2021 Tax Tips: A Look at the Future

2021 tax tips

The end of the year always means the possibility of last-minute tax changes, and this year, that’s especially true. Some of the new legislation may mean major changes starting in the new year, but other proposed bills, such as new capital gains and qualified dividend tax rates, may take effect retroactively. And taxes on the wealthy may go up, too. Many are wondering what 2021 tax tips we can offer.

Difficult to Plan with Certainty

These possibilities make it difficult to plan with certainty. Specific provisions under consideration include those discussed here. Note that, if passed, these provisions are likely to be subject to certain exclusions and dollar limits:

  • Increasing the top ordinary income tax rate from 37% to 39.6%, which was the rate prior to the passage of the Tax Cuts and Jobs Act of 2017.
  • Increasing the long-term capital gains and qualified dividend rate from 20% to 39.6% for taxpayers with annual adjusted gross income of more than $1 million.
  • Changing the capital gains tax to:
    • Tax capital gains when assets are gifted or transferred to people at death.
    • Tax capital gains when assets are transferred to or from an irrevocable trust or partnership.
    • Tax capital gains on unrealized appreciation of assets held in trust if capital gains have not been paid on a property for 90 years (e.g., property in a generation-skipping trust).
    • Tax carried interests as ordinary income instead of capital gains.
  • Subjecting pass-through income to either the 3.8% Medicare tax or the 15.3% self-employment tax if taxable income is greater than $400,000.
  • Repealing the Section 1031 like-kind exchange rules for real estate so that investors cannot defer taxes by rolling profits from the sale of a property into their next purchased property.

More from Capitol Hill

Although we have not yet seen a final draft of the proposed legislation, these are changes that should be considered as part of 2021 year-end tax planning. In addition, at least two other tax topics still might be included in the final bill: (1) a change in the $10,000 state and local income tax and (2) an increase in the estate and gift tax rate. (However, the $11.7 million allowance is scheduled to sunset on Dec. 31, 2025, unless it is extended.)

2021 Tax Tips: Six Proactive Measures

Debate around all these provisions is ongoing, but prudent taxpayers should become familiar with how they can change business and estate plans going forward. Here are six proactive measures that can result in lower taxes should these changes in the tax code be enacted:

  1. Transfer any appreciated assets you were planning to transfer by the end of 2021. Waiting until 2022 may expose these gifts to a capital gains tax. This is a good idea even for transfers to a spouse, revocable trust, not for profit, small business or family farm because we do not yet know whether transfers to any or all of these entities will be excluded from taxation.
  2. Review any estate tax planning strategies involving irrevocable trusts or partnerships to assess whether a capital gains tax may be triggered on appreciated assets to be contributed or distributed in the future.
  3. Consider selling investment real estate and buying new property in 2021. This may help avoid triggering taxes if the Section 1031 exchange rules change.
  4. Maximize contributions to retirement plans. Be aware that backdoor Roth IRAs may be eliminated in 2022.
  5. Cash out any carried interest positions.
  6. If you’re thinking about selling a business in 2022, consider doing so in 2021 instead, before there is a change in the capital gains rate. The proposed capital gains rate is nearly double the current rate, which means you would nearly double the amount of tax paid on the sale.

2021 Tax Tips, Tax Preparation and Planning in Las Vegas

Keep in mind that the situation is changing rapidly, and your best bet is to keep in close touch with financial professionals. Ensure your financial statements are appropriately completed and filed by contacting the pros at Layton Layton & Tobler today. We are also payroll and auditing experts.

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Serving Las Vegas, Summerlin & Henderson

Posted on November 10, 2021 | Published by Ignite Local | Related Local Business

State and Local Tax Considerations for Remote Employees in Las Vegas

remote employees las vegas
When the COVID-19 pandemic started, no one could have envisioned how long remote work would last or how many people would want to continue working remotely on a permanent basis. Along with the many problems this created in the workplace is one that affects how remote employees pay state and local taxes. In general, there is a difference between employees who work remotely because of their employers’ necessity and those who do so for their own convenience. With hybrid work arrangements becoming a feature of the new workplace, employers should be very deliberate when they communicate and execute policies relating to an employee’s work location.

