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Archives for December 2021

Recap of National Tax Security Awareness Week

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This year, National Tax Security Awareness Week was November 29 through December 3. Let’s go through some of the highlights. What is National Tax Security Awareness Week? Before we get into the details, you might be wondering: what is National Tax Security Awareness Week? In 2015, the IRS held a summit that called for public and private tax and administration leaders to come together to promote best practices for combating tax-related identity theft. Since then, the IRS and Security Summit partners dedicate one week per year to sharing knowledge and insights about how to protect your personal and business tax information, as well as top security tips for storing sensitive information and recognizing threats. The first few years’ worth of tips can be found here. Keep reading to learn about the insights shared during the 2021 National Tax Security Awareness Week. Protecting Against Tax-Related Identity Theft & More This year, like always, the IRS shared a ton of great tips and insights that both speak to the current state of security and also offer a path forward. The first thing they shared was a video describing the new IP PIN, an optional extra layer of security for information shared between you and the IRS. The IRS then talked about 10 key steps for protecting sensitive information. We’ve included our favorites here: “Phishing scams – like imposter emails, calls and texts -- are the No. 1 way thieves steal personal data. This year, fraud scams related to COVID-19, Economic Impact Payments and other tax law changes are common.” Only use websites with addresses beginning in "https" – the "s" is for secure communications. With the major shift in employees working from home, a VPN (virtual private network) is the best way to create a secure connection between your home and work networks. Beware of Fake Charities The second day of National Tax Security Awareness Week fell on Giving Tuesday, which gave the IRS a great opportunity to …

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IRS Audit Triggers for Small Businesses

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Your personal and business operations are too precious to be threatened by an IRS audit. Today, we wanted to talk about the biggest IRS audit triggers for small businesses. Mistakes Though there are few audits triggered by mathematics mistakes, the IRS has a computer trigger called the Discriminant Information Function (DIF) that scans tax returns and looks for certain things like duplicate information, and other mistakes. For example, a person or business with $100,000 in income likely won’t have $60,000 in charitable deductions, and DIF can catch that. Most mistakes that individuals and businesses make most often include writing Social Security and Tax Identification numbers incorrectly. Luckily, a good second look at your tax forms once they’ve been filled out can save you a lot of headaches. Home Office & Self-Employment One of the biggest audit triggers is the misrepresentation of home office items and self-employment expenses or income. Home office and home business deductions were difficult to navigate before the pandemic forced a lot of people to work remotely. There are a lot of rules you must follow for your expenses, equipment, and office space. It’s also important to note that your office and home business equipment must be used exclusively for your business for them to qualify for the deduction. Because of the complexity, the IRS often sees the home office section of the tax return as an opportunity for audit. If you plan to take advantage of these deductions for your business, you should also be prepared to prove that these items (from cars to tablets to other materials and utilities) were used solely for business purposes. Missing Income Gig workers are more prevalent than ever, which means the IRS is looking for unreported freelance and independent contractor income, either from your business payment perspective or the freelancer’s reporting. High Deductions Claiming deductions that seem disproportionate to your or your …

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ACA 2022: What You Need to Know

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The ninth annual ACA open enrollment period started on November 1, 2021, and it runs through January 15, 2022. This period is longer than it has been previously. Because of that, we also wanted to run through the latest changes and updates for ACA 2022. Changes to Choices and Premiums As with previous years, marketplace premiums are changing for 2022. They will be about 3% lower than 2021. 32 more insurers are participating in the marketplace next year as well, bringing the total to 213. According to KFF, consumers in the marketplace will have a choice of almost 83 health plans in 2022, up from 46 plan choices in 2021. The American Rescue Plan Act also changed the healthcare marketplace plans and premiums. ARPA, among other things, extended eligibility for premium tax credits to include people with income levels more than 400% of the federal poverty level (FPL). When broken down, consumers on these plans end up contributing a maximum of 8.5% of their income toward the benchmark silver plan. Active Renewal Is Your Best Bet If you or your employees are currently enrolled in a 2021 marketplace plan, you can let the Open Enrollment period pass and you will automatically be moved to a similar plan for 2022. But active renewal is still your best bet when it comes to ACA 2022. If you allow the marketplace to passively enroll you in a similar program to previous years, you may end up paying more in monthly premiums because the 2022 ARPA changes aren’t optimized for your ideal plan. Extremely Low-Income Enrollment For individuals with very low income levels (up to 150% FPL), a new monthly enrollment opportunity will be available. These opportunities will include zero-premium plans with greatly reduced deductibles. State-Based Marketplaces This year, three states have launched state-based marketplaces in Kentucky, Maine, and New Mexico. The Future of ACA Marketplace Enrollment Due to a special COVID-based enrollment period that ended in August of …

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