How Summer Jobs Help Teens

Hiring a teen for a summer job can help them to gain valuable skills. Here’s how summer jobs help teens, as well as how we can help you with tax preparation for teens. 

Why include teens in job programs and internships?

1.  It teaches teens responsibility 

Some teens do not yet realize the hard work needed to become successful. Helping them to enter the workplace and introducing them to corporate life will teach them how to earn their money and the responsibilities that come with having a job. They will learn how to accept feedback and the value of teamwork, among other responsibilities.

2.  A summer job teaches valuable skills

Teens can learn valuable skills such as good ethics and time management through summer jobs. These lessons are important as they enter adulthood and learn to be responsible working adults. 

3. Build teens’ self-esteem 

Teens are growing up in a digital age where they tend to compare themselves to others on social media. Their self-esteem can take a dive but with a job, they can grow their confidence and feel better about their achievements in life. 

4. Jobs provide independence 

A summer job is a good way for teens to gain independence from their parents. Earning their own money will help them to save up for college or eventually start their own business. They will also learn to be tax-abiding citizens. 

How can we help you with tax preparation for summer jobs?

If you are hiring teens even for summer jobs, or your teen is looking for a summer job, you will need to check the tax implications. At Georgen Scarborough, we help families and businesses with their tax preparation, payroll services, and financial audits. We can help you to sort out your tax documents and help your business with payroll for teens. 

For more information on our tax preparation and accounting services, call us today!

Tax Considerations When Forming a Business Entity

1-tax considerations wehn choosing a business entity

Tax preparations can be complicated. The type of tax you pay will depend on the type of business entity you have. If you need to know whether you are on the right track or if you plan on changing your business structure, this guide will help you out. 

Tax Considerations According to a Business Entity 

Regardless of whether you own a sole proprietorship or a limited liability company, you are going to need to pay tax, but will you have to file for tax as an individual or business entity? You might decide to change your business based on tax implications, or your financial status. Before you decide, here are some tax considerations for each business type.  

  • Sole proprietorship 

A sole proprietorship owned-business is probably the least complicated when it comes to filing taxes. According to the IRS, you would not be taxed as a business entity but rather as a business owner. What this means is your business assets and liabilities belong to you and you will have to pay individual taxes on these. 

  • General partnership 

A partnership operates similarly to a sole proprietorship. It is also not taxable as a business entity. All the owners will legally have the responsibility to pay tax on their terms. Income tax is paid according to the partner’s tax rates and not a partnership income tax. 

  • Limited liability company 

Limited liability companies (LLCs) are treated as partnerships, unless it elects to be treated as a corporation. LLCs’ tax considerations work according to the personal tax returns of the owners. All income and loss and tax due are paid by individuals. 

  • C corporations

Corporations can be complicated and costly in comparison with LLCs and partnerships. A regular corporation or C corporation has to pay corporate income tax that is taxed at the corporate level. They are also subject to potential double taxation. Double taxation occurs on taxable dividends, i.e., the profits of the business that are distributed to owners. What this implies is that the Corporation will have to pay tax on its profits and the individual shareholders will pay tax on the dividends they receive. Let’s not forget that you also need to pay taxes if you receive a salary from the Corporation.

  • S corporation 

S corporations are a little less complicated as the IRS treats them as a pass-through entity for tax purposes. Shareholders will pay tax on the income of the business as individuals.

Tax preparation can be overwhelming for any business entity but at Georgen Scarborough, we handle all your tax considerations, financial statements, and audits. From your estate and trust tax preparation to LLC tax preparation, we can ensure that your business’s taxes and accounting are taken care of. 

For professional tax preparation, you can trust, give our team of experts a call today!

How to Determine your Estimated Taxes for 2022

How to determine your estimated taxes

Sole proprietors, partners, and S corporation shareholders, should make estimated tax payments if they expect to owe $1,000 or more when their return is filed. However, many people are uncertain how to go about figuring their estimated taxes for a given year, let alone paying them. Here is a simple guide to determining your estimated taxes for 2022.