‘Convenience of the employer’ rule

The core question is this: Which state does the employee pay income tax to: the state where he or she lives or the state where his or her employer is located? In most states, a remote employee must pay taxes wherever he or she resides. However, some states follow a “convenience of the employer” rule that treats days worked at home as days worked at the employer’s location if the employee is working remotely for his or her own convenience and not the employer’s necessity.

Some states have reciprocal agreements stating that employees only have to pay tax in the state where they live, no matter whether they are doing so for necessity or convenience. Employees in this category will only have taxes withheld for one state.

If the employee lives and works in different states and those states do not have a reciprocal agreement, the employee will have to file two tax returns, one for each state. In addition, some cities and localities, such as New York City and Yonkers, New York, have their own taxes, which means some taxpayers will have to pay taxes to three entities.

While taxpayers affected by these rules will not necessarily be double- or triple-taxed because they usually are eligible for tax credits, each state has its own tax rates, and that could affect the taxpayer’s total tax bill.

This issue may eventually reach the U.S. Supreme Court, but the court recently declined to hear two cases relating to telecommuting tax policy.

Domicile or residency

A person’s state of domicile is the state in which his or her primary residence is located. A person has statutory residence in a state if he or she spends more than 183 days in that state in a given year. Some people also have income from additional states.

In general, personal income taxes must be filed in the state where the taxpayer’s principal residence is located. This is true for both W-2 employees and 1099 independent contractors.

Keep in mind that even states that do not collect personal income taxes usually require the taxpayer to file a return, and that taxpayers who live in one of those states must file nonresident tax returns in states from which they receive a W-2.

Keeping relevant documents and records, including utility bills and EZ pass statements, can help support your claims if you are audited. Having a daily calendar can be helpful as well.

Employer considerations and Remote Employees

Remote workers can cause additional work for employers, which must be sure to be compliant with payroll tax withholding rules for accurate payroll tax withholding and reporting. Business tax filings may also be affected, including filings regarding passthrough business income, unemployment insurance withholding, workers’ compensation, disability, sales tax and employment requirements.

Sales tax can be a particularly thorny issue since it takes only one employee working in a state to create an economic nexus in that state.

There are many rules to consider, including how long COVID-19 rule suspensions or modifications will be in force. In many instances, these rules have either expired or will expire shortly.

To be sure to avoid any penalties, individual taxpayers and businesses need to be familiar with the tax law in their resident state and any other states in which they operate. Getting professional help is the best option for navigating this changing area of the tax law.

Layton Layton & Tobler is a trusted CPA firm providing highly experienced accountingauditing and tax services for business and individuals in the greater Las Vegas area.

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Posted on October 13, 2021 | Published by Ignite Local | Related Local Business

Employee Retention Credit: Further Guidance in the Las Vegas Area

In COVID Tax Tip 2021-123, the IRS clarifies some of the confusion surrounding the powerful but complex Employee Retention Credit. The IRS is addressing changes made by the American Rescue Plan Act of 2021 that apply to the third and fourth quarters of 2021.

These changes include:

  • Making the credit available to eligible employers that pay qualified wages after June 30, 2021, and before Jan. 1, 2022.
  • Expanding the definition of “eligible employer” to include recovery startup businesses.
  • Modifying the definition of “qualified wages for severely financially distressed employers”.
  • Providing that the employee retention credit does not apply to qualified wages considered as payroll costs in connection with a shuttered venue grant or a restaurant revitalization grant.

Answers for Business Managers

For business managers who have questions and need authoritative answers, the IRS is answering various questions about the credit for tax years 2020 and 2021, including:

  • The definition of a full-time employee and whether that definition includes full-time equivalents.
  • The treatment of tips as qualified wages, and the interaction with the credit for the portion of employer Social Security taxes paid with respect to employee cash tips.
  • The timing of the qualified wages deduction disallowance and whether taxpayers who already filed an income tax return must amend that return after claiming the credit on an adjusted employment tax return.
  • Whether wages paid to majority owners and their spouses may be treated as qualified wages.

Employee Retention Credit Reporting Clarifications

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns, generally, Form 941 Employer’s Quarterly Federal Tax Return, for the applicable period. If a reduction in the employer’s employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

This is just a summary of a series of detailed and technical provisions. The IRS has provided all the details in Notice 2021-49. Managers should consult with a qualified tax professional to make sure they get all the benefits they’re entitled to without inadvertently violating the provisions.

