Who is eligible for unpaid leave under the Family and Medical Leave Act?
Employees with the following circumstances are eligible for FMLA unpaid leave: 

• Those who are giving birth to a newborn child
• Those who need time to care for a newborn child
• Those who are becoming adoptive or foster parents
• Those who take care of immediate family members who have serious health conditions
• Those who need to take a medical leave of absence

What can employees expect after taking FMLA leave?
If you take FMLA leave, you can expect to return to the same — if not nearly identical — position you held prior to the time you spent away from the workplace. You can either take FMLA leave all at once or you can break it down into multiple smaller absences, depending on the conditions of your need for FMLA leave.

Also, if you are eligible for paid leave, you can choose to use employer-provided paid leave concurrently as your FMLA leave. Likewise, employers can request that employees apply paid leave at the same time as their FMLA leave.

As long as you — as an employee — worked at least 1,250 hours within the past 12 months, you are eligible for FMLA leave. Now, just keep in mind that the Fair Labor Standards Act determines what applies toward FMLA leave, and situations like taking time off due to circumstances such as pregnancy complications can be counted against the 12 weeks of FMLA leave that you can utilize every year. 

Who enforces paid leave under the FMLA?
The Department of Labor’s Wage and Hour Division enforces the rules of the FMLA. However, employers are responsible for informing employees that they have 12 weeks of FMLA leave at their disposal.

Examples of FMLA best practices
Review the details of each employee's situation to determine their FMLA eligibility based on the nature of their request. Make sure your employees have worked enough hours to qualify for FMLA, and find a way to track leave requests that works for your business.

Respect your employees’ time by promptly responding to leave requests, especially in urgent situations. Timely responses will also ensure that your company remains in compliance with federal laws.

If you're unsure as to whether a situation qualifies for FMLA, consult with your HR team. In cases where FMLA leave requests are approved, double-check that you redistribute employee responsibilities in a way that accounts for the employees on leave while they are away.

Regulations for unpaid FMLA leave
Under the FMLA, you are required to inform your employees about their eligibility for FMLA leave. If employees submit an FMLA leave request, you should either accept their request or provide them — within five business days of their request — with at least one reason for their ineligibility.

Your employees are expected to submit an FMLA leave request at least 30 days in advance. Now, if they are approved for FMLA leave and their absence will be due to a serious health condition, you might need to submit a fitness-for-duty certification to confirm your employee’s ability to return to work.
​
Ultimately, when it comes to managing FMLA requests submitted by your employees, it’s important to handle the situation in a way that supports them. After all, they are entitled to FMLA leave. Just make sure you establish a temporary schedule to ensure operations are smooth while your employee is away.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

It's important to know that the estimator won't work if you have nonresident alien status; instead, read Notice 1392, Supplemental Form W-4 instructions for Nonresident Aliens. Also, if your tax situation is complicated, including alternative minimum tax, you should use Publication 505, Tax Withholding and Estimated Tax.

If you do use the estimator, the results will help you decide whether to retain your current withholding or change the amount. To change it, enter your new tax withholding amount on Form W-4, Employee's Withholding Certificate. (Your employer may want you to submit it through an automated system.)
The Tax Withholding Estimator never asks for personal information like your name, Social Security number, address or bank account numbers. None of the information you enter is saved.

Life changes
There are many reasons why you might need to change the withholding on your W-4. Among them are major life changes such as:

• A new job or other paid work
• A change in total income
• A change in marital status (if you are married as of Dec. 31, for tax purposes you are considered married for the whole preceding year)
• A new child in your life
• A new home

When you change your tax withholding midyear, check it again at the end of the year and adjust it as needed with a new W-4.

Life changes may also lead you to alter the amount withheld from pension, annuity and individual retirement account payments. This is done through Form W-4P, which you submit to your employer.
Remember that the W-4 is for federal withholding only. For state tax withholding, contact your state's tax agency.

Changing your withholding
Updating your W-4 may be a good move, but it is helpful to be prepared for the consequences. The amount of withholding changes how much cash you take home now and how much you owe later in taxes.

