Anthony Sykes & Company

             Is your QuickBooks Online account safe? Most likely it is. There is a reason why they are the most popular cloud-based accounting software today. However, when something is popular with consumers, it is also popular with criminals looking to take advantage of any opportunity they can. Consider this real-life example of how we helped one of our clients recover from an account hack.           The following details indicate a very sophisticated hack and underscore the need to be vigilant when it comes to criminals trying to steal your money. The Administrator’s account was hacked, and the associated phone number was changed. A Payroll Core subscription plan was added. This allowed the thief to add fake contractor names and associated email addresses. That step is key because this meant W-9’s were emailed to the “contractors”, filled out, and signed via DocuSign and then added to the Administ...

          The Employee Retention Credit ( ERC ) is a tax credit for employers who kept paying employees while closed by government order or had a great decrease in income due to COVID-19. This is a credit that can only be claimed by certain businesses and organizations that had employees during specific time periods. With this set of criteria, the ERC is continuing to be the subject of a growing advertising campaign. Wild claims are being made about who can qualify for it.           The eligibility requirements should be considered closely. One sign of a scam is stating that the application process is easy, or that someone can find out if they are eligible for it in minutes. The ERC is noted for being a very complex credit. Scammers are trying to use this situation to steal personal information or run away with large upfront fees for work that will never take place. Dishonest promoters try to lure in victims ...

               On July 24, 2023, the Internal Revenue Service ( IRS ) stated that it was ending the general practice of making unannounced in-person visits to taxpayers. The IRS is working on a new strategic plan in line with the passage of the Inflation Reduction Act last year. It is believed that this change will increase safety for revenue officers and taxpayers. There were tens of thousands of these types of visits each year. The goal was to help resolve delinquent tax matters.           In place of the visits, the IRS will send appointment letters and schedule meetings to deal with the tax problems. There will still be certain situations when unannounced visits will take place. This will be related to serving a summons or subpoenas and enforcement activity like seizure of property. If you want help in resolving a pressing tax issue, visit our website at help4yourtaxproblems.com .

                 With the Internal Revenue Service ( IRS ) ready to accept tax returns, you may be wondering how to take advantage of an early start date. The best thing to do is use your time wisely. How can you do that?  The first thing you should do is to gather all of your necessary information. This is the time of year that tax information is arriving, so keep it organized and make copies to give to your Qualified Tax Professional . The earlier you start this process, the easier it will be. As a bonus, you will be less likely to be in a rush and have missing details that will prevent you from filing your tax return. If you are choosing a new Qualified Tax Professional , make appointments early to meet them and discuss your needs. The longer you wait, the less availability they will have. The best way to prepare for tax season is to gather your information and get your questions answered early.

             The tax season for this year has been established. As announced by the Internal Revenue Service ( IRS ), the first day tax returns will be accepted is January 23 . The deadline to file is April 18 . However, in light of the recent devastating storms, many counties in California were declared federal disaster areas. How does this designation change things for the affected taxpayers?           As is often stated, this allows for federal funding to care for the practical needs of disaster victims. This also makes the way for federal agencies like the ( IRS ) to have the ability to adjust deadlines as circumstances dictate. In this case, the taxpayers that live in California counties that have been declared federal disaster areas, will have until May 15 to file federal individual and business tax returns. This also postpones any estimated tax payments. This allows for time to focus on what is needed now.

                 When being employed by a family member, things can get complicated. That is especially true when it comes to tax responsibilities. Often, it depends on the relationship and the type of business. For example, a spouse is considered an employee if the first spouse makes the management decisions. Then their income is subject to income tax withholding, Social Security, and Medicare taxes.           When children are employed by their parents in a Sole Proprietorship or partnership, the wages are always subject to income tax withholding. However, only after the children turn 18 does Medicare and Social Security come into play. This changes when the business is a corporation or an estate. At that point, all wages are subject to withholding, Medicare, and Social Security. It does not matter how old the child is. If you are planning on starting a business and employing family member...

