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Tomorrow is the federal tax extension deadline! Get your affairs in order today!
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As freelance jobs become more and more popular, opting to work as a rideshare driver is a great self-employment alternative that many are choosing nowadays. The way we think about commuting has been forever altered thanks to the popularity of platforms like Uber and Lyft, with an increasing demand for rideshare services, which also opens more positions for drivers to take. However, rideshare drivers must be aware of the tax implications this self-employment option brings. Here are five useful tax tips that rideshare drivers should keep in mind when filing their income.
1.One of the most important steps every freelancer or self-employed worker should follow is to create a system to track their tax deductions. Whether we decide to use an expense-tracking spreadsheet or a mobile app, being consistent and documenting every single business relates expense is a must. This will help us record and identify every deductible expense we made during the year, and facilitate our income tax filing process.
2.Many freelancers and self-employed workers tend to struggle when keeping track of their personal expenses and business expenses. A great way to solve this issue is by having separate bank accounts, one for our personal expenses, and one to use exclusively for business expenses. This will not only help us manage our personal and commercial finances better but will help us keep track of our business expenses, too.
3.Something that many people tend to ignore for some reason is that there are plenty of apps available, both free and paid, that can help us when tracking expenses and deductions. Taking advantage of this reliable and effective tools to document the number of trips we have, how often we charge fuel, the time we’ve spent driving, and any car repair costs will make our filing process more accurate and easier than ever.
4.Now, as rideshare drivers, we should always remember that mileage tracking represents our biggest tax deduction. Therefore, we must be very careful and consistent when recording the miles we drive. Since the IRS requires a mileage log when filing such deduction, we shouldn’t take this lightly. Otherwise, we might not be eligible for this deduction, and this would have a significant impact on our income taxes without a doubt.
5.Lastly, rideshare drivers who work with apps like Uber and Lyft have access to a very resourceful tool, their driver dashboard. This is where drivers can find very useful information, including their annual income, some of the deductions they might be eligible for, as well as the commissions that the apps are taking out of they pay.
One of the most tiring chores for a business is keeping all required records related to a vehicle and business travel. These records are needed for tax and financial purposes. For taxes, the law is very specific on the records you’re required to keep if you want to deduct your expenses. Anything you can do to save yourself and your staff time and effort without risking write-offs is welcome.
1. Use an app
If you use a personal vehicle for business, you usually need an odometer reading for each business trip to show the portion of vehicle usage for business. This means jotting down the odometer reading at the start and end of each trip to see a customer, go to the bank, or visit a vendor. But this can be automated for you if you use an app designed for vehicle recordkeeping. The GPS on your mobile device reads the exact travel distance for each trip, noting the time and date. You only have to add to this record the purpose of the trip. What’s more, you can find an app that ties into your other accounting system (QuickBooks has its own app) to further simplify tax return preparation.
You can also use an app to keep track of your travel expenses while away on business. Be sure to check on all of the required information needed to deduct these expenses in IRS Publication 463.
2. Rely on sampling
IRS regulations permit you to use a recordkeeping method called sampling. This means if you have adequate records for a part of the year, you can extrapolate the results for the full year. For example, if you keep good records for the first week of each month that show that 65% of the use of your pickup is for business purposes, and your invoices and bills show the same business pattern for the rest of each month, you can treat this partial record as proof of 65% business use for the entire year. Similarly, you can keep records for one full month as proof of the full year’s vehicle usage, as long as the month is representative of your driving pattern for the year.
3. Scan receipts
Instead of saving scraps of paper, hotel printouts, and other written evidence of costs related to business travel, just scan them into your mobile device. Make sure you have a scanner app on your device.
The challenge with scanning receipts is to have a system for organizing them so they can be readily retrieved if or when needed.
4. Forget receipts
When you travel or are out and about in town on business, you don’t need to retain receipts if the cost of the expense is less than $75. For example, on an out-of-town business trip if you take a taxi from the airport to your hotel at a cost of $50, you don’t need a receipt (but must follow other recordkeeping rules for the expense).
But the $75 rule does not apply to lodging. So, if you stay at a Travel Lodge, you’re going to need a receipt regardless of the cost.
5. Rely on per diem rates
Instead of trying to substantiate lodging and meal costs while traveling away from your regular business location, you may be able to use a government-set daily rate:
GSA.gov has per diem rates. There is a basic rate fixed for the government’s fiscal year ending September 30, with higher rates for certain destinations.
IRS high-low substantiation rates: one rate for most locations within the continental U.S., but a higher one for travel to set locations. The rates also apply for the government’s fiscal year (those for FY 2019 are here ).
Note: Self-employed individuals can use per diem rates only for meals and incidental expenses (not for lodging).
Work with your CPA or other tax advisor to make sure your recordkeeping practices for your business are in line with IRS requirements and financial reporting standards.
Tip: When making a purchase, first evaluate it on a cost per use basis. If it’s a toy or a gadget, consider how often you plan to use it before you buy it.
HIRE A PRO TO HELP YOU
While you can certainly do the day-to-day record keeping for your business, It’s highly encouraged you to entrust a professional for the final cut before sending over your information to the IRS.
This provides you with four key benefits:
- Ensures that your records are double checked by a numbers professional.
- Puts your mind at ease that you are running your business the way you should.
- Helps you in the long run by getting all the latest tax breaks, credits, and write-offs appropriate for your business. Tax laws are always changing, so it can be a lot to keep up with if you don’t hire a professional to help you.
- Makes you less susceptible to a tax audit. When the IRS views your tax returns and notes that it was filed by a professional, it will have a lesser chance of being flagged for an audit.
NOW THAT YOU KNOW JUST HOW SIMPLE IT CAN BE, HOW WILL THESE IDEAS HELP YOU IN YOUR BUSINESS?! LEAVE A COMMENT BELOW AND LET’S CHAT ABOUT IT!
