News - Jacksonville, FL CPA Firm | Daniel Brock | Brock CPA
Accounting Advisory Business Taxes

The Season of Giving: Understanding Charitable Gift Deductions

The holiday season is a time when many people take an opportunity to give. Whether it’s to your church, an education-related Foundation or other charitable organization, so long as the organization has tax-exempt status, your gift can qualify for tax benefits.

What Types of Organizations Qualify as Charitable?

If you’re unsure what type of organizations qualify, note that non-profit eligible entities typically operate for religious, scientific, poverty mitigation or educational purposes, and/or have a purpose to prevent cruelty of protected or vulnerable groups. The IRS provides a search tool to help verify an organization’s tax-exempt status and determine its eligibility for deductible contributions, which you can access by clicking here. (Remember, gifts that benefit a particular individual, business or private interests do not qualify as deductible contributions.)

Changes to Charitable Giving Deductions

Last year, the IRS temporarily allowed individuals to deduct $300 per person (up to $600 for married filing jointly) without itemizing other deductions. Unfortunately, in 2022, charitable contributions can only be deducted if you itemize expenses on Schedule A of your tax return. For that to make sense, all your itemized expenses must exceed the standard deduction. Additionally, other charitable contribution deduction provisions made as part of COVID relief in the 2020 and 2021 tax years are no longer available. Specifically, the deduction for cash contributions to public charities is no longer up to 100% of adjusted gross income for people who itemize. The 2022 rules have reverted back to allowing no more than 60% of your adjusted gross income for cash contributions to most public charities, and the limit is 30% for non-cash donations.

What Type of Documentation is Needed?

For cash contributions, you’ll need the name of the organization and the donation amount; a bank or credit card statement that illustrates the amount of the contribution and the date of the donation; and for gifts over $250, a receipt from the charitable organization is also required.

Plan Ahead

In addition to documenting the charitable donations you have made this year and working with your tax advisor to determine whether the using standard deduction, or itemizing deductions will be the best option for your 2022 tax return, it’s important to plan ahead. Start thinking now about your charitable contribution goals and associated tax implications for 2023. Make sure you know what tax bracket you’ll fall into next year, if you plan to file individually or jointly, the associated deduction limits, and the types of assets you can donate.

We are Here to Help.

The team at Brock CPA is here to help you better understand the latest rules on allowable deductions for charitable donations of cash and property as well as potential carryover opportunities. As always, we encourage you to reach out with any questions or concerns regarding your accounting and tax needs by calling 904-330-0268 or emailing dbrock@brockcpa.com.

Accounting Business Taxes

How to Lessen the Chances of an Audit

As most know, President Joe Biden recently signed the Inflation Reduction Act into law. In doing so, he authorized $80 billion in funding for the Internal Revenue Service over the next 10 years. The law calls for the funding of 87,000 new IRS agents. Part of this is to replenish an aging, shrinking workforce and revitalize the agency to be able to process more returns on time and provide better overall service. However, $45 billion is specifically earmarked for enforcement to close the estimated $600 billion “tax gap”, or the difference between what Americans owe and what they actually pay. Part of this effort is to include more audits.

 

While all agree that the absolute number of audits will rise, administration officials have intimated that the share of people being audited will likely be the same for households earning less than $400,000 per year. Although some question the veracity of this threshold, one thing is certain – that many individuals and small business owners with closely held businesses that generate more than this amount in annual revenue will face a higher likelihood of an audit than in years past.