For example, you may put more cash in your pocket now but be met with a larger tax bill later. Or you may choose more withholding now and perhaps receive a refund at tax time. The IRS reports that about 70% of taxpayers prefer to overwithhold now and get the refund. (The average refund is more than $2,700.) Getting a tax refund can incentivize better tax planning to optimize withholding levels.
​
What if you don't have a W-4?
Here are some considerations if you don't have a formal employer:

• If you have lost your job, IRS Publication 4128, Tax Impact of Job Loss, explains the tax ramifications of such things as severance pay and unemployment compensation; payments for any accumulated vacation or sick time; withdrawals from your pension plan; job hunting and moving expenses. You will also want to consider making estimated payments so that you don't have a large amount of tax due in April.
• If you own or are starting your own business, see IRS Publication 334, Tax Guide for Small Business.
• If you are a member of the gig economy, you may need to consider making estimated tax payments as you earn income; this will help you avoid a large balance due or penalties.
• If you have income from part-time, temporary or side work, or if you are paid in cash, property, goods or virtual currency, it is essential to report all income and pay estimated taxes as necessary.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

Some legal experts say that the first mistake for executors to avoid is too little or no communication with heirs. Keeping beneficiaries regularly informed will ensure that there are fewer misunderstandings as debts are resolved, assets are valued and property is sold prior to the distribution of funds. This communication effort includes maintaining careful records of all transactions conducted on behalf of the estate.

Duties of executorship
In addition to clear communications, an executor has the following duties:

• Locate the will and file it with the probate court.
• Notify banks, credit card companies and government agencies of the death.
• Set up a separate bank account for the estate.
• Inventory completely and properly the estate's assets; file the inventory of these assets.
• Give notice of the estate and a copy of the will to beneficiaries.
• Represent the estate in court.
• Pay debts and taxes.
• Sell property or assets not designated for disbursal to a specific beneficiary.
• Take care of all assets until they can be distributed:
  • Safeguard property. A vacant house can attract thieves who scan obituaries.
  • Lock up and secure jewelry and other valuables.
  • Photograph the inside of the home to document its contents.
  • Listen and adjudicate. Heirs can be emotional about items that have sentimental rather than cash value.
• Distribute assets according to the will.
• Act impartially and be honest and fair.

As an executor, you should avoid the following mistakes:

• Delaying inheritance beyond the probate process's protocols
• Allowing insurance on valuable assets to lapse or failing to ensure sufficient coverage
• Selling estate assets for less than they're worth
• Claiming charges against the estate ahead of others
• Paying personal expenses with estate assets

Additional considerations
An executor bond might be required during the probate process. The bond guarantees faithful performance of executorship.

Claims against the estate may involve medical bills, bank loans, unpaid fees, rent money, credit card debt and/or personal loans. If there are assets owed the estate, the executor must seek them, including filing a lawsuit if necessary.

If the estate lacks sufficient liquid assets to pay all approved claims, estate assets will need to be sold to pay those claims. Beneficiaries may not agree with the executor's decision regarding which assets to sell. You may have to compartmentalize your emotions to focus on the steps to be taken to preserve estate assets.

Unless the estate is complicated, probate commonly takes a few months to a year. Conflicts among family members or contested wills can cause complexities and delays.

Fulfilling the role
Much of the executor's job is administrative — stopping Social Security payments, for example. Maintain meticulous records to document your actions, e.g., a detailed to-do list, a spreadsheet of assets and liabilities, and copies of emails to the estate lawyers, appraisers, accountants and/or property managers you hire to help assess, protect and distribute the estate.
​
The paperwork an executor deals with can be daunting, and it's easy to lose sight of the humanity involved — your work, even undertaken honestly, may impact the beneficiaries' finances. In this way, accounting for and managing the beneficiaries' feelings is an important part of the job. Throughout the intricacies of being an executor, remember that your actions are a labor of love, a true sign of honor for the deceased.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

File returns four times a year, and at the end of the year, prepare and file Form W-2, Wage and Tax Statement, to report wages, tips and other compensation paid to employees. Each employee needs a copy. You will use Form W-3, Transmittal of Wage and Tax Statements, to transmit Form W-2 to the Social Security Administration.