Estimating tax using Form 1040-ES

Most individuals use Form 1040-ES to determine their estimated taxes. It is a fairly simple calculation, provided you can provide all of the following:

  • Expected adjusted gross income
  • Deductions
  • Taxable income
  • Taxes
  • Credits

You can use your income, deductions and credits for the prior year as a starting point, referring back to the federal tax return you previously filed.  Form 1040-ES includes a worksheet that you can use to figure your taxes, based on these amounts. You need to estimate the amount of income you expect to receive for the coming year. If your estimated amounts are too high or too low, you can always complete another Form 1040-ES in the following quarter, adjusting the estimates you previously made. It is best to try to make your estimations as accurate as possible, however, in order to avoid penalties.

C-Corporations can follow a similar procedure, except that they use Form 1120-W. 

If you are not comfortable estimating your taxes and completing your Form 1040-ES, or if you run a business and would like to outsource your accounting and tax functions to qualified, certified accountants, contact Georgen Scarborough. We are a firm of CPA’s in Vienna, VA, and we will be happy to handle your estimated tax calculations.

How to Write a Financial Statement For a Non-Profit

How to write a financial statement for a non-profit

A financial statement for a non-profit is much more than just a collection of figures and accounting data. While the financial statement does indeed document a non-profit’s incoming and outgoing cash flows for a certain period, it actually does much more than that. It is, in fact, the key to a non-profit’s ability to conduct business successfully and sustainably. By recording the donations, grants and expenditures of the non-profit, a financial statement enables a non-profit to show its business dealings transparently, attract donors and ensure compliance with the relevant authorities. These statements are usually also required for tax purposes.

What goes into a financial statement?

To get a better understanding of the non-profit financial statement, let’s break it down into its four constituent parts and examine each separately. Each financial statement that is drawn up for a non-profit consists of the following:

  • Statement of Financial Position
  • Statement of Activities
  • Statement of Cash Flows
  • Statement of Functional Expenses

The Statement of Financial Position is a summary of the non-profit’s balance sheet at the end of a specific period—usually a particular financial year. It shows the organization’s assets minus its liabilities, reflected in the equation Assets = Liabilities + Net Assets. A non-profit’s assets are all the items or property that it owns or benefits from. Liabilities are what the organization owes. The net assets consist of the dollar value of the residual assets left over once liabilities are taken into account.

The Statement of Activities (income statement) reflects all the business activities conducted by the organization within the given period: all the incoming transactions versus the various expenses. The difference between these two is the change in net assets (net income) for the given period.

The Statement of Cash Flows records all of the movements of money into and out of the organization, providing explanations for all of the revenue and expenses reflected in the previous statements. A Statement of Cash Flows is divided into operating, investing, and financing activities.

The Statement of Functional Expenses shows expenses of each functional area of the organization, such as programs, fundraising, and management. This is most beneficial to non-profits because it enables them to show potential donors exactly how their money is being spent.

If you run a non-profit, you need accurate and thorough financial statements. It is always best to give this task to experienced certified public accountants. Georgen Scarborough is a firm of CPA’s in Vienna, VA. Contact us for more information.

The Tax Benefits of Homeownership

The Tax Benefits of Homeownership

There are many tax benefits that people who own homes can reap. One of the main tax benefits of homeownership is that they don’t have to count the rental value of their home as taxable income—also called imputed rent. This means that their home can be a source of income that is not taxed. Here are some more tax benefits that homeowners get:

Mortgage Interest Deduction.

Homeowners who itemize deductions can reduce their taxable income by deducting the interest they pay on a home mortgage. Taxpayers who don’t own homes don’t have this benefit. This tax break was further defined by the Tax Cuts and Jobs Act. 

Property Tax Deduction.