 

As a result, you will want to protect yourself as best as possible. While nothing is guaranteed, there are some practical steps you can take to lessen your exposure to an audit. Most important is avoiding the types of common mistakes that are most often flagged by IRS computers:

 

These include:

  • Filing and/or paying late
  • Leaving questions blank
  • Not reporting all income reported to the IRS by others
  • Showing nonpassive involvement when you are a passive investor
  • Reporting under incorrect Tax ID numbers
  • Numbers in your return conflicting with documents submitted by others
  • Materially overstating charitable donations and automobile expenses
  • Reporting a side business loss too many years in a row
  • Reporting unusually large deductions (such as business expenses) as compared with prior years
  • Not being specific about deductions
  • Claiming losses from a business activity that the IRS views as a hobby
  • Using the same annual figures repeatedly
  • Using all perfectly round numbers

 

Finally, always use a good professional CPA to help you with your tax preparation and answer any questions you may have about federal or state tax issues. At Brock CPA, we nourish long-term, consultative client relationships, so that we have a full, accurate understanding of our clients’ businesses at all times, and can step in to assist at any time. If you find yourself the subject of an audit, we can assist with our tax resolution services which include tax problem resolution for businesses and individuals, and representation before the IRS and state tax authorities. Contact us at (904) 330-0268 or dbrock@brockcpa.com for assistance.

 

Best Regards,

Daniel Brock

Accounting Business Taxes

Early Tax Planning Tips to Avoid Surprises

Now that we have entered the second half of the year, there is no better time to get a handle on your taxes to reduce the risk of unexpected surprises for next year’s tax season. Practicing a number of effective mid-year tax planning strategies can not only help you save income taxes, but can also increase your retirement fund, help you manage cash flows, and more. No matter if you typically receive a tax refund or a bill, taking advantage of the extra time in between seasons to review your taxes will help taxpayers become better organized, and provide peace of mind that everything is on track for next year.

 

  1. Review tax withholdings

Typically, whenever you start a new job there is a variety of paperwork to complete – including a Form-W4 that covers how much your employer withholds from your paychecks for federal taxes. It’s important to re-visit those withholdings before each tax season arrives to ensure everything is still up to date, especially after major life changes such as marriage, having children or obtaining a second form of income. The IRS provides a tax withholding estimator online tool to help taxpayers see if they are on track, providing ample time to adjust tax withholdings if necessary.

  1. Increase 401K contributions

For taxpayers that may have a little more room in their budget, now is also the perfect time to consider reviewing and making changes to monthly 401K contributions. Boosting your pre-tax retirement savings is a great way to reduce your total adjusted gross income. As of 2022, you are able to save $20,500 into your 401K, with an extra $6,500 if you are 50 years or older. No matter what your personal saving goals may be, there is no doubt that they will be easier to obtain by increasing your deferrals now.

  1. Weigh Roth IRA conversions

As many are aware, the stock market has been significantly down since the beginning of this year. However, some may have a chance to use this to their advantage by saving on Roth individual retirement account conversions. After making non-deductible contributions to pre-tax IRA, you may then convert those funds to a Roth IRA account – ultimately getting ahead on tax-free growth with the trade paying off upfront levies on contributions and earnings.

  1. Consider tax-loss harvesting

Using losses to offset profits is known as tax-loss harvesting, which is considered another good move for taxpayers to make while the stock market is down. This is achieved by selling declining assets from a brokerage account and using those losses to reduce other gains. Once the losses begin to exceed profits, you are then able to subtract $3,000 per year from regular income.

 

When it comes to taxes, we believe that there is no better time than right now to make sure you are doing everything possible to limit what you owe for the upcoming tax season. By practicing a few proactive steps throughout the year, businesses and individuals can be more confident that they are ready to go once tax season approaches. We understand that tax season can be an overwhelming time for many, and that it often has a way of sneaking up on you. At Brock CPA, our team of certified tax and accounting professionals are here to ensure our clients a stress-free tax season. If you are ready to get a jumpstart on your taxes, we encourage you to contact our office by calling 904-330-0268 or emailing dbrock@brockcpa.com.

Accounting Business Taxes

The IRS Updates its “Where’s My Refund?” Online Tool

Last month, the Internal Revenue Service (IRS) made enhancements to its “Where’s My Refund?” tool – an online feature that allows taxpayers to check the current status of their returns. In years past, the application only presented the status of the most recently filed tax return within the past two years. However, as the agency continues to endure processing backlogs from 2021, the tool now introduces a new feature that enables taxpayers to check the status of their current tax year along with returns for the two previous years.