                 The Franchise Tax Board ( FTB ) has announced state tax relief for individuals and businesses impacted by Hurricane Ian. This means that there is a postponement for required payments and an automatic extension given to file a return. The FTB automatically follows the Internal Revenue Service ( IRS ) lead when it comes to postponement periods for presidentially declared disasters.           This means that for those who have been affected by the hurricane, the October 17 tax filing deadline has been moved to February 15, 2023. Taxpayers can also deduct a loss related to a disaster. Instructions must be closely followed in this process.

             This is the busiest shopping season of the year, and most of it is being done online. This means that criminals are actively trying to find opportunities to steal your information. They often use it to try and get a fraudulent tax refund. This is our second post about how we can protect ourselves.           Beware of scammers using fake charities . This is a time of year when many want to give to organizations. Criminals know this and try to use it to their advantage. Never let anyone pressure you into donating without doing research first. Make sure the charity is real by confirming its exact name, website, and mailing address. If the name is similar to, but not the same, as a well-known charity, this is often a sign of fraud. Give donations by credit card or check, do not give gift cards or wire money.           Businesses need to learn b...

                 Starting a business is hard work and can be expensive. Some of these costs can be deducted over time and recovered by the business. This can be done over a period of 15 years after the business is active, but it does not apply to every expense.           A qualifying start-up cost must be paid before the business is active. It must also be related to the field the business operates in. It can include advertisements for opening the business, travel costs related to securing suppliers and customers, and fees for consultants and other professional services. Costs related to investigating whether to purchase another business can also be deducted.           Not all costs qualify. Interest, taxes, and costs for experiments do not qualify for deduction. The actual purchase of another business cannot be deducted from federal taxes. The...

          It is easier to create different streams of income than ever before. With that ability comes certain obligations. Primarily, you must understand your tax responsibilities. All income is subject to tax. That includes part time, temporary, and side jobs. The payment may be in cash, property, goods, or even virtual currency. All of it must be reported, this means that a good record keeping system must be used during the year.           In addition, every employee must be classified correctly. This does not mean that the employer decides who is an employee and who is an independent contractor. An accurate classification is based on an examination of how the employer influences the work being done and how it is accomplished. When this is done correctly, all parties understand what is required from a tax standpoint. An employee will have income taxes withheld according to what is stated on the Form W-4 . A ...

     We have stated before that the American Rescue Plan of 2021 ( ARP ) is expansive and it will take time to understand all the areas that it touches. It was recently announced that there are tax credits to help businesses provide paid time off for employees receiving COVID-19 vaccinations. This would be available to eligible employers with less than 500 employees.      That means if the employer offers a paid day off to get a vaccine, this tax credit will equal the amount of wages paid. There are also tax credits that reimburse the cost of providing sick and family leave related to COVID-19 . These credits are available for use from April 1 to September 30, 2021. There are similar credits available for those who are self-employed.

          One of the lifelines for Small Businesses last year was the Paycheck Protection Program ( PPP ). There was also the Employee Retention Credit ( ERC ). Both were a part of the CARES Act in March 2020. Until the Taxpayer Certainty and Disaster Tax Relief Act of December 2020, they were essentially treated as separate. A business would have had to choose between one or the other. Now they can participate in both and the Internal Revenue Service ( IRS ) has released guidance on this subject.           Getting involved in both forms of relief is certainly an attractive option to most businesses. However, there is no “one size fits all” path to COVID-19 relief. PPP funds are still very difficult to acquire and this guidance allowing for ERC use is still new. Keeping good records and talking to your Qualified Tax Professional is essential at this point. This is a situation that is constantly changing, w...

                 For those who felt left out of the last 2 Paycheck Protection Program ( PPP ) openings, there is another chance. Starting on February 24, and continuing for 2 weeks, there is an exclusive window for Small Businesses with 20 employees or less to apply for a PPP loan. This is a particular group that has felt shut out of the program to this point.           This means that sole proprietors and independent contractors will have an even greater opportunity to receive this funding. However, the calculations that would increase the amounts of the loans for these Small Businesses will not be updated by the Small Business Administration ( SBA ) until March 1 . Specific written guidance will also be issued at that time. So it might be best for business owners to wait until that time so their applications will be subject to the most updated rules.