These homeowners can also reduce their taxable income when they deduct their property taxes, as this will effectively be a transfer of federal funds to jurisdictions that impose a property tax, which lets them raise property tax revenue at a lower cost to their constituents. 

Profits From Home Sales.

Generally speaking, when a taxpayer sells an asset, they must pay capital gains tax on any profits, but homeowners may exclude from taxable income up to $250,000 (or $500,000 for joint filers.) if they meet the criteria as follows:

  • They must have owned and occupied the home for 2 years of the preceding 5 years as a primary residence.
  • They may not have claimed the capital gains exclusion in the past two years for the sale of another home, with some exceptions.

These deductions and exclusions are generally worth more to taxpayers in higher tax brackets. Compared to homeowners in lower-income tax brackets, those with higher incomes face higher marginal tax rates and pay more property tax and mortgage interest. This means that they will most likely itemize their tax deductions on their tax returns.

4 Ways a CPA Can Maximize Your Tax Refund

4 Ways a CPA Can Maximize Your Tax Refund

Now that tax season has begun, many people are considering whether or not they should hire a Certified Public Accountant (CPA) to help them get more from their tax returns. And with good reason, CPAs can provide valuable assistance during this time. Here are some ways that a CPA can help you to maximize your tax refund:

Claim Your Credits

Tax credits are a dollar-for-dollar reduction of taxes that you owe. Most people who have a moderate to low income may qualify for the Earned Income Tax Credit. There are some requirements that you must meet to be eligible for this credit, and to get it, you must file a tax return (even if you don’t owe taxes.) While this may seem complicated, a CPA will be able to help you claim these credits.

Determine Whether You Qualify for Deductions

It is vital that you don’t miss any tax deductions, as finding only one missed deduction can make a big difference. In fact, if a CPA can find a large enough deduction, it might just be enough to cover their fee. The more deductions they can find, the higher your return will ultimately be.

Help You File Your Income Taxes

A qualified CPA will be able to help you determine the best filing status. Choosing the best filing status for you can significantly impact how much your refund will be. The status you choose will determine your standard deduction, filing requirements, the credits you qualify for as well as your tax refund. 

Correct Any Errors.

Having a CPA on hand can help you avoid any mistakes or commit unintentional fraud. Besides this, they can also help you create a budget plan if you have unpaid taxes. This will help you work out a payment plan with the IRS for your taxes to save more money. Ultimately, your CPA will be able to keep track of costs and financial planning so that you don’t have to.

For expert, professional assistance with your 2022 tax returns, contact us at Georgen Scarborough Associates, PC, today.

Get ahead on your 2022 tax filing

Get ahead on your 2022 tax filing

The deadline for your 2022 tax filing is only a few months away. You may think that’s plenty of time, but it is always better to start early, be prepared. It’s even better to file early if you can. Here are a few pro tips to help you avoid the last-minute stresses of tax season.

Tips to stay ahead on your tax return in 2022

For most people, a frantic, last-minute rush is par for the course when it comes to filing their tax returns. However, there really is no need to manage your taxes in this way. By taking a few simple steps early in the season, you can ensure that your taxes are wrapped up efficiently, accurately, and without stress. Here are four simple steps to help you stay ahead.

  • Organize your records: The best way to avoid last-minute stress is to ensure that all your tax documents are collected, collated, and filed at all times. This includes pay stubs, receipts, etc. Don’t leave paperwork at the bottom of a desk drawer. Nor should you save your electronic documents in a haphazard way. This will have you searching for hours through folders and email attachments to get them in order. Organize everything as you go.
  • Set up an online IRS account: With an online IRS account, you can get immediate access to your tax records without having to reach out by phone or email. Then you can work faster and more accurately as you prepare your taxes.
  • Check on the annual changes to tax rates and deductions: At the end of each year, the IRS announces rate adjustments. Make sure you stay on top of these so you can file accurately and timely.
  • Get the help of a CPA: One of the best ways to rid yourself of the stress of filing your taxes is to leave the job to a professional. A certified public accountant knows all the rates and regulations, will be able to guide you through the filing procedure, and will know what it takes to file on time and with the most benefit to you.   