Layton Layton & Tobler is a trusted CPA firm providing highly experienced accountingauditing and tax services for business and individuals in the greater Las Vegas area. Contact us today for help with the employee retention credit.

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Posted on September 12, 2021 | Published by Ignite Local | Related Local Business

What To Know About ASC 842, the New Lease Accounting Standard

asc 842 las vegas

Every day that passes marks less time for private companies to get ready for ASC 842, the new lease accounting standard. Private companies will have to comply with this standard in fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

What is Its Intent?

ASC 842 is intended to “increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions.” Because ASC 842 applies to most leases and subleases, with limited exceptions (e.g., leases of intangible property; leases of minerals and biological assets, including timber; leases of inventory; and leases of assets under construction), private companies will be required to disclose all contracts, or portions of contracts, granting “control” of the leased asset for a specific period of time.

The scope of the changes is clear from these major changes required by ASC 842:

  1. Leases must be classified as either finance leases (formerly referred to as capital leases) or operating leases. To be categorized as a finance lease, the lease must meet at least one of these criteria:
    1. The lease term covers most of the asset’s remaining economic life;
    2. The asset is specialized for the lessee’s use;
    3. The present value of the sum of the future minimum lease payments exceeds “substantially all” of the fair value of the asset;
    4. The lease either
      1. Transfers ownership to the lessee at the end of the lease term, or
      2. Gives the lessee the option of purchasing the asset, and there is reasonable certainty that the lessee will exercise this option.
  2. The rules for operating leases depend on the term of the lease. That is the first determination that must be made.
    1. Short-term leases are leases that run a term of 12 months or less. In addition, the lessee may not have the option of purchasing the asset at the end of the lease term.
      If the lease is deemed a short-term lease, the lessee may be able to recognize the lease payments over the lease term on a straight-line basis without having to include it on the balance sheet.
    2. Long-term leases are treated differently. For example, lessees will be required to record lease assets (i.e., the lease liability adjusted for certain items such as prepayments and initial direct costs) and lease liabilities (i.e., the present value of lease payments) on their balance sheets.
  3. The following key terms should be understood before your contracts are reclassified:
    1. Right-of-use asset. The right-of-use asset pertains to the lessee’s right to occupy, operate or hold a leased asset during the rental period.
    2. Embedded lease. Contracts sometimes have leases embedded in them. For example, a service contract that specifies the use of specific assets contains an embedded lease.
      Embedded leases are subject to ASC 842, which states: “A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.”
    3. Lease component. A lease component is the right to use an underlying asset.

The disclosure requirements under ASC 842 are complicated.

They require digging deep into contracts and leases, which means businesses need to start preparing now. To achieve the transparency ASC 842 is aiming for, a company must, at a minimum:

  • Take inventory of every lease the company has signed.
  • Categorize assets as real estate, equipment, an embedded lease, a variable payment or right-of-use. This is in addition to classifying the assets as operating leases or finance leases.
  • Lease and non-lease components need to be identified and separated because they are accounted for differently.
  • Amortization schedules must be prepared for assets, such as lease liabilities and right-of-use.
  • To ensure compliance going forward, determine which internal controls need to be revised and where new ones are needed.

Performing the many analyses needed for compliance with ASC 842 is both time-consuming and complicated. Companies need to be sure they have the guidance, tools and technology they need to help ease the process initially and in the future. Getting qualified professional advice is essential. Layton Layton & Tobler is a trusted CPA firm providing highly experienced accounting, auditing and tax services for business and individuals in the greater Las Vegas area.

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Posted on August 10, 2021 | Published by Ignite Local | Related Local Business

Cybersecurity: Essential for All Transactions

Cybersecurity Las VegasCybersecurity — especially data privacy — is one of the biggest problems facing businesses today. These security problems are compounded because every segment of every industry is affected differently, and each is subject to the risk factors peculiar to that segment. Grouping similar data together based on chosen parameters allows businesses to assess the privacy needs of each data segment they are holding. For example, the protections for public data don’t have to be as stringent as the protections for private data.

