Form 941. The 941 consists of income taxes, Social Security tax, or Medicare tax withheld from employee’s paychecks. Every employer uses this form to report federal income tax withheld from employees (including withholding on sick pay and supplemental unemployment benefits). Although the 941 Form is not incredibly complex, it does require a lot of care and precision to do it correctly. 

What happens if you forget to pay?

Don’t forget! The penalties are high. 

Penalty Charged for…

2% Deposits made 1 to 5 days late.

5% Deposits made 6 to 15 days late.

10% Deposits made 16 or more days late, but before 10 days from the date of the first notice the IRS sent asking for the tax due.

10% Amounts that should have been deposited, but instead were paid directly to the IRS, or paid with your tax return. But see Payment with return, earlier in this section, for exceptions.

15% Amounts still unpaid more than 10 days after the date of the first notice the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier.

 

Do you know when to deposit your payroll taxes?

IF the total taxes you reported in the lookback period were…

$50,000 or less, THEN you are a monthly schedule depositor.

more than $50,000 THEN you are a semiweekly schedule depositor.

 

What is the lookback period?

If you’re a Form 941 filer, your deposit schedule for a calendar year is determined from the total taxes reported on Forms 941, line 12 (Total taxes after adjustments and nonrefundable credits), in a 4-quarter lookback period.

 

(Information source IRS Publication 15)

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The Deadline Is Approaching To Apply For A Paycheck Protection Program (PPP) Loan

The Paycheck Protection Program ends this month! The deadline to apply is on Wednesday, March 31. All eligible businesses can apply through a participating lender until then. The interest rate on all PPP loan balances is an eye-catching 1%. That would be $100 in interest payments per year, per $10,000 in unforgiven loan proceeds.

Congress remains clear that a forgiven PPP loan is completely tax-exempt and is not taxable income. Furthermore, business expenses paid for with PPP funds can be written off like everyday business expenses.

Does a forgiven PPP loan become taxable income? After the passage of the CRRSAA into law in December 2020, Congress made clear that a forgiven PPP loan is completely tax-exempt and is not taxable income.

If you already have received PPP funds, you are allowed to use the money for both the salaries of your employees and the employee taxes that you would normally withhold and send to the IRS. You can’t, however, use these funds to cover the business’ portion of the taxes that go toward things like FICA and Medicare.

What can I spend my PPP funds on?

Generally, PPP funds can be used for four purposes:

  • payroll
  • mortgage interest
  • rent/lease
  • utilities

Payroll should be the major use of the loan.

Before rushing to apply, here are some questions to answer to see if your business is eligible.

How many employees do you have? Because this is a small business loan, it must be less than 500. Are you open and operational? Have you been operational before February 15th, 2020? This is a must.  If you have already received PPP funds you may be eligible for a second draw! The same guidelines apply as your first loan, however, there are a couple of additional conditions. To get a second draw, your business can have no more than 300 employees & you need to show a 25% or greater reduction in gross revenue.

Find out more by visiting the Small Business Administration Paycheck Protection Program (PPP) website.

Ready to apply for your PPP loan? Call 406-894-2526 or book your Paycheck Protection Program (PPP) consultation online today!

We’re here to help you find a more efficient way! Call 406-894-2526 or request a quote online!