ESI’s Post

🚨 **IRS Penalties: What Triggers Them & How to Avoid Them** 💸 Did you know that most IRS penalties happen because of simple mistakes or missed deadlines? Here's what can put you at risk: ❗ **Missing filing deadlines** – Whether it's for personal, corporate, or payroll taxes, late filings can lead to costly penalties. ❗ **Failure to pay** – Filing your tax return is just half the battle. If you don’t pay the taxes owed by the due date, penalties pile up. ❗ **Inaccurate reporting** – Mistakes on your tax return? That can lead to penalties too. ❗ **Underpaying taxes** – Especially important for self-employed folks. Make sure you're paying enough throughout the year to avoid an unpleasant surprise. ❗ **Neglecting payroll taxes** – If you're a small business owner, missing payroll tax obligations is a serious no-no. It can lead to major issues down the road. The good news? Staying on top of deadlines and payments can help you avoid these penalties—and if you need help, we're here for you! #TaxTips #TaxPenalties #IRSCompliance #SmallBusinessTips #StayAhead

Hiring your children has always been a great tax savings tool. Thanks to the Tax Cuts and Jobs Act (TCJA), the savings continue to pile up. Learn more about the correct way to reap the benefits of deductions while keeping the IRS happy. #financialplanning #wealthywallet #smallbusinessowner #taxstrategy #moneyexpert #taxadvisor #texas

Analyzing the Impact: Tax Relief for American Families and Workers Act of 2024 Get the latest on the following topics: Employee Retention Credit (ERC) Immediate Sunset Research & Development (R&D) Deductibility Child Tax Credit Enhancement Extension of Bonus Depreciation Increase Limitations on Expensing of Depreciable Business Assets https://lnkd.in/ezSgypRk

🚨 It's easy to under-withhold taxes when you've had multiple jobs or change employers, which could ultimately lead to a surprisingly large tax bill 😟🙈 Your tax withholdings throughout your career are not a "one-and-done" exercise and something that you should review periodically for a number of reasons: 👉 If you've recently gotten a raise through a promotion or new employer, it's entirely possible that you have moved into a higher tax bracket and will need to update your tax withholding to account for this 👉 Major life events (i.e. getting married, divorced, a job loss, unemployment income) can have a major impact on your tax filing status. For example, couples who file as 'Married/Jointly' get certain tax breaks that Single filers do not 👉 The IRS tends to update tax brackets every year based on annual income -- even if you haven't switched jobs or gotten a raise recently, you may be in a different tax bracket this year vs. last year due to these changes The good news is that it's very easy to make updates to your situation. A quick Google search for 'tax brackets' and an email to your HR department with your updated tax withholding % will help you avoid unwelcome surprises come tax season ❌💸 #TaxSeason #TaxPlanning #PersonalFinance

💸 Are You Paying Too Much in Taxes? 💸 If you're a sole proprietor or a single-member LLC with a net/taxable income over $50,000, you might be overpaying on self-employment tax! 😱 Electing to file as an S Corporation could save you big time—potentially cutting your self-employment tax in half. But here’s the kicker: even if you've already made the S-Corp election, you need to find that perfect balance between distributions and salary. 📊 We recently had two new clients with opposite extremes. One wasn’t taking any payroll, and the other was taking everything on payroll. The difference in tax outcomes? A world apart. 🌎 ⚠️ PS: If you've elected to file as an S-Corp but haven't started taking a salary yet, now's the time to chat with your tax advisor. Don’t let the IRS decide your payroll—they'll have you paying too much in self-employment tax! #taxadvisory #selfemployment #selfemploymenttax #businessowner #contractor #savingclientsthousands

Essential Tips for Salaried Individuals Filing Income Tax Returns: If you are a salaried income taxpayer, the process to file an income tax return is quite simple. Here are five key points to keep in mind: Nature of Employment: When filing your income tax return, specify your type of employment. Indicate whether you are a central government employee, a state government employee, an employee of public sector enterprises, a pensioner, or an employee of the private sector. This ensures the accurate classification and processing of your return. Required Documents: Gather and keep the necessary documents handy: Form 16: Provided by your employer, detailing your salary and tax deductions. Annual Information Statement (AIS): Download this statement to verify your income details. House Rent Receipts (if applicable): For claiming HRA exemptions. Investment Premium Receipts (if applicable): For claiming deductions under various sections. Note that you do not need to attach these documents with your return, but they are essential for accurate reporting. Tax Already Paid: Throughout the year, taxes are deducted at source (TDS) or collected at source (TCS). Ensure these figures match the tax amounts in your return: AIS and Form 26AS: Access these to check the actual tax paid. Any discrepancies should be reconciled before filing to avoid issues. Filing for Previous Years: If you missed filing returns for the previous two years, you can still do so using the updated income tax return form (ITR-U). This allows you to stay compliant and avoid penalties. Prevent Issues: Link Aadhaar with PAN: Ensure your Aadhaar is linked to your PAN to avoid any filing issues. Pre-validate Bank Account: Pre-validate the bank account where you want to receive your tax refund to ensure smooth processing. Choose the Correct ITR Form: Selecting the correct ITR form (typically ITR-1 for salaried individuals) is crucial. Filing with the wrong form can lead to your return being treated as defective, requiring you to file a revised return. #IncomeTax #TaxFiling #SalariedIndividuals #ITR #TaxTips #FinancialYear #AadhaarPANLinking #TaxReturn #Form16 #ITRU

