News you can use
Student Loan Forgiveness Application
The U.S. department of Education has officially launched the application for student loan forgiveness. The statistics show that 40 million of Americans are in debt for their education and the average balance of the loan is more than $30,000 which is up from $12,000 in 1980. 90% of borrowers fall below the income caps for the relief: $125,000 for individuals and $250,000 for married couples. If you have a student loan do not forget to log into your account and submit the application.
Roth IRA for Children
Did you know that you could contribute into your kids Roth IRA? Funding your kids Roth IRA could be a better financial planning move than funding State 529 education plan. Roth funds can be used to pay for school and as long as withdrawals are part of initial contribution, early withdraw penalties and tax would not apply. Roth IRA does not have an age limit, meaning that a newborn could have an account as long as they have social security number and earned income. However, until the child reached age of majority the account would have to be set up as a custodial account. For more details click on the link below.
What are tax consequences of remote work?
Since the pandemic has started many companies have gone partially of fully remote. What seems to be a simple concept has created complicated tax consequences for firms and businesses when paying their employees. There is no federal solution right now and every state works differently. Employees may live in one state and work for a company located in another state and must contend with taxes in both states. Luckily, the residents of Louisiana who work remotely for businesses which are located in another states, even if they file and pay taxes to other states, they will be able to claim taxes paid to other states as a credit on their Louisiana tax returns. For more details click on the link below.
Offer in Compromise
If you owe a lot in taxes but do not have a funds to pay them, it is a good idea to consider an Offer in Compromise program that the IRS offers. Through this program the taxpayer enters into an agreement with the IRS to settle a tax debt for less than the full amount. Offer in Compromise agreements can be very useful, and settlements can be a significantly less especially if the taxpayer has a low income and a few assets. I do advise you to talk to a tax professional before you proceed with filling of the application. For more details about Offer in Compromise program click on the link below.
Coming up Deadlines - Reminder
Now that extended deadlines for business and individual tax returns is behind us, we can solely focus on the last quarter of the year, year-end planning, and year-end deadlines that are coming up. Here is just a quick reminder of important dates that are coming up. Please know that those are not only deadlines but just some of the most important once that I think my current and potential clients would find useful to get a reminder of.
- October 31, 2022 - Deadline to file 3rd quarter payroll reports for 2022
- December 31, 2022 – Deadline to open solo 401k for 2022.
Actual contributions can be made up until the personal tax filing deadline (April 17th, or October 16th if the extension was filed) - January 15, 2023 – Deadline to make 4th quarter estimated tax payments for 2022
- January 31, 2023 – Deadline to file W-2s and 4th quarter payroll reports for 2022
- January 31, 2023 – Deadline to file Form 1099-NEC & 1099-MISC for 2022
- March 15, 2023 – Deadline to file Form 1065 (Partnership Tax Return) & Form 1120S (S-Corporation Tax Return) or an extension for 2022
- April 17, 2023 – Deadline to file Form 1040 or an extension
- April 17, 2023 – Deadline to pay any taxes owed for 2022.
Please keep in mind that extension is extension to file and not extension to pay - April 17, 2023 – Deadline to pay 1st quarter estimated payment for 2023
- April 17, 2023 – Deadline to make IRA & HSA contributions for 2022.
“Lucky” Baseball Catcher
I came across an interesting article that came out earlier this month that talks about Yankee fan catching a “million dollars” ball after New York Yankee Aaron Judge broke the American league single season home run record. Taken literally from the tax code, any fan catching of the Judge’s pricey baseballs holds that windfalls dropping into a taxpayer’s lap must be recognized immediately as ordinary income. Do you all think that is fair? The ball that finished is fans hands might have only cost $25 yet now this “lucky” fan would have to pay hundreds of thousand dollars in taxes. For a full article click on the link below.
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E-mail: dragana@dcmtax.com
Phone:318-751-5455