This year, instead of April 15th, the new tax filing deadline is May 17th, 2021.
With So Many Forced To Work From Home In 2020, Does This Change Certain Tax Implications For Businesses Filing Federal Income Taxes This Year?
The work from home status will change the implications for both employer and employee. While home office expenses have not been allowed as a deduction for employees since 2018, now, employers can help employees by buying equipment and giving it to the employee to use, which will qualify as a deduction. They can also enter into an Accountable Plan. The employer can reimburse the employee for certain expenses and that money is tax-free to the employee and a deduction to the employer. Finally, the employer can make qualified disaster relief payments to the employee, which fall under the same status as an Accountable Plan.
With Tax Season At Hand, Is It Possible To Make Sure We Are Not Audited By The Internal Revenue Service?
No. However, some of the things that invite an audit are filing a Schedule C for a sole owner and proprietorship business. One might want to think about forming a small corporation or an LLC to file a separate return. Any significant fluctuations in income or expenses can trigger an audit, in which case you should be sure you keep accurate records to be used if audited.
What Are Some Red Flags That Could Increase Chances Of Being Audited By The IRS?
One of the most significant red flags is filing a schedule C, which you must file if you own your own business as a sole proprietor. Too many even numbers on your return can also be cause for alarm. If all deductions are rounded or there is a substantial charitable donation, it may also trigger an audit by the IRS to confirm the accuracy of the accounting.
Do Tax Laws Differ For Severance Pay Versus Salary Pay?
Severance pay is generally treated the same as ordinary income. However, if an employee was fired, and they sue the employer and win the case, part of that severance pay may not be income. For instance, if it could be separated into a salary or money paid for discrimination, then the part awarded for discrimination would not be counted as income.
How Might Working Remotely In 2020 Affect Income Taxes For Employees In South Carolina?
Working from home can be a tricky subject for a tax return. The first thing that must be determined is if the employee is now being treated as an independent contractor or remains an employee. If the business is located in another state from where the employee is, there may be double taxation. For instance, if a business is located in North Carolina, but the employee lives in South Carolina and works remotely, then the business will withhold North Carolina payroll taxes, and the employee also must pay South Carolina. It must be determined to ensure there is no double taxation.
For more information on Estate Planning In South Carolina, a free case evaluation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.