Protecting the privacy of the data with which they are entrusted is a universal business goal. The best way to get started is to answer the following questions:

  • What types of data does your business have (e.g., credit card information, health information, criminal history, biometrics)?
  • Which departments have access to that data?
  • Who are your data service providers and what are their credentials?
  • Which personnel can access the data?
  • What steps has your company taken to protect the data (e.g., encryption, back-up, internal controls)?

Federal and International Regulations

The United States has no federal law protecting data privacy. A number of states, however, are responding: At least 31 states have already established laws regulating the secure destruction or disposal of personal information. At least 12 states — Arkansas, California, Connecticut, Florida, Indiana, Maryland, Massachusetts, Nevada, Oregon, Rhode Island, Texas and Utah — have imposed broader data security requirements. Other states, including New York, are considering legislation.

California is a pioneer on the data privacy front. The California Consumer Privacy Act of 2018, which went into effect on January 1, 2020, is similar to the General Data Protection Regulation (GDPR). Companies that do business in California will be affected by this legislation.

At least some of the activity at the state level is in response to the European Union’s enactment of the GDPR. Any company doing business in a nation that has adopted the GDPR must comply with its consumer protections regarding data privacy. The GDPR covers many types of data, including the following:

  • Personally identifiable data (e.g., names, addresses, date of births, Social Security numbers)
  • Web-based data (e.g., user location, IP address, cookies, and RFID tags)
  • Health (HIPAA) and genetic data
  • Biometric data
  • Racial or ethnic data

The bottom line is that U.S. businesses operating in multiple jurisdictions must consider these categories, as well as any other categories pertinent to their industry, as they segment the data they are holding. Understanding the data they hold is essential to instituting the right level of privacy safeguards.

Three Steps to Securing Your Data

Understanding your data is the first step to securing data. The second step requires knowing the relevant laws and regulations your business must comply with.

The third step is to stay alert for any indications of a breach. The sad truth is that many data breaches go on for quite a while before they are discovered. The time lapse between hack and discovery allows hackers to continue accessing vulnerable data. That makes constant monitoring an important aspect of any data security program. Watching for the signs of a breach — such as an unanticipated spike in bandwidth usage — can indicate a problem.

By following these three steps, businesses can be sure they are doing their best to protect the data they and their data service providers hold.

Let us Help You with All Your Data Needs in Las Vegas!

Let us know how we can help you understand your data better. Layton Layton & Tobler is a trusted CPA firm providing highly experienced accounting, auditing and tax services for business and individuals in the greater Las Vegas area.

Understanding Cybersecurity in Las Vegas

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Posted on July 15, 2021 | Published by Ignite Local | Related Local Business

Exploding 6 Estate Planning Myths

estate planning mythsPlanning your estate is about defining and living out your legacy during your lifetime. It enables you to enjoy the impact your plan has on the people and organizations you support. But there are several estate planning myths that still need debunking.

Estate Planning Myth #1: It’s only for the wealthy

There’s a common belief that estate planning is necessary for multimillionaires only. But if you own property and assets or have loved ones that depend on you to provide for their income or care, use an estate plan. Basically, if you have money, real estate or a comic book collection, you have an estate. Use estate planning to protect your spouse, minor children or other dependents.

Myth #2: Estate planning is only about distributing your assets after you’re gone

Your legacy includes charitable planning goals and gifting strategies, but you should see your plan as passing down less tangible assets that are meaningful to you. Also, you need to prepare for unexpected events; name a guardian for your kids to take care of them and manage whatever funds you leave for their benefit.

Myth #3: A will oversees the distribution of all your assets

Some assets — life insurance policies and qualified retirement assets like 401(k)s and IRAs, for example — may technically not be covered by your will. A will doesn’t override all your beneficiary designations. Items left to ex-spouses may go to them no matter what your will says. So you must review beneficiary designations to update an IRA account to your new spouse, for instance.

Other important legal documents include a power of attorney to carry out any legal or financial decisions that have to be made on your behalf, a living will and a trust. A trust can accomplish a lot of things more efficiently than a will, even for those with modest estates, so don’t rule it out.

