Why Pay and Prepare Your Taxes

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Tax Tips for Federal Withholdings | W-4

The most common reason why you may not received a tax refund when filing your taxes is because your withholding is wrong. This applies to most W-2 filers only. Getting your withholding right enables you to receive a refund. Below is what the IRS suggest you do to ensure you have selected the correct withholding.

All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld. Doing this now can help protect against facing an unexpected tax bill or penalty in 2023. The sooner taxpayers check their withholding, the easier it is to get the right amount of tax withheld.

Taxpayers whose employers withhold federal income tax from their paycheck can use the IRS Tax Withholding Estimator to help decide if they should make a change to their withholding. This online tool guides users through the process of checking their withholding to help determine the right amount to withhold for their personal situation. Taxpayers can check with their employer to update their withholding or submit a new Form W-4, Employee’s Withholding Certificate.

Adjustments to withholding
Individuals should generally increase withholding if they hold more than one job at a time or have income from sources not subject to withholding. If they don’t make any changes, they may owe additional tax and possibly penalties when filing their tax return.

Individuals should generally decrease their withholding if they qualify for income tax credits or deductions other than the basic standard deduction.

Either way, those who need to adjust their withholding must prepare a new Form W-4, Employee’s Withholding Certificate. They need to submit the new Form W-4 to their employer as soon as possible since withholding occurs throughout the year.

Individuals who should check their withholding include those:

  • who experienced a marriage, divorce, birth or adoption of child, purchase of a new home or retirement
  • who are working two or more jobs at the same time or who only work for part of the year
  • who claim credits such as the child tax credit
  • with dependents age 17 or older
  • who itemized deductions on prior year returns
  • with other personal and financial changes

Tax Withholding Estimator benefits
The IRS Tax Withholding Estimator can help taxpayers:

  • determine if they should complete a new Form W-4.
  • know what information to put on a new Form W-4.
  • save time because the tool completes the form worksheets.

Taxpayers should prepare before using the Tax Withholding Estimator by having their most recent pay statements, information for other income sources and their most recent income tax return. The tool does not ask for sensitive information such as name, Social Security number, address, or bank account numbers.

Taxpayers shouldn’t use the Tax Withholding Estimator if:

  • They have a pension but not a job. They should estimate their tax withholding with the new Form W-4P.
  • They have nonresident alien status. They should use Notice 1392, Supplement Form W-4 Instructions for Nonresident Aliens.
  • Their tax situation is complex. This includes alternative minimum tax, long-term capital gains or qualified dividends. See Publication 505, Tax Withholding and Estimated Tax.


More information:
Tax Withholding Estimator FAQs

Accountant | Tax Preparer for Uber or Lyft Drivers

I came across this post on FORUM uberpeople.net and commented on it. The questions asked on the forum is below.

 Discussion Starter · #1 · 

Any clues on how to find the best recordkeeping, tax filing advice? Key word search shows a lot of info on this from 2016. Bah-humbug. I’m thinking I might get a CPA’s help once, and see how they organize and arrange…and do my own work after. But maybe there are tax magicians to be found.

I save receipts and records, and am moderately educated on common deductions. I have been hammered with car expenses over and over and have not contacted the IRS at all this year (last year I did not earn enough to get a 1099 and just used TurboTax).

Perhaps I’m equipped to handle it on my own. I use Excel, although I’m kinda playing catch-up with logging everything and thinking my bookkeeping may not need to be as meticulous as I’m making it. I enter weekly earnings. I copy & paste fueling records from Speedway. I document mileage at every fill-up. My mileage is for sure 95% rideshare–maybe higher (I record exceptions)!

Not looking for app suggestions, by the way. I know the best rated ones and am not interested.

I’m not real big on traveling far from New Lenox/Mokena for help. But I suppose it’s a 1x or 2x consult and maybe there’s a real magician out there with Illinois-specific advice.

Here is our response:

Here is my advice. Coming from an Accountant, Tax Expert and a former Uber Driver.

Most of us drive ourselves to work and to other destinations. If we do not have a car, we use public transportation. There is a difference between driving yourself and driving as a Uber or Lyft driver.

Here is the difference

When we are driving ourselves, all we do is to sit at the wheel, turn on the engine and get going. We do not put any thoughts into what the rules of the road are. The rules are subconsciously programmed into our heads. That is, we start the engine and go to where ever we are heading. We stopped at the stop lights, stop signs, and signal left or right and get to where we want to go. That is so easy. It’s routine !!!

When I am driving for uber, I do much the same as above. The difference being is that I am more conscientious of the laws that governs driving. I tend to drive for Uber with my antenna up. I now know that have the responsibility of taking my passenger to his/her destination safely. The same applies to Do-it-Yourself taxes and have a Tax Expert do your taxes.

A Tax Professional is much more verse in the laws that govern preparing taxes. He or She can save you time and money. He or she has been trained to know what is allowable or not allowable. What is deductible or not deductible. For example, you can not say I made $50,000 driving and my expenses are $45,000. Like how do you support yourself? Are you married or single? What makes up the $45,000 allowable expenses?

That knowledge the Tax Preparer has comes from education, training and experience. You can not do taxes without knowing the ramifications and consequences of taking non-deductible expenses.

We can help you with your taxes.

We can help save you money and time.

We are Tax Experts. We are LA PREMIER Tax Service.

Call us (213) 418-9600 or set an appointment | FRIENDLY Tax Services (Accountants and Tax Preparers)

Home Office Deduction Self-Employed

The home office deduction allows qualified taxpayers to deduct certain home expenses when they file taxes. To claim the home office deduction on their 2021 tax return, taxpayers generally must exclusively and regularly use part of their home or a separate structure on their property as their primary place of business.

Here are some details about this deduction to help taxpayers determine if they can claim it:

  • Employees are not eligible to claim the home office deduction.  
  • The home office deduction, calculated on Form 8829, is available to both homeowners and renters.  
  • There are certain expenses taxpayers can deduct. These may include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.  
  • Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.  
  • The term “home” for purposes of this deduction:  
    • Includes a house, apartment, condominium, mobile home, boat or similar property.
    • Also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse.
    • Doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.
       
  • Generally, there are two basic requirements for the taxpayer’s home to qualify as a deduction:  
    • There generally must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
    • The home must generally be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.  
  • Expenses that relate to a separate structure not attached to the home may qualify for a home office deduction. They will qualify only if the structure is used exclusively and regularly for business.  
  • Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:  
    • The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
    • When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.


Share this tip on social media — #IRSTaxTip: How small business owners can deduct their home office from their taxes. https://go.usa.gov/xtbkP

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.

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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