Social Media Marketing?

It’s been a very interesting year for so many reasons besides the pandemic and the ensuing civil unrest.  From the point of view of a business owner, though, this might be some of the best times we’ll ever see.

Why would I say that?  Simple:  Old systems aren’t working, and even those of us who are set in our ways (And almost EVERY CPA I know is like that) are being forced to rethink strategies.  Some of those strategies might have been in place a little too long, too. 

Now where is this more apparent than in Social Media and using it as a marketing tool.  Right now, as big advertisers discuss pulling their advertising campaigns from companies like Facebook, big social media companies are looking for ways to generate income. 

Enter your business. 

The truth is, social media marketing has always been reasonable (or free, if you knew how to combine “marketing” and “organic posting”), but now, increasing your reach is even less expensive.  Sure, you’ll need the basics like a business page, and you’ll need to think about the overall strategy you’ll use – in most cases, people need to learn more about you and your business before they jump into a purchase with you – but right this second? 

Every sale your business has ever wanted in probably “on” Facebook. 

The men and women who can introduce you and your business to others is on LinkedeIn.

Every “DIY” person you’d like to sell to is looking for hints, tips, and tricks on YouTube. 

And on and on. 

Billions of people, all looking for the information you know. 

Now, I’m not saying this as the person with all the answers – Social Media, as a general rule, is still NOT my favorite place to be. 

On the other hand, I AM saying this as an expert in business, and when I see national and international companies pulling money out of a platform, I know that platform is going to:  A.) begin to make changes and B.) going to discount advertising to keep income levels up. 

Since most – if not all – smaller companies look for local or regional exposure, the ability of Facebook, for example, to drill down into the demographics and location of viewers gives locals an advantage with their marketing. 

Is it perfect?  Of course not!  But the math bears it out:  many of the “big” marketers I follow on Social Media average $5 in income for every $1 spent. 

That’s pretty good AND doesn’t include the lifetime value of that customer.  It’s a remarkable change from what one client recently experienced with their radio advertising campaign.  They purchased one hundred ads, to run over ten weeks – roughly $278. 

Not one lead came in.

Not one. 

The same company ran a similar campaign on Facebook for one month – they had over 50 requests for services.  In all, they spent just shy of $400 on Facebook and currently have made nearly $3,000.  No, it’s not quite the average the “big guys” I referenced earlier, but it’s definitely NOT bad for some beginners.

What could your business do with $3,000 in new business this month? 

If there was ever a time to rethink about your business strategies, this is the year.  The government is keeping money flowing, like it or not, and people are spending it … and not the same way they usually do. 

Take advantage of this and find out if you’re been missing something.

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Make an appointment here!  t!  Or, call Toll-free 1-855-254-1892.

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Let’s talk Fringe Benefits

Fringe benefits are benefits provided by employers as compensation outside of an employee’s wages. Some employers provide certain benefits as an incentive to retain existing employees or onboard new ones. While some benefits, such as, a delivery person’s personal use of the company van, are incidental to an individual’s employment.  Additionally, some benefits are de minimis and are covered under on Internal Revenue Code section 132(a)(4). The Code requires such de minimis fringe benefits be excluded if they are infrequently used and are of inconsequential value. De minimis benefits not included in the Code may include, but not limited to the following:

• ·       Personal use of business cell phone,
• ·       Holiday gifts, employee use of photocopier and,
• ·       Group term life insurance with face value up to $2,000.

Fringe benefits.

Fringe benefits must be included as part of an employee's wages unless they are otherwise nontaxable. Such benefits are subject to income tax withholding and employment taxes (FICA). Reportable fringe benefits may include cars and airplane rides provided by employers, free or discounted commercial flights and vacations, to name a few, that must be included in employee wages. An employer determines the reportable amount by determining the excess of the amount paid by the employee over the fair market value of the benefit plus any amount the law excludes. There are other special rules you and your employees may use to value certain fringe benefits.

Nontaxable fringe benefits.

Some fringe benefits aren't taxable (or are minimally taxable) if certain conditions are met. The following are some examples of nontaxable fringe benefits.

• ·       Services provided to your employees at no additional cost to you.
• ·       Qualified employee discounts.
• ·       Working condition fringes that are property or services that would be allowable as a business expense or depreciation expense deduction to the employee if he or she had paid for them. Examples include a company car for business use and subscriptions to business magazines.
• ·       Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals aren't furnished at below cost).

However, the benefits of highly compensated employees must be included in wages unless the benefit is available to other employees on a nondiscriminatory basis.

