Have you seen those ads on television or received email solicitations promoting a large tax credit? The large tax credit they are referring to is the employee retention tax credit (ERTC). The ERTC is a government-sponsored program to keep workers employed during 2020 and 2021 because of the COVID pandemic by providing refundable tax credits to employers that kept their workers on payroll during the COVID crisis. Unlike most tax credits, this is a credit against the employer payroll taxes.
Even though this credit only applies for 2020 and part of 2021 for most businesses, if your business qualifies, and you haven’t already claimed the credit, it can still be claimed by amending the payroll tax returns for those years. So that you can determine if you might qualify for the credit and avoid being misguided by the credit promoters, the following is a summary of the qualifications to claim the ERTC.
The credit is available to all employers regardless of size, including tax-exempt organizations, tribal businesses, and businesses in U.S. Territories. There are only two exceptions: State and local governments and their instrumentalities. For eligible employers, the credit is available for wages paid:
December 1 – Time for Year-End Tax Planning
December is the month to take final actions that can affect your tax result for 2022. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2022 should call for a tax planning consultation appointment.
December 12 – Report Tips to Employer
If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 12. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
December 31 – Last Day to Make Mandatory IRA Withdrawals
Last day to withdraw funds from a Traditional IRA Account and avoid a penalty if you were born before January 1, 1951. You may delay your first distribution to April 1, 2023 if your birth date is during the period January 1, 1950 through December 31, 1950. If you are required to take a distribution in 2022 and the institution holding your IRA will not be open on December 31, you will need to arrange for withdrawal before that date.
December 31 – Last Day to Pay Deductible Expenses for 2022
Last day to pay deductible expenses for the 2022 return (doesn’t apply to IRA, SEP or Keogh contributions, all of which can be made after December 31, 2022).
December 31 – Caution! Last Day of the Year
If the actions you wish to take cannot be completed on the 31st or a single day, you should consider taking action earlier than December 31st.
December 1 – Employers
During December, ask employees whose withholding allowances will be different in 2023 to fill out a new Form W4 or Form W4(SP).
December 15 – Social Security, Medicare and Withheld Income Tax
If the monthly deposit rule applies, deposit the tax for payments in November.
December 15 – Nonpayroll Withholding
If the monthly deposit rule applies, deposit the tax for payments in November.
December 15 – Corporations
The fourth installment of estimated tax for 2022 calendar year corporations is due.
December 31 – Caution! Last Day of the Year
If the actions you wish to take cannot be completed on the 31st or a single day, you should consider taking action earlier than December 31st.
Year-end is rapidly approaching as are the holidays. So, before you become distracted with the seasonal celebrations, it may be in your best interest to consider year-end tax moves that can benefit you for both 2022 and 2023.
Congress created Achieving Better Life Experience (ABLE) accounts in 2014. Prior to the creation of the ABLE accounts, individuals with disabilities who were eligible for Medicaid or federal Supplemental Security Income were limited to a maximum of $2,000 in assets, such as bank savings accounts. Now, disabled people are allowed to have up to $100,000 in one of these special accounts without jeopardizing their Medicaid or Supplemental Security Income.
November 10 – Social Security, Medicare and Withheld Income Tax
File Form 941 for the third quarter of 2022. This due date applies only if you deposited the tax for the quarter in full and on time.
November 15 – Social Security, Medicare and Withheld Income Tax
If the monthly deposit rule applies, deposit the tax for payments in October.
November 15 – Nonpayroll Withholding
If the monthly deposit rule applies, deposit the tax for payments in October.
If you are an employee who works for tips and received more than $20 in tips during October, you are required to report them to your employer on IRS Form 4070 no later than November 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
The Small Business Administration (SBA) provides disaster assistance for homeowners, renters, nonprofits, and businesses of all sizes affected by Hurricane Ian.
Caution: The following list of qualifying counties is preliminary and can change as damage assessments are concluded.
With the recent passage of the Inflation Reduction Act of 2022, the electric vehicle credit has undergone some major changes. Although most of the changes take effect in 2023, to qualify for the current credit, vehicles purchased after August 15, 2022, are required to meet the final assembly requirement of the new law.
The Inflation Reduction Act signed into law by President Biden on August 16, 2022, gives new life to the federal tax credit for the purchase and installation costs of residential solar-power systems and provides guidelines allowing batteries to also qualify for the credit.
