Your Return Is Filed! 3 Things to Keep in Mind Post-Filing
Most people feel some relief after filing their income tax returns each year. But even if you’ve successfully filed your 2024 return, you may still have questions. Here are three common ones.
1. What’s the Status of Your Refund?
You can learn the status of your tax refund using an IRS online tool. Go to irs.gov and click on “Get Your Refund Status.”
You’ll need your Social Security number, filing status and refund amount.
2. What if You Forgot to Report Something?
In general, you can file an amended tax return and claim a refund within three years after you filed your original return or within two years of the date you paid the tax, whichever is later. So, if you filed your 2024 tax return on April 15, 2025 (the due date for 2024 returns), and barring any changes in the rules, you’ll generally have until April 18, 2028 (because April 15 is a Saturday and April 17 is a holiday in Washington, DC) to amend your return.
However, there are a few situations when you’re allowed more time to file an amended return. One example is claiming a bad debt deduction. Generally, you may amend your tax return to claim a bad debt for seven years from the tax return’s due date for the year the debt became worthless.
3. How Long Must You Keep Tax Records?
Retain tax records as long as the IRS can audit your return or assess additional taxes. The statute of limitations is generally three years after filing, meaning most 2021 tax year records can now be discarded if you filed by the April deadline in 2022. If you filed an extension, keep records from the extended due date for three years.
The statute extends to six years for substantial underreporting (over 25% of gross income). There’s no time limit if you never filed or filed fraudulently. So, keep actual tax returns indefinitely to prove legitimate filing.
Retirement account records should be kept until the account is depleted, plus three (or six) years. Real estate and investment records should be kept for as long as you own the asset, plus at least three years after selling, or six years to be extra cautious.
Being diligent with recordkeeping can help you avoid IRS issues down the line.
Still Have Questions?
Contact the office for help finding answers about your refund, filing an amended return or record retention.
The High Cost of Worker Misclassification: Tax Implications and Risks
The consequences of misclassifying an employee as an independent contractor can be costly. You could be liable for back taxes (including the employee’s shares of unpaid payroll and income taxes), penalties and interest. There may be serious nontax consequences as well.
How Important Is This?
Businesses must withhold federal and state income taxes and the employee’s share of Social Security and Medicare taxes from employee wages. They must also pay the employer’s portion of Social Security, Medicare and unemployment taxes for employees. Generally, none of these obligations apply to the business for workers who are independent contractors.
Misclassifying an employee as an independent contractor can result in liability for unpaid payroll taxes, penalties and interest. You may also owe the employee’s share of taxes.
Beyond taxes, misclassification can mean liability for minimum wages, overtime pay, benefits, workers’ compensation, and state disability insurance. Ensuring proper classification helps avoid costly legal and financial consequences.
What Factors Should You Consider?
Determining the correct classification requires reviewing the key factors that the IRS evaluates. No single factor is conclusive; all must be taken into account.
Here are the three categories of factors the IRS assesses:
1. Behavior control. Who controls what work is done and how it’s performed? A higher degree of control suggests the worker is likely an employee. It’s important to consider how much training and education the business provides a worker to do the job.
2. Financial control. Who controls the economic aspects, such as how the worker is paid and how expenses are reimbursed? Independent contractors generally have financial risk. They may work for flat fees and work for more than one business.
3. Type of relationship. Workers hired for an indefinite period and performing core business functions are more likely to be employees.
Labeling a worker as an independent contractor in a written contract doesn’t make it so. However, it may serve as evidence in a dispute between parties.
How Does Remote Work Affect Classification?
It’s tempting to think that if a person works for you remotely, he or she automatically qualifies as an independent contractor. Not so fast! Even if the individual chooses to work remotely, the classification is still subject to scrutiny.
The key considerations are the same as for on-site workers, such as whether you, as the business owner, have the right to control the details of the worker’s services and how they’re performed.
Worried You’ll Make a Mistake?
Don’t underestimate the importance of this issue. The consequences of misclassification can indeed be severe. Using a reasonable basis for classifying workers may relieve penalties and employment taxes.
You can ask the IRS to weigh in by filing Form SS-8, “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” Before you do this, contact the office and ask for a review of the details.
Beyond Federal Taxes
Even if you’re confident in your classification of workers for federal tax purposes, it’s essential to consider how they’re treated under state taxation and federal and state wage and hour regulations. Classifying workers as employees in some cases and independent contractors in others can create significant administrative challenges, so evaluate their status comprehensively before making a final decision. Don’t risk a mistake. Answers to your questions are a phone call away.
Traveling With Your Spouse on Business? Know What’s Deductible
If you own a company and travel for business, you may wonder whether you can deduct all the costs of having your spouse accompany you on trips. It’s possible, but the rules are restrictive.
When Your Spouse Is Also Your Employee
If your spouse is your employee, you may be able to deduct most of his or her travel expenses. But there are strict rules: You can deduct travel costs only if his or her presence on the trip serves a bona fide business purpose. For example, if you’re attending a trade show and your spouse is one of your company’s leading sales reps, negotiating and closing sales at the show would likely qualify as a bona fide business purpose. But it isn’t sufficient for your spouse to merely be “helpful” in incidental ways, such as by typing your meeting notes.
Similarly, a spouse’s participation in social functions, such as being a host or hostess, generally isn’t enough to establish a business purpose. That is, if his or her purpose is to develop general goodwill for customers or associates, this is usually insufficient. Further, if there’s a vacation element to the trip (for example, if your spouse spends time sightseeing), it will be more challenging to establish a business purpose for his or her presence on the trip. On the other hand, a bona fide business purpose exists if your spouse’s presence is necessary to care for your serious medical condition while you’re traveling for business.
If these tests are satisfied in relation to your spouse, you can claim the typical deductions allowed for business travel away from home. These include the costs of transportation, meals, lodging and incidentals such as dry cleaning and phone calls.
When Your Spouse Isn’t Your Employee
If your spouse isn’t your employee, then even if your spouse has a bona fide business purpose for making the trip with you, you won’t likely qualify to deduct all of his or her travel costs. But you may still be able to deduct a substantial portion of the trip’s costs. This is because the rules don’t require you to allocate 50% of your travel costs to your spouse, only any additional costs you incur for him or her.
For example, in many hotels, the cost of a single room isn’t much lower than a double. If a single room would cost you $150 a night and a double room would cost you and your spouse $200, the disallowed portion of the cost allocable to your spouse would only be $50. In other words, you can write off the cost of what you’d have paid traveling alone. To prove your deduction, ask the hotel for a room rate schedule showing single rates for the days you stay.
If you drive your car or rent one, the cost will be fully deductible even if your spouse is along. Of course, public transportation, meals and any separate expenses incurred by your spouse won’t be deductible.
What Can You Deduct?
While the employee and bona fide business purpose requirements prevent tax deductibility of a spouse’s travel costs in most cases, there are circumstances when some expenses can be deducted. Contact the office if you have questions about this or other tax-related topics.
Helping a Family Member Buy a Home
Making a family loan isn’t the only way to assist a loved one with purchasing a home. If you aren’t concerned about being paid back, a straightforward option is gifting cash. In 2025, you can give up to $19,000 to anyone without federal gift tax consequences under the gift tax annual exclusion.
If your loved one is married, you can gift up to $38,000 to the couple tax-free. If you’re married, you and your spouse can jointly give up to $76,000 to the couple, all without federal gift tax consequences (4 x $19,000).
Gifts exceeding these limits reduce your lifetime gift and estate tax exemption, which for 2025 is $13.99 million ($27.98 million for married couples). State tax consequences must also be considered. Contact the office to explore the best approach for your situation.
Tax-Advantaged Savings Accounts That Benefit Those With Disabilities
Eligible individuals with disabilities and their family members can use Achieving a Better Life Experience (ABLE) accounts to pay for qualified expenses. These are savings or investment accounts that don’t affect eligibility for government assistance programs. Contributions aren’t tax deductible, but withdrawals used for qualified expenses are tax free, similar to 529 education savings plans.
The 2025 contribution limit is $19,000. Qualified expenses include housing, education, transportation and basic living expenses. ABLE account beneficiaries may be eligible to claim the Saver’s Credit for a percentage of their contributions. This is a nonrefundable credit for people who are 18 or older, aren’t dependents or full-time students, and meet certain income requirements. Contact the office for more information.
Facilitate IRS Transactions With a Business Tax Account
The IRS Business Tax Account provides information to sole proprietors, partners of partnerships, and shareholders of S corporations and C corporations. Eligible business taxpayers who set up an account can use the hub to make electronic payments, schedule or cancel future payments and access other tools.
Business taxpayers can also view their current balances, payment history and other business tax records, as well as digital copies of select IRS notices. A newly added Income Verification Express Service enables lenders to easily access the income records of a business borrower (if authorized by the taxpayer). Here’s more, including a link to create a business tax account for your company: www.irs.gov/businesses/business-tax-account
3 Ways to Receive Payments in QuickBooks Online
One of the biggest challenges small businesses face is managing a steady cash flow. Keeping income ahead of expenses is a constant balancing act. QuickBooks Online can help. With easy-to-use forms and a convenient mobile app, it helps you track and deposit incoming payments with ease.
Do you ever receive instant payments for certain products or services? Ever need to record a sale on the go, for your records and your customer’s? Or maybe you send out invoices and want to ensure payments are accurately logged once they come in. QuickBooks Online has you covered in all these scenarios. Plus, it offers automation tools that speed up the payment process so you can get paid faster and focus on growing your business.
Let Customers Pay Online
If your business sends invoices for products or services, QuickBooks Online makes it easy to record customer payments. While you can manually enter payments, there’s a faster, more efficient option: QuickBooks Payments. This built-in merchant service lets you accept credit card and bank payments electronically, helping you get paid faster and streamlining your cash flow.
Once QuickBooks Payments is set up in QuickBooks Online (contact the office if you need help), your invoices will include integrated payment options for credit cards and electronic checks. Each invoice will feature a payment button, allowing customers to easily enter their payment information. You’ll be able to track when an invoice is viewed, paid and deposited. Simply open your list of invoices and click on one to view its details. A timeline panel will slide out from the right side, showing the invoice’s history and status. Plus, you can opt to receive notifications for invoice activity.
If you prefer to record payments manually, find the unpaid invoice in your list and click the Receive Payment link at the end of the row. This opens the Receive Payment screen, where you can fill in any missing details and save. You can also find the same link on the invoice screen itself or from the Invoices page (SalesInvoices).
There’s generally no cost for setting up a pay-as-you-go account in QuickBooks Payments. There are only per-transaction fees, depending on whether:
- They’re ACH bank payments,
- They’re payments that come in through an invoice (Apple Pay, Google Pay, credit cards, etc.),
- The payments are keyed in, or
- You swipe a card.
There’s also a small flat fee per transaction. Payments that come in before 3 p.m. PT should be in your account the next business day.
Accept Payments Through GoPayment
To take payments while you’re on the road, you’ll need a free mobile card reader from Intuit that connects to your smartphone. It supports tap, chip and digital wallet payments. You can also manually enter card details.
To process transactions, you’ll need to download the GoPayment app, available for iOS and Android. The app lets you add product names, prices and images to make checkout faster and easier. Multiple layers of security are in place to help protect your data during mobile transactions.
Receive Instant Payments
Sometimes, you’ll receive payment right after delivering a product or service. In these cases, QuickBooks Online allows you to create and provide a sales receipt on the spot.
Just click +New in the upper left corner, then select Sales Receipt in the Customers section. The form that opens will look similar to an invoice or estimate. Choose the customer in the upper left corner and fill out the remaining details as you normally would. When you’re finished, click Save and send to email the receipt. You’ll have the option to preview it before sending and to print it.
The Undeposited Funds Account
If your customer paid you on the spot with a credit card, that payment would be processed in your QuickBooks Payments merchant center. But what about a physical check? QuickBooks Online defaults to the Undeposited Funds account for sales transactions. You can change this, but it’s not recommended. This account temporarily holds payments, typically cash and checks, that haven’t yet been deposited into your bank.
It’s a good idea to review this account regularly to ensure you’re not leaving funds languishing. Hover your mouse over the Transactions link in the toolbar and click Chart of Accounts. Scroll down until you find it, as pictured below.
To combine the transactions in the Undeposited Funds account to make a bank deposit, click +New in the upper left corner and then click Bank deposit under Other. Make sure the Account in the upper left corner is set to the account where you want to deposit the funds. Click the box in front of each check you want to deposit (or Select all), then Save.
To see your deposit information, click Reports in the toolbar, then click Deposit Detail under Sales and Customers. You’ll have to list the deposits individually on your physical deposit slip. Make sure that the slip matches what you see in QuickBooks Online.
If you need help or have questions, feel free to contact the office to schedule a consultation. While the process of receiving payments isn’t overly complicated, it’s essential to ensure every payment is recorded accurately and deposited correctly into your bank accounts.
Upcoming Tax Due Dates
May 15
Calendar-year exempt organizations: File a 2024 information return (Form 990, Form 990-EZ or Form 990-PF) or file for an automatic six-month extension (Form 8868). Pay any tax due.
Calendar-year small exempt organizations: File a 2024 e-Postcard (Form 990-N) if not filing Form 990 or Form 990-EZ.
Employers: Deposit nonpayroll withheld income tax for April if the monthly deposit rule applies.
Employers: Deposit Social Security, Medicare and withheld income taxes for April if the monthly deposit rule applies.
June 10
Individuals: Report May tip income of $20 or more to employers (Form 4070).
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.