• ·       No-additional-cost services.
• ·       Qualified employee discounts.
• ·       Meals provided at an employer-operated eating facility.
• ·       Reduced tuition for education.

Note: a highly compensated employee for 2020 is an employee who meets either of the following tests.

• ·       The employee was a 5% owner at any time during the year or the previous year.
• ·       The employee received more than $125,000 in pay for the prior year.

When taxable fringe benefits are treated as paid

You may choose to treat certain taxable noncash fringe benefits as paid by any pay period but must be paid at least annually. You don't have to pay all employees during the same period as long as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year.

Withholding on fringe benefits

Employers may add the value of fringe benefits to regular wages and figure withholding taxes on the total. Otherwise, they may withhold federal income tax on the value of the fringe benefits at the flat supplemental wage rate of 22 percent. Special provisions apply if supplemental wages exceed $1 million. Withholding income tax on the value of an employee's personal use of a vehicle is not required but employers must withhold social security and Medicare taxes on the use of the vehicle.

Depositing taxes on fringe benefits

Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period.

 

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Click to make an appointment!  Or, call Toll-free 1-855-254-1892

IRS AUDIT, ANYONE?

For as long as I have been providing tax-related solutions, I have seen many cases where taxpayers do not have supporting documentation or the support they have is inadequate. Well, while it is ideal to have supporting documentation for every single item on your tax return, that’s not always practical. For example, natural disasters are a common scenario where information often gets destroyed with potential negative impact on the taxpayer.   

 

Think about this: Between 2010 and mid-2019, major storms and climate-related events caused a total of $761 billion in property damage. Many of the folks affected by those events, I would imagine, were unable to support items on their tax returns. If those tax returns were subject to audit, they may lose some of their deductions.  But, taxpayers running afoul of various tax provisions requiring documentation or just impacted by events beyond their control to support tax deductions may be saved by the “Cohan Rule.” The Cohan Rule stems from a famous court case, “Cohan v. Commissioner, 39 F. 2d 540 (2d Cir. 1930)”. 

 

Who is Cohan?

George M. Cohan began his career as a child, performing with his parents and sister in a vaudeville act known as "The Four Cohans”.

Beginning with Little Johnny Jones in 1904, he wrote, composed, produced, and appeared in more than three dozen Broadway musicals. Cohan wrote more than 50 shows and published more than 300 songs during his lifetime, including the standards "Over There", "Give My Regards to Broadway", "The Yankee Doodle Boy" and "You're a Grand Old Flag”.

Known in the decade before World War I as "the man who owned Broadway", he is considered the father of American musical comedy.


What is the Cohan Rule?

Cohan was audited by the IRS and was told that he was not allowed to deduct many of his business and entertainment related expenses because he did not keep all of the necessary receipts. Mr. Cohan appealed this ruling and the courts actually sided with him, forcing the IRS has to accept estimates of his expenses.

The Cohan Rule is now a law that allows taxpayers to deduct some of their business-related expenses even if the receipts have been lost or misplaced so long as they are reasonable and credible.

How does the Cohan Rule work with the IRS?

Based on the Cohan ruling, the IRS must allow you (a business owner) to deduct some of your business expenses, even if you do not have each and every receipt to back them up. The idea is that you incur expenses as you run your business, which aren’t, can’t or weren’t always documented. Keep in mind, however, that the IRS expects that you to provide credible evidence of these expenses and while you might not have an actual receipt, you can also show pertinent records like calendar notice, canceled checks, or other notes to indicate that you are not fabricating this expense.

While the Cohan Rule allows the taxpayer to deduct some reasonable expenses even without receipts, there is a catch. If you do not have receipts, you may not be reimbursed for the full amount of your expenses. The IRS will only allow you to deduct the least amount of money that you could have possibly spent, not the entire sum.

Can you use the Cohan Rule?

So if you ever find yourself under audit and, either feel like an  auditor is not giving you credit for legitimate deductions or that you do not have documentation to support, the Cohan Rule may be used to appeal the auditor’s position and even allow you to raise this issue in court.
The IRS is not required to grant you these deductions, but it is certainly worth trying. You may find that you end up getting credit for a portion of your deductions. Have questions, concerns or want to discuss your issue?  Make an appointment here!  Or, call toll-free 1-855-254-1892.

 

THE CASE COHAN V. COMMISSIONER

The case of Cohan v. Commissioner, settled in the 2nd Circuit US Court of Appeals on March 3, of 1930, is one of the top ten most cited tax cases in history. Among other matters of little long-term significance, the case addressed deductions for travel and entertainment expenses claimed by actor, songwriter, and playwright Mr. George M. Cohan (Below, shown on the cover of Time magazine) between 1921 and 1923.