Here are some common US Taxation Terminologies: 1. Audit: A surprise party thrown by the IRS, but instead of cake, they bring questions and paperwork. 2. Estimated Tax Payments: A guessing game where you try to predict how much the government will want, and they let you know if you guessed wrong with penalties. It’s best to consult a tax expert to make an educated guess. 3. Form 1040: The complicated love letter you send to the IRS every year, detailing every penny you made and spent. 4. Refund: The magical moment when the government realizes they took too much of your money and decides to give some of it back, often accompanied by joyous disbelief. 5. Form W-2: The yearly reality check from your employer, reminding you of how much you earned and how much the government took before you even saw it. 6. Dependent Care Credit: The government’s way of saying, “We know kids are expensive, so here’s a little something to help... but not too much!” 7. Payroll Tax: The government’s cut from your paycheck is automatically deducted, so you never get too attached to that money. 8. Nexus: The tax world’s way of saying, “If you’re making money in our backyard, you better be sharing!” 9. Carry Forward: Like saving leftovers in the fridge to enjoy later, but with tax benefits instead of cool cake. 10. K-1 (Form 1065): The IRS’s group project report card, detailing who gets what share of the partnership profits, losses, and headaches. 11. Section 179 Deduction: The government's way of encouraging businesses to invest in themselves by allowing a significant tax break on new equipment and software. It’s like getting a pat on the back (and some money back) for upgrading your tools. #US #IRS #Form1040 #W2 #Tax

When self-employed, it's common about this time of year to begin worrying about whether or not you're paying or holding enough on the side for taxes. 😬 In particular, if you're having a good year and you're putting a bit away each time for taxes, it's easy to have doubt creep in about whether or not you're holding onto enough. When working for yourself, you have to worry about your typical income tax rate - or what everyone thinks of when it comes to taxes. But you also have to worry about self-employment tax, which pays for your Social Security and Medicare. This amounts to 15.3% of your income, after business expenses and some other items are taken out. 😩 This, for the self-employed is one of the biggest drains. But you can manage it in a few different ways. 1. Pay 100% of your taxes from last year or 90% of what you will owe this year (whichever is less). If you take this strategy, you'll also have to store extra funds for April. 2. Hold off a certain percentage of your revenues for taxes - often people use a back of the notebook calculation of 33%. This can often overstate your taxes, but can be handy. 3. Through a service or your own efforts, calculate your expected taxes as time goes on. Payroll services do this fairly well. This is a conversation I'm often having with folks, figuring out how much to pay themselves and how much they can expect to pay in taxes. It's a balance. The good news: if you're owing more taxes, it means you're making more in your practice. 🤔 Then it's just managing that new reality you have. In the comments is a video I put together about how to pay yourself and managing the tax exposure. Let me know if it's helpful!

Understanding tax laws, various forms of income, deductions, and filing processes can be overwhelming for first-timers due to their complexity. However, individuals and organizations need to adhere to this framework to avoid consequent legal repercussions. Read our latest blog on income tax to navigate the income tax process smoothly and ensure compliance while maximizing available benefits. https://lnkd.in/guKJWe38 #hrsolutions #hrsoftware #hrms #hrmssoftware #payrollsoftware #payrollmanagement #paywheel #tax #tax2024 #budget #budget2024 #itr

Taxes are an essential part of our economic system, funding government operations and services. Understanding the various types of taxes helps individuals and businesses navigate their financial responsibilities. Here's a breakdown of different tax categories: https://lnkd.in/eZ2vEn4y Each type of tax serves a specific purpose in generating revenue for governments and influencing economic behavior. Understanding these taxes is crucial for individuals and businesses to fulfill their financial obligations and make informed decisions. #taxes #purpose #individuals #business