This upgrade is essential for those who are still waiting for their current tax returns as well as those waiting for returns from the last couple years – which has been a common occurrence due to the IRS’ current processing difficulties in result of the COVID-19 pandemic.

Now, taxpayers can utilize the “Where’s My Refund?” tool to select any of the three most recent tax years (2019, 2020, 2021) to check their refund status after providing their Social Security number or ITIN, filing status, and expected refund amount from their original tax refund for the specific year they are checking. However, it is important to note that information available to those calling the tax refund hotline will be limited to the 2021 tax returns only.

Using the application, taxpayers can begin checking status of their return within:

  • 24 hours after e-filing a 2021 tax return
  • 3 to 4 days after e-filing a tax year 2019 or 2020 return
  • 4 weeks after mailing a return

 

“Where’s My Refund?” is one of the most commonly used online features that the IRS provides and was used approximately 776 million times last year. The online tool is updated daily, providing taxpayers a projected refund issuance date as soon as all received documents have been approved.

“We encourage those who expect a refund, but requested an extension, to file as soon as they’re ready. We process returns on a first-in basis, so the sooner the better. There’s really no reason to wait until October 17th if filers have the relevant information to file now” said IRS Commissioner Chuck Rettig.

The IRS has continued to receive backlash from Congress due to the lengthy backlogs in processing tax returns. Rettig has testified to Congress that the Biden administration’s budget has requested funds for modern technology to help with these ongoing issues, but so far it has not been approved by lawmakers.

We understand how important it is for businesses and individuals to receive their tax refunds as promptly as possible. At Brock CPA, our tax and accounting experts are here to assist you with any questions or concerns you may have. As always, we encourage you to reach out with any questions or concerns regarding your accounting and tax needs by calling 904-330-0268 or emailing dbrock@brockcpa.com.

Accounting Business Taxes

Cryptocurrency Taxation for 2023: Here’s What You Need to Know

Cryptocurrency has been a major topic in the world of finance for the past several years and is only becoming more popular among a number of individuals and corporations today. You may recognize the names Bitcoin, Litecoin, Etherum, and Dodgecoin – all forms of cryptocurrencies that have seemingly gained a significant amount of mainstream interest over the past couple years specifically.

Some may argue that one of the biggest appeals of using cryptocurrencies is being able to remain anonymous through private and secure transactions. However, this will no longer be the case after December 31st, 2022.

Various factors in the world of crypto are evolving quickly, including tax rules. Similar to any investment, there are taxes to take into consideration before determining how much you really made, or lost, on digital credits.

New Reporting Requirements for Cryptocurrency

As of now, those who are involved with cryptocurrency are responsible for keeping a record of all their transactions – including reporting the taxable transactions to the IRS. Crypto users are asked to indicate whether they received, sold, sent, exchanged, or otherwise acquired any financial gains in any virtual currency during the tax year at the top of their 1040 tax form.

Beginning in 2023’s tax year, all potentially taxable digital asset transactions made by cryptocurrency users will be reported to the IRS by outside parties. This is incredibly similar to the third-party reporting that is required when you hold or invest in stocks. Essentially, both you and the agency will get a W-2 form from your employer that reports your annual earnings and a Form 1099 from your broker that reports any stock transactions. In addition, next year businesses must begin reporting whenever they receive more than $10,000 of cryptocurrency in a single transaction in efforts to minimize money laundering.

Cryptocurrency Taxation for 2023

Crypto Transactions Will No Longer Be Anonymous

While the news that cryptocurrency is here to stay may be great for some, the loss of anonymity also presents an obstacle for those who wish to keep their transactions private, or for those who have not met their tax obligations. Furthermore, until this year it was fairly common to be able to open a digital wallet by simply using a name and email address. Come 2023, it is expected that users will now be asked to provide an array of personal information that was likely not asked in the past.