#bookkeeping #accounting #finances #payroll #quickbooks #income #business #orangecountyca #santa ana #tustin #bookkeepingsantaana #bookkeepingoc
1. Research, Research.
Sure, the commercials tell you what a car is offered for. They don’t tell you what you should really pay. Bring these items to the dealership to get the most bang for your buck:
- Printouts on the true market value of the car from Kelley Blue Book, and Edmunds.com
- All the information from the dealer’s website on rates, incentives, rebates, and special finance deals.
- All the information from the competition’s website on rates, incentives, rebates, and special finance deals.
- Information on your trade in vehicles title, loan, value, etc (if you have one).
- Information on you such as your credit score, banking info, and anything else that can help you get the dealer to give you competitive financing.
2. Check Out the Car
You probably know which vehicle on the lot is your preferred, but have a back up or two. Do a walk around when brought to the vehicle. Check for damage, dings, dents, etc. Your salesperson may ask for a credit check before the test drive. Tell them you are pre-approved, as this just adds time and effort to your purchase time. You will be asked for your driver’s license. Don’t be afraid to ask questions on the features of the car before getting in.
3. Test Drive Wisely
Follow these tips to get the most out of your test drive:
- Insist on test driving the car for at least 15 minutes.
- Don’t let the salesperson distract you if you are listening to the car or otherwise focused.
- Take a route that allows you to speed up, brake, take tight corners, and even rough street ways.
- You can test the radio for a few moments. Turn it off when satisfied. The noise can be distracting.
- Test all the instruments to see if they work.
4. Negotiate Like a Boss
Sales people will often as you to “make the opening bid.” Don’t fall for that. Ask for their best price up front. They will show you a document that outlines all the details on the car. Use your handouts from previous research to compare. Be prepared to walk away should the salesperson not meet or beat the prices. You may love the price and the car. Don’t buy until you’ve shopped at least two more times. Be sure to use this dealer’s numbers when visiting the next.
5. It’s Not Over Until You Sign
You have shopped around. You’ve found a car you like. You’re ready to sign. Now it’s time to face off with the dealer’s finance office. This person will attempt to sell you all types of extras from warranties to paint protection. Feel free to say no to these. They will push for the extended warranty, to which you should let them know you don’t intend to keep the car that long – even if you do. It is essential you ensure the numbers in the sales contract match the agreed-upon price you agreed to earlier. Get any needed repairs, upgrades, detailing, etc in writing before signing.
Congratulations: you are now ready for your new car! Come by and show us your new car.
Entrepreneurs, Here are Business Tips You Should Know
1. Always ensure that you have enough money in the bank.
2. Get rid of bad employees before they do more damage.
3. Troubleshoot your own managerial style.
4. Take care of your star employees.
As an entrepreneur, its highly important for you to know the ins and outs of your business. The more concepts and strategies you are able to apply to your brand, the higher your chances for success will be.
#businesstips #bookkeepingtips #bookkeepingsantaana #bookkeepingorangecounty
On July 1, President Trump signed the (H.R. 3151). This bipartisan legislation aims to modernize and improve the IRS by creating an independent office of appeals, requiring the IRS to submit to Congress a plan to redesign and restructure the agency, enhancing cybersecurity efforts, and implementing other changes to better serve taxpayers. Several provisions were supported by APA’s Government Relations Task Force through meetings with congressional staff.
Here are some of the payroll provisions in the Taxpayer First Act.
·Lowered electronic filing threshold. The IRS currently requires electronic filing when a business files at least 250 information returns (e.g., Forms W-2 or 1099-MISC). The legislation lowers the threshold to 100 in calendar year 2021 and then to 10 thereafter.
·Internet platform for Form 1099 filing. The legislation requires the creation of an online platform for businesses to prepare and file Forms 1099. The legislation directs the IRS to develop the platform with a user interface and functionality similar to SSA’s Business Services Online and to implement it by January 1, 2023.
·Authentication of e-Services users. The legislation requires the IRS to verify individuals who apply to open an e-Services account before they can use its tools.
·Independent Office of Appeals. The law creates a new position, Chief of Appeals, who will report directly to the IRS Commissioner and oversee the Independent Office of Appeals to resolve tax controversies without litigation.
·Cybersecurity and identity protection. Referred to as “21st Century IRS,” the legislation requires the IRS to collaborate with the private sector to protect taxpayers from identity theft refund fraud.
To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, give us call at 714-400-9201 or visit our website at www.Alvareztaxinc.com
When the new gas tax kicks in July 1, California will have the highest gas tax in the country.
The new gas tax will add an additional 5.6 cents per gallon of gas.
Consumer Watchdog President Jaime Court argues even though the new gas tax is expected to generate more than $50 billion over the next decade for much-needed road repairs, road infrastructure and transit upgrades, consumers shouldn’t be stuck with the bill.
“I had an issue with the tax increase when it went into effect because I felt that it should be paid for by the oil refineries excessive profits,” he said.
With the state average at over $4 a gallon, motorists pay close to $1.20 more per gallon at the pump than the national average. The state energy commission reports 70 cents of that difference is attributed to tougher gas standards and environmental regulations. Court claims otherwise.
“The state of California is investigating now the high cost of gas in this state… I know what it is because I look at the oil refineries profit reports. It’s gouging. When the oil refineries are making more off California gasoline than they make anywhere in the rest of the nation, we know that that profit is gouging,” Court added.
Court said he’s working with the governor’s office to rein in oil companies providing relief for consumers at the pump.
“We are an isolated market, and we have five oil refineries that control 90% of the gasoline in this state in terms of making it, and also in Southern California, control 80% of the retail gasoline stations,” he added.