Myth #4: An estate plan is a once-and-done event

Once the plan is in place, it’s not over. Preferences and goals change over time. Laws change. Tax rates are adjusted. You rethink your charitable strategies. You may marry or divorce or welcome a new child or grandchild; minor children become adults. Or you may move to another state — all reasons to revisit your plan.

Myth #5: Taxes eat up the lion’s share of any estate

Although estate taxes are real and the rates are quite high, topping out at 40%, only people with estates worth millions of dollars are affected by federal estate taxes. Many states don’t have estate or inheritance taxes at all, though some that do have lower thresholds than the federal rate.

The estate tax exclusion increased significantly under the Tax Cuts and Jobs Act of 2017. Although there may be future changes, the general trend has been the federal estate tax affects only the very wealthy. Keep abreast of any state laws that may change and impose a separate estate or inheritance tax.

Myth #6: None of this matters anyway — I’m too young to need a will

This is one of the biggest myths of all! First of all, even individuals without a spouse or children should make provisions for how their worldly goods will be disposed of after they’re gone. And if your situation changes later, you’ll already have a template in place. Even if you don’t have close family, you may want to leave your assets to a meaningful charity.

Let us know how we can help you create an estate plan that’s right for you. Layton Layton & Tobler is a trusted Las Vegas CPA firm providing highly experienced accounting, auditing and tax services for business and individuals in the greater Las Vegas area.

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Posted on June 16, 2021 | Published by Ignite Local | Related Local Business

Selling Your Home: The Tax Angle

selling your homeThe buying and selling of homes are the largest financial transactions you may make, and as with most financial transactions, there’s a tax angle. If you know what your tax implications are as you go into the deal, you’re better able to plan and avoid unpleasant surprises.

Capital Gains Exclusions

Unlike with most other capital gains, the government gives you a big break when selling your principal home for a profit. You can exclude up to $250,000 ($500,000 if married filing jointly) of the profit from the sale. This exclusion is available for an unlimited number of times. And it applies to houses, apartments, condominiums, stock cooperatives, and mobile homes fixed to land.

However, there are other rules and limitations. To take advantage of the exclusion, you must own and occupy the home as your principal residence for at least two years before you sell it. Owning it and occupying it are two different things, however, and although you have to meet both tests, you don’t have to do this simultaneously. As legal site Nolo explains, “As long as you have at least two years of ownership and two years of use during the five years before you sell the home, the ownership and use can occur at different times.” This is an eligibility break for renters-turned-buyers, who can count rental time before the purchase as part of the “occupy” time.

Also note the word “principal.” This is your main home, where you spend most of your time. You can only have one principal residence at a time. If you have a townhouse in the city where you work but spend August in your country home, your townhouse is still your principal residence.

Conditions for $500,000 Married Exclusion

The IRS also imposes conditions to be eligible for the larger $500,000 married exclusion. You must meet all the conditions below:

  • You are married and file a joint return for the year.
  • Either spouse meets the ownership test.
  • Both spouses meet the use test.
  • During the two-year period ending on the date of the sale, neither spouse excluded gain from the sale of another home.

If a spouse is deceased, under what conditions can the surviving spouse use the $500,000 exclusion? You have to meet all of the following conditions:

  • You sell your home within two years of the death of your spouse.
  • You haven’t remarried at the time of the sale.
  • Neither you nor your late spouse took the exclusion on another home sold less than two years before the date of the current home sale.
  • You meet the two-year ownership and residence requirements (including your late spouse’s times of ownership and residence if need be).

Getting a Break on Improvements

If you’re single and buy a house for $300,000, you’re limited to a sale later of $550,000 before you start having to pay taxes. However, any improvements you made will increase that $300,000 basis, and the IRS is generous in what it considers an improvement. You can add a new room, landscaping, a heating system, new siding — even a satellite dish. General repairs, like fixing a broken windowpane, do not add to the basis. But fixing the windows as part of a larger renovation project will count.

The bottom line? When selling a home, work with professionals to make sure your plans are aligned with tax rules.

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Posted on May 11, 2021 | Published by Ignite Local | Related Local Business

Federal Tax Date Postponed to May 17

federal tax dateThe filing date for the federal income tax has been postponed until May 17. The IRS has announced that individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Need Additional Time? Request a Filing Extension Until October 15

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15. However, this Oct. 15 extension does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds associated with e-filed returns are issued within 21 days.