We understand that a number of our clients at Brock CPA may use cryptocurrency platforms for their business or individually. With a number of new changes on the rise for the world of crypto next year, you can rely on our accounting and tax planning professionals to act as knowledgeable guides and help you navigate through any uncertainty. As always, we encourage you to reach out with any questions or concerns regarding your accounting and tax needs by calling 904-330-0268 or emailing dbrock@brockcpa.com.

Business Taxes

Years of Neglect have Caused Chaotic Consequences for the IRS

In 2018, the U.S. Supreme Court ruled in South Dakota vs. Wayfair that states can require online businesses to collect sales taxes, even if they do not have a physical presence in the state. After nearly 3 years, Florida is finally about to do so.

On April 19th, 2021, Governor Ron DeSantis signed into law a tax package, Senate Bill 50, to require out-of-state online retailers to collect sales taxes on purchases made by Floridians.

Beginning on July 1st, 2021, retailers selling more than $100,000 a year online will have to start collecting 6% sales tax from residents at the point of sale. Businesses who sell less than $100,000 a year online will be exempt from collecting this tax.

Business

Brock CPA Welcomes Madison Parman

In 2018, the U.S. Supreme Court ruled in South Dakota vs. Wayfair that states can require online businesses to collect sales taxes, even if they do not have a physical presence in the state. After nearly 3 years, Florida is finally about to do so.

On April 19th, 2021, Governor Ron DeSantis signed into law a tax package, Senate Bill 50, to require out-of-state online retailers to collect sales taxes on purchases made by Floridians.

Beginning on July 1st, 2021, retailers selling more than $100,000 a year online will have to start collecting 6% sales tax from residents at the point of sale. Businesses who sell less than $100,000 a year online will be exempt from collecting this tax.

Business Taxes

The Importance of Filing Business Tax Returns Correctly and On Time

In 2018, the U.S. Supreme Court ruled in South Dakota vs. Wayfair that states can require online businesses to collect sales taxes, even if they do not have a physical presence in the state. After nearly 3 years, Florida is finally about to do so.

On April 19th, 2021, Governor Ron DeSantis signed into law a tax package, Senate Bill 50, to require out-of-state online retailers to collect sales taxes on purchases made by Floridians.

Beginning on July 1st, 2021, retailers selling more than $100,000 a year online will have to start collecting 6% sales tax from residents at the point of sale. Businesses who sell less than $100,000 a year online will be exempt from collecting this tax.

Taxes

5 Tips for Better Tax Planning in Florida

In 2018, the U.S. Supreme Court ruled in South Dakota vs. Wayfair that states can require online businesses to collect sales taxes, even if they do not have a physical presence in the state. After nearly 3 years, Florida is finally about to do so.

On April 19th, 2021, Governor Ron DeSantis signed into law a tax package, Senate Bill 50, to require out-of-state online retailers to collect sales taxes on purchases made by Floridians.

Beginning on July 1st, 2021, retailers selling more than $100,000 a year online will have to start collecting 6% sales tax from residents at the point of sale. Businesses who sell less than $100,000 a year online will be exempt from collecting this tax.

Taxes

Brock CPA Celebrates 5 Years in Business

In 2018, the U.S. Supreme Court ruled in South Dakota vs. Wayfair that states can require online businesses to collect sales taxes, even if they do not have a physical presence in the state. After nearly 3 years, Florida is finally about to do so.

On April 19th, 2021, Governor Ron DeSantis signed into law a tax package, Senate Bill 50, to require out-of-state online retailers to collect sales taxes on purchases made by Floridians.

Beginning on July 1st, 2021, retailers selling more than $100,000 a year online will have to start collecting 6% sales tax from residents at the point of sale. Businesses who sell less than $100,000 a year online will be exempt from collecting this tax.

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