The gig economy, also called sharing or access economy, is defined by activities where taxpayers earn income providing on-demand work, services, or goods. This type of work is often carried out via digital platforms such as an app or website. There are many types of sharing economy businesses, including two of the most popular ones: ride-sharing, Uber and Lyft, for example, and home rentals such as Airbnb.
Reminder: Social Security Benefits May Be Taxable
Social Security benefits include monthly retirement, survivor, and disability benefits; they do not include Supplemental Security Income (SSI) payments, which are not taxable. Generally, you pay federal income taxes on your Social Security benefits only if you have other substantial income in addition to your benefits. Your income and filing status affect whether you must pay taxes on your Social Security. About 40 percent of people who get Social Security have to pay income taxes on their benefits.
The Facts: Taxable vs. Nontaxable Income
Are you wondering if there’s a hard and fast rule about what income is taxable and what income is not taxable? The quick answer is that all income is taxable unless the law specifically excludes it. But as you might have guessed, there’s more to it than that.
What is IRS Letter 6419?
Taxpayers should have started receiving IRS Letter 6419, 2021 advance CTC, in January. The advance child tax credit payments letter helps taxpayers get the remainder of their 2021 tax credit. It includes the total amount of advance child tax credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments.
What’s New for IRS Form 1040 This Year
If you’ve gathered your tax documents and are ready to tackle your tax return, there’s one more step you should take: becoming familiar with what’s new on the 2021 Form 1040. While the format of Form 1040 and its schedules remain similar to 2020, there are several changes. Many of these changes can be attributed to the American Rescue Plan Act of 2021 (ARP).
Non-Profits: Electronic Filing of Form 1024
Starting January 3, 2022, nonprofit organizations applying for recognition of exemption must submit Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, electronically online at Pay.gov. Form 1024, which was previously filed using a paper version, has been revised by the IRS to allow electronic filing. There is, however, a 90-day grace period during which the IRS will continue to accept paper versions of Form 1024 (Rev. 01-2018) and letter applications.
Three Tips for Getting an Accurate Business Valuation
If you’re conscientious about financial reporting, you may already have a sense of your company’s worth, but in some instances, you might need a formal business valuation, such as:
- Certain transactions: Are you selling your business? Planning an IPO? Need financing?
- Tax purposes: This includes estate planning, stock option distribution, and S Corporation conversions.
- Litigation: Often needed in cases like bankruptcy, divorce, and damage determinations.
Important Information About Economic Impact Letters
The IRS began issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter helps Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022. It contains information that can reduce errors and delays and help taxpayers or tax professionals prepare their 2021 federal tax returns.
Working Remotely Could Affect Your Taxes
When COVID-19 struck, many employers quickly switched to a work-from-home model for their employees. Many of them began working in a state other than where their office was located. While some workers have returned to their offices, as the pandemic drags on, more offices continue to work remotely with no back-to-office dates in sight.
Eight Facts About the Adoption Credit
Taxpayers who adopted or started the adoption process in 2021 may qualify for the adoption credit. This credit can be applied to international, domestic private, and public foster care adoption; however, taxpayers who adopt their spouse’s child cannot claim this credit.