The IRS (or the ‘Board’ as it is referred to in the Court’s opinion) attempted to deny all of Cohan’s travel and entertainment expenses due to insufficient accounting and documentation, even though it conceded he had traveled due to the income earned in various cities across the country. The Court disagreed with the Board’s conclusions, and expounded in the following remarks (written by Circuit Judge Learned Hand, at left, who has been quoted more by the Supreme Court than any other lower court.

“Absolute certainty in such matters is usually impossible, and is not necessary; the Board should make as close an approximation as it can, bearing heavily if it chooses upon the taxpayer whose inexactitude is of his own making. But to allow nothing at all appears to us inconsistent with saying that something was spent.”

“It is not fatal that the result will inevitably be speculative; many important decisions must be such. We think that the Board was in error as to this and must reconsider the evidence.”

Since this case, there have been hundreds of spin-off cases where the Cohan rule has been applied to different circumstances. In one of the more recent cases, Doffin v. Commissioner, 1991, the tax court applied the Cohan rule to gambling loss deductions. In Doffin, the court considered statistical probability based on the gambler’s gaming style to estimate the deductible losses. Doffin has frequently been cited in other cases involving gambling loss deductions.

The IRS will always interpret the application of tax law in a manner adverse to the taxpayer. The burden of defending your rights is yours, and if you choose, ours.

IMPORTANT: We highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other relief programs or get your penalties and interest forgiven. Reach out to our firm today for a consultation.  Click to make an appointment! Or call Toll-free 1-855-254-1892

Bankruptcy FAQ for Individuals

Filing for bankruptcy is a difficult and draining process. People often feel ashamed, scared, or confused. If you find yourself with no other options, bankruptcy can be a good way to clear out old debts, change financial patterns, and most importantly get a fresh start. Here is everything you need to know about filing for bankruptcy.

 

Note: Depending on what type of taxes you owe, you might not be able to wipe out your back taxes in bankruptcy proceedings. Our firm specializes in tax resolution and back tax debt settlements with the IRS. So if you’re considering bankruptcy in part because of your back tax burdens, reach out to us today for more information on how you can get tax relief.  Click to make an appointment! Or call Toll-free 1-855-254-1892.

 

Who Should File for Bankruptcy?

 

If you owe money to a creditor and cannot repay it, you can file for bankruptcy. Businesses and individuals are eligible; however there are caveats. If you have filed for bankruptcy once before, there is a waiting period before you may file again. After filing for Chapter 7 bankruptcy, you cannot claim bankruptcy again for eight years. After filing for Chapter 13 bankruptcy, you must delay a second claim for at least two years.

 

What Types of Debt Can I Discharge Through Bankruptcy?

 

You can discharge most types of debt through bankruptcy, including medical debt, credit card debt, payday loans, and mortgage debt.

 

Certain types of debt cannot be discharged through bankruptcy, meaning that you will still need to repay these debts even if everything else is forgiven. Debts that cannot be wiped out in bankruptcy include spousal support, child support, student loans, and back taxes in most cases.

 

Any debt you take on after you've filed for bankruptcy is ineligible to be discharged through the filing, since you did not have the debt when you asked for debt relief.

 

Why is Filing Bankruptcy Helpful?

 

When you can't keep up with the bills, you're under a high level of stress. Bankruptcy is never a first option for people; many have tried things like getting extra jobs, selling unwanted possessions, or asking family members for loans before arriving at bankruptcy as their best option for debt relief.

 

By wiping out debts, bankruptcy reduces stress immediately. Collectors are not allowed to come after individuals who are going through bankruptcy, so threatening phone calls and letters will end immediately.

 

A Chapter 13 bankruptcy can promote good financial habits, because in this form of bankruptcy, some amount of debt is repaid under a plan. By helping to increase financial literacy and instilling good financial habits, this partial repayment can keep people in the black once debts are discharged.

 

The biggest downside to filing for bankruptcy is that it impacts your credit, so you may find it difficult to take out loans for up to ten years after the bankruptcy. Your credit score also impacts things like the interest rate offered on loans and your ability to pass a tenant screening, so there are other ramifications to consider.

 

If you're not sure whether a certain debt will be forgiven or which type of bankruptcy is right for you, there are resources to help you explore your options, such as credit counselors. If you are thinking of filing for bankruptcy, it's helpful to get a counselor's opinion on your specific circumstances and what to expect after filing.