Relief Does NOT Apply to Estimated Tax Payments Due April 15

The IRS emphasizes that this relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. If you are an employee of a company, you probably have your taxes withheld from your paychecks and submitted to the IRS by your employer.

Regarding State Tax Returns

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. Some states have already delayed their filing dates and others may follow the IRS example, but don’t make any assumptions.

Let us know if you have any questions.  Ensure your financial statements are appropriately completed and filed. Contact our firm, Layton Layton and Tobler, today.

We’re Here to Answer Your Questions Regarding State & Federal Tax Date

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Posted on April 14, 2021 | Published by Ignite Local | Related Local Business

Special PPP Loan Provisions for Small Businesses in Las Vegas

loan provisions las vegasStarting on Feb. 24, 2021, the SBA is establishing a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees. This is according to guidance on the SBA and White House sites. According to the statement, this will give lenders and community partners more time to work with the smallest businesses to submit their applications. These special loan provisions are designed to aid small businesses across the country.

New Loan Provisions for Small Businesses in Las Vegas

The SBA also announced four additional changes to open the PPP to “more underserved small businesses than ever before.” The SBA will:

  • Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants.
  • Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal.
  • Eliminate PPP access restrictions on small business owners who have struggled to make student loan payments by eliminating student loan debt delinquency as a disqualifier to participating in the PPP.
  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use their Individual Taxpayer Identification Number (ITIN) to apply for the PPP.

Goal from Congress for the Latest Round of PPP Loan Provisions

The statement further noted that a critical goal from Congress for the latest round of PPP was to reach small and low- and moderate-income (LMI) businesses who have not received the needed relief a forgivable PPP loan provides. Although Congress set a $15 billion set-aside for small and LMI first draw borrowers, the current round has only deployed $2.4 billion to small LMI borrowers, “in part because a disproportionate amount of funding in both wealthy and LMI areas is going to firms with morhan 20 employees.” The SBA believes this special 2-week window and the other changes will allow the distribution of more funds.

Where to Find More Details About Additional Relief Programs

More details are available on the SBA loan resource site. The program is slated to end on March 31, although additional relief programs are expected before then. Contact us at Layton Layton & Tobler for a free consultation.

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Posted on March 17, 2021 | Published by Ignite Local | Related Local Business

Keeping Receipts for Taxes

Why Keeping Receipts for Taxes is Important. Which Receipts to Keep and Which Not to Worry about?

Keeping Receipts for Taxes in Las Vegas, Henderson & SummerlinThe start of a New Year is time to begin thinking about preparing financial records and employment documents for tax filing. Nobody looks forward to this annual chore, but it unfortunately must be done. Which expense receipts are important and which are not for tax filing is discussed below. Make sure you’re keeping receipts for taxes the right way.

Keeping Receipts for Taxes in Las Vegas

Your receipts are what the IRS refers to as ‘documentary evidence’ of business expenses during the year; expenses you plan to deduct from income or use for tax credits. Generally, tax planners advise you to keep receipts for the following expenses. If in doubt, don’t throw it out! It’s better to have them and not need them than the other way around.

  • Charitable contributions
  • Tuition & student loan payments
  • Fuel purchases if vehicle use was work-related
  • Rent & mortgage payments
  • Childcare payments
  • Office rent, including for a home office
  • Medical expenses related to exams, hospital stays, out-of-pocket Medicare expenses, dental work, psychiatric and chiropractic care, optometry, etc.

Receipts You Can Discard

Generally, receipts for work-related travel are not required to be kept if the amount of the purchase is under $75. If you bought a meal during work-related travels that cost $40, you don’t need the receipt. If the meal cost $80, hold onto it. Take a picture of the receipt with your smartphone, email it to yourself, and store then in a separate email folder if that’s easier for you. Your accountant will need them come tax season.

Let Us Help

Contact the tax experts of Layton Layton & Tobler to get a head start on your tax planning and preparation. Keeping receipts for taxes is just one of many things you’ll want to be ahead of the game on. Not planning and executing your plan in regards to taxes is like not planning and executing in your business operations. Not doing so can land you in a bad place.

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