Summer is here and you are probably not thinking about taxes? We get it! Especially when you're a busy realtor/broker juggling showings or a skilled contractor focused on your next job.

Well, we've got some interesting news. The IRS (the tax folks!) recently shared their "Data Book for 2024." Think of it as a report card on what they've been up to. And guess what? Some of their plans could actually make dealing with taxes a bit smoother for small business owners like you!

Let's peek at what this means for you in simple terms:


1. The IRS is Going Digital!

Imagine doing more of your tax stuff online, without piles of paper. The IRS is working on something they call the "Digital First Initiative."

• What it means: They want you to be able to do almost all your tax tasks with them using your computer or smartphone.
• How it helps you: This could mean less paperwork headaches! Think about easily finding forms, submitting information, or getting updates online. It's all about making things quicker and more convenient, so you can spend more time selling houses or finishing that important project.

2. Your Online Tax Account Just Got an Upgrade!

If you're self-employed (and most real estate pros and contractors are!), this is great news. The IRS has improved its "Business Tax Account" online tool.

• What it means: More types of businesses can now use this handy online spot. It’s like your own secure dashboard on the IRS website.
• How it helps you: You can use it to check your business tax details, see payment histories, and manage your information all in one place. For real estate agents, this could be a simple way to track your estimated tax payments. For contractors, it's a good spot to keep your business tax info organized. This could be a real time-saver!

3. The IRS Wants to Keep You in the Loop!

It seems the IRS is trying harder to talk to small business owners. Their 2024 report mentioned they reached out to hundreds of thousands of small businesses with things like email newsletters.

• What it means: The IRS is making an effort to provide more information and updates directly to you.
• How it helps you: By getting these updates, you can stay on top of any tax news that affects your business. This could include tips, reminders about deadlines, or news about changes to tax rules. Being informed can help you avoid mistakes and maybe even find helpful resources.

So, What's the Big Deal for You?

Okay, these changes from the IRS don't mean tax laws themselves are suddenly different for your real estate business or contracting work. But, how you interact with the IRS and manage your tax responsibilities is getting a modern makeover.

• For Real Estate Agents: Imagine easily tracking your commission income and estimated payments online. Digital tools can help you keep better records for things like mileage or your home office deduction.
• For Plumbers, Electricians, and Craftsmen: When you're moving between jobs, having easier online access to your tax information or the ability to make payments digitally can save you a lot of hassle. It can also help you keep tabs on income from different projects and your expenses for tools and supplies.
  

​The main idea is that these IRS efforts are about making the tax system a bit more user-friendly for busy people like you. Less paper, more online tools, and better communication can only be a good thing!

Got Questions? We’re Here to Help!
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We know that even with these helpful IRS updates, taxes can still feel complicated. You might be wondering how to best manage your deductions as a real estate professional, or how to handle taxes for your contracting income.
That’s what our team is here for! We specialize in helping real estate pros and independent contractors like you navigate the tax world with confidence. If you have questions about these IRS changes, need advice on your specific tax situation, or just want to make sure you’re on the right track, please reach out!

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For those who qualify, (see below) the Employee Retention Credit (ERC, or ERTC) is still active. The IRS is simply pausing the processing of those claims. Here is a brief overview of the ERC for those who may need a refresher.

The Employee Retention Credit (ERC or ERTC) is a complex tax credit provided by the IRS for businesses and tax-exempt organizations that continued to pay employees during the COVID-19 pandemic, especially when facing shutdowns or experiencing a required decline in gross receipts in 2020 and 2021. However, the IRS has identified issues with aggressive marketing and misinformation, leading to ineligible claims for the ERC. To assist taxpayers in determining their eligibility accurately, the IRS has created a detailed question-and-answer chart.
Part A: Checking Your Eligibility

1. Operational Status and Employee Payments:
   
   • The first step involves confirming whether a business or tax-exempt organization operated a trade or business, had employees, and paid wages between March 13, 2020, and December 31, 2021. Household employers are not eligible for the ERC.
2. Gross Receipts Decline:
   
   • Eligibility hinges on whether the trade or business experienced the required decline in gross receipts during specific eligibility periods in 2020 or the first three quarters of 2021. If yes, the organization may be eligible, but further confirmation of the decline is necessary.
3. Supply Chain Issues:
   
   • If the ERC is being claimed due to supply chain issues, caution is advised. A supply chain disruption alone doesn't qualify, and detailed scrutiny of the supplier's government order is essential.
4. Business Suspension by Government Order:
   
   • The organization must determine if its operation was fully or partially suspended by a government order due to the COVID-19 pandemic in 2020 or the first three quarters of 2021. The suspension must be due to a government order and not merely guidance, recommendation, or statement. Eligible periods are limited to when the government order was in effect and operations were suspended.
5. Recovery Startup Business (RSB):
   
   • For businesses initiated after February 15, 2020, with $1 million or less in average annual gross receipts for the prior three tax years and not qualifying under the gross receipts or suspension tests, there may be eligibility. RSBs have limitations on the maximum ERC per quarter and are eligible only for the third and fourth quarters of 2021.

Part B: Claiming the ERC if Eligible
If the eligibility questions lead to this part, the organization may qualify for the ERC. Thorough record-keeping, including wages paid, gross receipts, government orders, and other required documents, is crucial. Assistance from a trusted tax professional is recommended, and additional information is available at IRS.gov/erc.
Part C: Resolving an Incorrect ERC Claim
If an incorrect ERC claim has been made, the IRS provides a withdrawal process outlined at IRS.gov/withdrawmyerc. This process is applicable if certain conditions are met, including making the claim on an adjusted employment tax return, filing the adjusted return only for the ERC claim, and not cashing or depositing the refund check. The IRS is also working on guidance for employers who were misled into incorrectly claiming the ERC and received the credit. Regular updates on IRS.gov/erc are advised for the latest information.
In conclusion, the ERC is a valuable credit for businesses and tax-exempt organizations, but it is crucial to navigate the complex eligibility criteria accurately to avoid potential repercussions for incorrect claims. The IRS emphasizes its commitment to helping taxpayers while preventing incorrect ERC claims and fraud.

Ironically, the 2023 tax season starts today on January 23rd. Another year of putting the correct numbers in the correct boxes and filing by the correct due date. Those numbers however, have a greater emotional meaning to you the taxpayer. Numbers such as total income can drag your ego and pride into the mix when you have a banner year. It makes for an exciting yet stressful situation when you have a great year but did not plan accordingly. Will I owe taxes on the income or will I be able to minimize my tax burden are the questions revolving around in your head.

Did I make a tax plan ahead of time to address the increase in income?

When you are only putting the correct numbers in the correct boxes by the correct due date, you are selling yourself short and possibly leaving your hard earned dollars to the IRS. The goal is to bring those numbers to life, recognize them and celebrate them. What better way to accomplish this than by building a tax plan during the year so there are no surprises at tax time. 

Feel free to contact us if you would like to partner with more than a tax professional that puts the right numbers in the right boxes by the right due date to build a lasting relationship to save your hard earned dollars and bring meaning to your numbers.

Here's to a less "taxing" filing season.