     The new COVID relief package ( Consolidated Appropriations Act, 2021 ) was signed on December 27. A Bill like this is unlikely to be changed after it has been signed. This means we have a much clearer understanding of what it will provide.      This is actually part of a larger piece of legislation that includes funding the government until September 2021. The COVID relief part of the law renews many of the programs created with the Coronavirus Relief and Economic Security ( CARES ) Act. For example, the Paycheck Protection Program ( PPP ) will continue. There is also a clarification that businesses can deduct expenses paid with funds from a forgiven PPP loan. There will be an extension of Federal Pandemic Unemployment Assistance ( FPUA ). This allows for Unemployment Insurance for Independent Contractors and those who work in the Gig Economy. This will go in effect 1 week later due to the delay in signing the Bill. Another round of Economic Impac...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this series of posts has shed some light on what to do in different situations.      This post will give the best reason why a borrower might want to wait to submit their application. Some businesses have potential forgiveness reductions . Our last post discussed how fewer full-time employees or reductions in salary would impact the qualified expenses that could be claimed.      It may be best for some of these businesses to wait until after December 31 to file their applications to see if they were able to restore any of their employees and/or salaries. That would allow them to qualify for what are known as Safe Harbors and not have to reduce t...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this series of posts will shed some light on what to do in different situations.      The last post shared why a borrower might apply early and may want to wait. Another reason to wait is if the borrower has reductions to forgiveness due to fewer full-time employees or reductions in salary . It would be best to wait until the end of their covered period. This is because the reduction applies to all qualified expenses, not loan forgiveness. At the end of the covered period all the expenses can be added and then reduced by the necessary amount. If this is greater than the loan, a borrower can still qualify for full forgiveness. A Qualified Tax Professional is esse...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this post and the ones that follow will shed some light on what to do in different situations.      If you are using the last of funds or coming to the end of the forgiveness period, the application is not required until 10 months after the end of that forgiveness period. With that understanding, you do not have to wait. If the money’s all gone and you are confident that full forgiveness can be reached, it makes sense to apply. This is one reason why it makes sense to wait.      Applying early will not change forgiveness reductions . For example, if a business has reduced salaries of employees by 25%, that must be accounted for during the entire ...

     With so many businesses and employees working remotely, security have become a much greater concern. There are a variety of phishing tactics designed to steal the tax information from employers and tax professionals. This is why Payroll and HR Scams has earned a spot on the Internal Revenue Service ( IRS ) Dirty Dozen list of 2020.        The goals of these scams are accomplished by Business Email Compromise ( BEC ) or Business Email Spoofing ( BES ). There are two well-known scams that are currently being used. A compromised email account is used to send requests for gift cards in different amounts. The other uses the victims email account to change their direct deposit information to an account that the criminal controls. Often fake IRS documents are used.      The specific methods may change over time, but the goals are always the same. If you feel that a request is suspicious, look into it further. There are often little detai...

When the Paycheck Protection Program ( PPP ) was first announced, many saw it as the answer to their COVID-19 related business issues. There was a rush to get applications in, especially when it was revealed that these loans may not have to be paid back if certain requirements were met. Now, as the dust begins to settle, we are getting a better idea about who makes these decisions. The Small Business Administration ( SBA ) has a great deal of discretion over how a PPP loan will be paid back. They decide if the loan can be forgiven or how much will be paid back. In addition, there is currently little guidance on how to appeal their written final decisions. The only SBA decisions that can be appealed are if the borrower was determined ineligible for a PPP loan, for the loan amount received, if the loan amount was used for ineligible purposes, or if the borrower was ineligible for full or partial loan forgiveness. This process is handled by a special SBA office. They will not rev...

           A growing threat today involves cybercrime. One example of this is Ransomware. This is software designed for an evil purpose. It will target human or technical weaknesses in a computer, network, or server. Most of the time, people are not even aware of downloading it. This relates to our recent Phishing blogpost .           Once inside, the Ransomware will track activity to lock and encrypt critical files. Then a demand message will appear. It will usually have payment details and contain the threat of the losing the data, or making it public. They may even be able to impact the entire computer network. To avoid this situation be careful about the links and attachments you open. There are many fake COVID-19 charities being promoted. This is a particular concern for Tax Professionals because they deal with the personal information of many individuals. The Internal Revenue Service ( IRS ) has guidel...