Know the details
The situation can get complicated when both employee and employer have to contribute. For example, the current tax rate for Social Security is 6.2% for the company and 6.2% for the employee. For Medicare, the current rate is 1.45% for you and 1.45% for the employee. Also, an Additional Medicare Tax applies to an individual's Medicare wages that exceed a threshold amount based on the taxpayer's filing status. You'll withhold an Additional Medicare Tax of 0.9% for single filers who make more than $200,000, and for married couples filing jointly, the threshold is $250,000, but if filing separately, $125,000. You don't have to match this additional portion.

Employers report and pay Federal Unemployment Tax Act tax separately from federal income tax and Social Security and Medicare taxes. You pay FUTA tax only from your own funds. Employees don't pay this tax or have it withheld from their pay.

Mark your calendar with key dates. The IRS has an Employment Tax Due Dates page with information on what you need to do and when you need to do it. The matching share of the Social Security and Medicare payroll taxes is collected as the Federal Insurance Contributions Act taxes, and your part is considered a business expense, not a liability. Because it's a business expense, it can be written off at tax time.

Don't forget the states
This is just the beginning of an employer's responsibilities. You are likely subject to state withholding rules as well. It's essential that employers be on top of the general rules and any annual rate changes. Understanding these tax issues is important since you bear the responsibility of fulfilling your tax obligations related to your employees. It's important to send out payments on time to avoid penalties and late fees. Be sure to work closely with financial professionals to make sure you stay compliant.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

Up to $10,000 (for married couples filing jointly) of property taxes combined with either state or local taxes can be deducted on your federal tax return. (See IRS Publication 530 for special rules and exceptions to deducting property taxes. It's important to note that you must itemize the deduction on Form 1040's Schedule A, but for some people taking the standard deduction is a better option. Property taxes may be deducted only in the year that you pay them.)

You don't want to pay too much in property taxes. While you can't change the property tax rate, you can change your house's valuation if it's assessed too high. How do you know whether your house is overvalued? How do you fight for correct valuation? Let's look at the steps.

Property assessment
There's no single formula used by local governments to assess property value, so you want to find out your local jurisdiction's considerations and rates. Then, you want to find out what you are currently paying.

Next, review your property assessment document. Even though it's an official document, mistakes do happen, and you don't want to be paying property taxes on a bedroom that you don't have. While you are at the assessor's office, you might get some insights into the process by asking how property is assessed for valuation; another resource for this information is your jurisdiction's website.
Finding out the assessment values of houses nearby can be quite helpful in understanding your own assessment. If your neighbor has a similar assessment even though their house has a swimming pool and three-car garage and your house does not, you have good reason to challenge your assessment.

If you are planning an addition or improvement to your property, remember that any permanent built fixture on your plot will drive up your assessment. Call a local building company or the local tax office to get an idea of how construction might change (or has already changed) your property's value.

Challenging the assessment
If you think your property is being valued too high, counter with a professional opinion. Ask whether your jurisdiction will let you hire an outside appraiser (not all of them will). A certified professional from the National Association of Independent Fee Appraisers or the American Society of Appraisers might convince the right people that your house is overvalued.

An alternative approach is to look at real estate websites to get the actual sale price of what's been sold in your neighborhood. These comparison prices might be helpful in persuading the assessors that they have overvalued your house.

It is important to understand, however, that your home's assessed value isn't always going to be the fair market value. Some assessments are determined by the cost to replace your home plus the value of the land. If your home is the smallest house among large, expensive houses, your house's value is going to increase based on its location.

During the appeal
Once you start an appeal, your house is in the spotlight. If you have any zoning or compliance issues, they'll be brought to light. Did you pull permits to do a bathroom remodel? Did the previous owners have permits when they redid the kitchen? Is the top step of your front stoop a half inch taller than code? You may want to consult with an experienced builder and/or a tax appeal lawyer before you begin your appeal.

If an assessor has questions about your property, they will likely contact you. