Tax Advice

IRS Direct Pay – Federal Payments

~ JFoxCPACFP ~ Leave a comment

IRS Direct Pay is a convenient way to pay your federal taxes online directly from your checking account. The IRS uses the latest encryption technology making electronic payments safe and secure. When paying electronically, you can schedule your payment in advance, you will receive instant confirmation after you submit the payment, and you can opt in to receive email notifications about your payments. It is quick, easy, and much faster than mailing in a check.

Here are some detailed instructions and screenshots to help you get started:

In the first step, you will choose the reason for payment.

  • If you are paying an amount owed, you will select the “Balance Due” option. You will apply payment to “Income Tax – Form 1040” and select the tax year in which you have a balance due. For example, if you are making a payment in April 2023 for your 2022 tax return, you will select 2022.
  • If you are making an estimated payment, you will select the “Estimated Tax” option. You will apply payment to “1040ES (for 1040, 1040A, 1040EZ) and select the tax year in which you would like to apply the estimated payment. For example, the estimates paid on 4/15/23, 6/15/23, 9/15/23, and 1/15/24 should be applied to the 2023 tax period.

You will hit continue. It will ask you to confirm, and you will hit continue again. Then, you will go on to verify your identity.

It may be easiest to select the previous year and enter your information from your previous year tax return. It can verify your tax information as far back as 5 to 6 years. If the information does not match, look at your last filed return, especially if you moved recently.

Then you will enter payment information and continue the prompts on the website to complete the payment process.

Once you are prompted to the confirmation screen, please print the payment confirmation receipt for your records and upload it to us via Liscio.

The IRS has several other great options to help with your online payments. If you plan to make payments regularly, you can set up an online account. In addition, they have several FAQs related to Direct Pay. Lastly, if you prefer to pay via credit card, there are options for that as well, although they do come with a fee.

Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After September 30, 2021

~ FoxCPA ~ Leave a comment

The COVID leave tax credits under the American Rescue Plan Act of 2021 (ARP) expired on 9/30/21.  These credits are based on the date of the paycheck, not the days missed. For any paycheck after 10/1/21, any employee taking COVID leave would need to utilize vacation/sick pay or the time off will result in unpaid leave.

As an employer, you may decide to offer voluntary leave at company cost and without the tax credit benefits. If employers offer such leave, they must do so in a consistent manner and for all employees.

How to get the most out of deductible meals

~ FoxCPA ~ Leave a comment

In this month’s video, I explained what types of business meals are deductible.  Since meals can be frequent and for small dollar amounts, I get more questions about tracking these receipts than any other expense.  In the case of travel meals, an IRS rule allows you to throw those receipts all away.  Instead of tracking and deducting each specific expense, you can deduct a per diem rate for your travel meals. Continue reading →

Backdoor Solo-401k plans

~ JFoxCPACFP ~ 3 Comments

It happens every year:

  • Doctor is being paid by 1099 for extra shift work or locums.
  • Doctor is covered for retirement at her day job – doesn’t know a 2nd plan may be an option.
  • Doctor is looking for ways to reduce her income while filing her taxes.
  • Doctor finds White Coat Investor – in January!

If a similar situation has happened to you, don’t despair! You can still fund a solo-k via the back door.

Here’s how: Continue reading →