Why Pay and Prepare Your Taxes

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Selling or Sold Your Home – Consider These

The IRS says homeowners should think about these things when selling a home:

Ownership and Use
To claim the exclusion, the taxpayer must meet ownership and use tests. During a five-year period ending on the date of the sale, the homeowner must have owned the home and lived in it as their main home for at least two years.

Gains
Taxpayers who sell their main home and have a gain from the sale may be able to exclude up to $250,000 of that gain from their income. Taxpayers who file a joint return with their spouse may be able to exclude up to $500,000. Homeowners excluding all the gain do not need to report the sale on their tax return unless a Form 1099-S was issued.

Losses
Some taxpayers experience a loss when their main home sells for less than what they paid for it. This loss is not deductible.

Multiple Homes
Taxpayers who own more than one home can only exclude the gain on the sale of their main home. They must pay taxes on the gain from selling any other home.

Reported Sale
Taxpayers who don’t qualify to exclude all of the taxable gain from their income must report the gain from the sale of their home when they file their tax return. Anyone who chooses not to claim the exclusion must report the taxable gain on their tax return. Taxpayers who receive Form 1099-S, Proceeds from Real Estate Transactions must report the sale on their tax return even if they have no taxable gain.

Mortgage Debt
Generally, taxpayers must report forgiven or canceled debt as income on their tax return. This includes people who had a mortgage workout, foreclosure, or other canceled mortgage debt on their home. Taxpayers who had debt discharged, in whole or in part, on a qualified principal residence can’t exclude it from income unless it was discharged before January 1, 2026, or a written agreement for the debt forgiveness was in place before January 1, 2026.

Possible Exceptions
There are exceptions to these rules for some individuals, including persons with a disability, certain members of the military, intelligence community and Peace Corps workers.

Worksheets
Worksheets included in Publication 523, Selling Your Home can help taxpayers figure the adjusted basis of the home sold, the gain or loss on the sale, and the excluded gain on the sale.

Share this tip on social media — #IRSTaxTip: Important tax reminders for people selling a home https://go.usa.gov/xu6Nb

Fact Sheet – Child Tax Credit | Advance Child Tax Credit Payments

There have been important changes to the Child Tax Credit that will help many families receive advance payments. The American Rescue Plan Act (ARPA) of 2021 expands the Child Tax Credit (CTC) for tax year 2021 only.

What are advance Child Tax Credit payments? (updated May 20, 2022)
Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may properly claim on your 2021 tax return. If the IRS processed your 2020 tax return or 2019 tax return before the end of June 2021, these monthly payments began in July and continued through December 2021, based on the information contained in that return.
Note: Advance Child Tax Credit payment amounts were not based on the Credit for Other Dependents, which is not refundable. For more information about the Credit for Other Dependents, see IRS Schedule 8812 (Form 1040), Credits for Qualifying Children and Other Dependents.

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Independent Contractors (Uber or Lyft) Accounting Tips

The challenge we see in our practice is that Independent Contractors do not take the time to keep good accounting records. Keeping good records is the fuel to your business when it comes to taxes.

Fundera magazine, the small business resource center have 11 accounting tips for small business owners and self-employed individuals that we like to share with you. These tips are not just for Uber or Lyft drivers. If you are am Amazon delivery driver, or postmate, ubereats, doordash or instracart, you may want to take note of these.

  1. Separate business and personal expenses
  2. Track every business expense
  3. Accurately record income
  4. Consider hiring a professional, even if temporarily
  5. Automate accounting practices with accounting software
  6. Dedicate time to update your books
  7. Keep tabs on labor costs
  8. Be prepared for major expenses
  9. Maintain inventory records
  10. Follow up on invoices and receivables to avoid overpaying on taxes
  11. Create financial projections for future years

Related Articles

https://www.entrepreneur.com/article/356782
https://www.fundera.com/blog/do-you-need-an-accountant-for-a-small-business
https://www.inc.com/guides/2010/04/choosing-an-accountant.html

Ways To File | Why File With Us

There are hundred of ways to file your tax returns. You can file with a CPA. You can have a Tax Accountant or have a Tax Preparer file your tax return. You could also file your taxes online (DO IT YOURSELF option) with a tax software vendor such TurbotaxTaxActH & R BlockTaxSlayer, Jackson Hewitt or even Liberty Tax. Then there is the FREE FILING options. Your options are humongous. Both H & R Block and Jackson Hewitt offer in-person store service. That’s all good.

Here is why you should file with us

  1. We promise to diligently handle your tax return with CARE as if it is OURS.
  2. We promise to Get You Maximum Refund Possible – To do this, we will fight to get you ever deductions and credits you deserve
  3. 100% Accurate Calculations – Our calculations are 100% accurate on your tax return, or we’ll pay any IRS penalties.
  4. Optional: We may require a Zoom Meeting, Google Meets or a Microsoft Teams meeting to verify and complete your tax return.

States Giving Out More Stimulus Money

We can help you get your stimulus money.
Call us (213) 418-9600 or (866)542-9551
Below are states that are giving out stimulus money.

California

California has authorized payments of $600 to qualifying taxpayers in the state who make under $75,000. An additional $500 is also available for dependents. Disbursement is expected to begin in September, 2021.

Florida

In Florida, only first responders and educators are eligible for a fourth stimulus check. This stimulus check will come in the form of a $1,000 payment.

New Mexico

Residents of New Mexico who were not eligible for the federal stimulus checks can receive a payment from their local government. A total of $5 million was set aside to make payments (up to $750 per household), with the money going to the lowest income state residents first. Residents must apply through the YesNM Portal and have a driver’s license number, Social Security number, or Taxpayer Identification number.

New York

The state of New York created a $2.1 billion fund to provide payments of up to $15,600 for workers who are undocumented and who were thus excluded from receiving federal stimulus relief. Recipients must be New York residents, have lost earnings due to the pandemic, and have made less than $26,208 in 2020.

Texas

The state of Texas isn’t providing stimulus checks, but some local school districts are. Specifically, school employees in Denton will receive a $500 retention bonus along with a pay increase of 2% if they return for the upcoming 2021-2022 school year. And those who work in Irving will get a $2,000 retention bonus. Several other districts have voted to approve pay raises but not direct stimulus payments.

Friendly Tax Services

Friendly Tax Services is the premier income tax preparation firm for individuals, families, small business owners and the self-employed; Uber, Lyft, Taxi, and Limousine drivers; Actors, Independent Contractors and Entrepreneurs. We have empathy and understand the toll driving takes on Uber, Lyft, Taxi, and Truck drivers. That driving is time consuming. Uber drivers just don’t have the time it takes time to keep track of those business-related expenses.


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