As you prepare your taxes for the coming year, reach out to Georgen Scarborough for help. We are a firm of CPAs based in Vienna, Virginia. Contact us if you need help with your 2022 tax filing.

Learn more about current ax laws in the Wall Street Journal’s Tax Guide 2022.

Tax inflation adjustments for 2022

Tax inflation adjustments for 2022

At the end of last year, the IRS announced its latest set of tax inflation adjustments for 2022. It is very important that both individual taxpayers and businesses familiarize themselves with these changes so that they can make the necessary provisions for their tax filing and payments in the coming year. Here is a brief look at the most important adjustments.

Adjusted tax rates for 2022

Among the most important new provisions for the new tax year are the following:

  • The standard deduction for married couples filing jointly has risen by $800 from $25,100 to $25,900.
  • The standard deduction for individual taxpayers has risen to $12,950 (up $400)
  • The maximum Earned Income Credit has also risen. It now stands at $6,935—a $207 rise from the previous year.
  • As of 2022, the dollar limitation for employee salary reductions for health flexible spending arrangements increases to $2,850.
  • The foreign earned income exclusion is $112,000, as opposed to $108,700 in 2021.
  • Deceased estates (for people who pass away during 2022) have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
  • The annual exclusion for gifts increases to $16,000 for 2022, up from $15,000 for 2021.

It is advisable to get the assistance of an experienced certified public accountant (CPA) to help you manage your taxes in 2022. CPAs always have a complete grasp of the new tax limits, rates and regulations, and will know exactly how to apply them to your income and tax requirements. Georgen Scarborough is a firm of CPAs based in Vienna, Virginia. Contact us if you need help managing the tax inflation adjustments for 2022.

Top 10 Reasons to Hire a Tax Professional

Top 10 Reasons to Hire a Tax Professional

Tax season has officially begun. And, after the past two years, the stress of filing tax returns and gathering documents is one that many people don’t want to deal with. Here are 10 reasons why you should be using the services of a tax professional this year: 

Ten Reasons to Use a Tax Professional

Accuracy

The tax code can be complicated. Plus, any errors made when filing your return can be costly; legally and financially. This is why we pay tax professionals. Tax professionals keep you up-to-date with the tax code and have the necessary expertise to ensure accuracy in your tax returns.

Can keep you updated

The tax professional can update you on any IRS tax changes or tax law changes. 

You may get a higher return

A tax professional can get you the highest return possible by ensuring you don’t accidentally miss any deductions. 

Saves you time

Normally, it takes between 8 and 10 hours to compile a complete tax return. If you have a busy schedule, a tax professional is a great resource to free up this valuable time. Time is money after all. 

Expert Advice

Tax professionals can answer any questions you may have and help you make smarter decisions to ensure maximum tax savings and returns. 

Saves you money

If your tax preparer finds just one deduction you may have missed, it could easily cover their fee. Not to mention, the more deductions they help you find, the higher your return will be. They can also recommend ways for you to save on your taxes and increase your returns. 

Reduced risk of an audit

You lower your risk of an audit when you use tax preparation services. Plus, if you are audited or the IRS starts asking you questions, the preparer will know exactly how to answer the questions and deal with the IRS. 

Lowered Stress Levels

You no longer have to worry about filing the return yourself. Sometimes just knowing that you have professional assistance can reduce your stress levels. 

Human contact

You get a personal touch from using a tax professional that tax software cannot provide. Plus, no matter how advanced the software is, it cannot represent you in an audit. 

Current and future peace of mind

Tax professionals can equip you with the tools and knowledge to ensure that your current and future tax seasons go off without a hitch. They provide you with the best strategies to ensure you make smart tax-saving decisions. 

For expert, professional assistance with your 2022 tax returns, contact Georgen Scarborough Associates, PC, today.