 

If you have back tax debt, we highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to our firm today for a consultation.  Click to make an appointment! Or call Toll-free 1-855-254-1892.

Work from Home Tax Forms: How to Store Them, How to File Them and How to Reduce Your Liability

Working from home can be a dream come true, especially if you also work for yourself. Opportunities for freelancers, gig workers and other self-employed men and women have exploded in recent years, giving people the freedom they crave without sacrificing the income they need. This is far more evident with the current COVID situation where millions of Americans are now commuting from their bedroom to the dining room table for a Zoom call.

 

That freedom and flexibility can be intoxicating, but there is an unwelcome hangover as well. Tax issues can make working from home less attractive, and more expensive, leaving many gig workers, new freelancers, abd small business owners frustrated. But if you plan carefully and know what to do, you can reduce the tax headache and enjoy the perks of working at home. Here are some key things to know before the tax man comes calling.

 

But before we jump into tax strategies, it’s important to note that the IRS is increasing enforcement in the coming months and even years after this pandemic. More small businesses and independent contractors are going to find themselves getting letters from the IRS requesting for more information or stating they owe money to the IRS. If you have any tax trouble or owe more than $10k to the IRS or state but can’t pay in full, contact our firm today. We help people find tax relief.  Click to make an appointment! Or call Toll-free 1-855-254-1892.

 

So, lets jump into some best practices for keeping your tax records clean in case the IRS comes knocking on your door.

 

Gather Contact Information from Your Clients

Whether you are preparing sales brochures for local businesses, designing websites for new startups or putting together dozens of individual side hustles, it is important to have contact information for every client.

 

The typical freelancer may have dozens of clients in a single year, and being able to contact them is an essential part of doing business. So go through your email lists, sort out your invoices and create a database of addresses and telephone numbers. Hopefully you will receive all your documents on time, but if not, that contact information will help you track down the missing paperwork.

 

Store Electronic and Paper Copies

The old saying that it is better to have it and not need it than need it and not have it is doubly true when you are self-employed. For gig workers, freelancers and other self-employed individuals, the loss of a single tax form could delay filing for months and even trigger an audit by the IRS.

 

That is why it is so important to build redundancy into your document storage. That means scanning each 1099 form as it is received, storing it on your hard drive, cloud account and offline storage device. It also means making paper copies of those critical documents and storing them in a safe place. These tax forms will be important when the tax filing deadline rolls around, so make sure you have them when you need them.

 

Keep Your Own Ledger

In a perfect world, every freelancer and at-home worker would receive all the tax forms they need, but that perfect world is the exception and not the norm. If you want to be ready for tax time and avoid unwanted entanglements with the IRS, you need to keep your own ledger.

 

Having your own records to back up your earnings estimates will help you in many ways, from qualifying for lower cost health insurance to getting a jump start on your tax return. It may be a little extra work, but keeping your own ledger will pay off in the long run.

 

Check Off Each Form As It Is Received

Now that you have your ledger in hand (or on your computer), you can cross reference your records and check off each 1099 form as it is received. When you have crossed the last form off your list, you can start filing your taxes and get the refund you deserve.

 

Be sure to scan each form as you receive it and make several backup copies. Having this documentation on hand will make your life easier should the IRS question part of your return or request additional information about the income you are claiming.

 

Reduce Your Tax Liability with a Solo 401(k) or SEP-IRA

Many new freelancers and gig workers are surprised at the high taxes they are required to pay, and the self-employment tax can be a particularly devastating blow. This extra tax is assessed to self-employed individuals, and it can have a big impact on members of the gig economy.

 

You may not be able to eliminate the self-employment tax, but there are steps you can take to keep your tax liability to a minimum. Retirement plans for the self-employed are among the most generous around, and opening a solo 401(k) or SEP-IRA could allow you to shelter tens of thousands of dollars in income.

 

These self-employed retirement plans do require some setup and a fair amount of paperwork, but once in place they can be used year after year to reduce your tax liability, so you can keep more money in your pocket and send less to the IRS.

 

Being self-employed and working from home can be wonderful, but it is important to be prepared for the realities. One of those unpleasant realities is taxes, and keeping track of your work at home tax forms will be critical as you make the transition. The tips listed above can help you keep proper records, stay on the right side of the IRS and even reduce your tax liability.

 

OWE BACK TAXES?

Our firm specializes in tax resolution. We serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. Click to make an appointment! Or call Toll-free 1-855-254-1892.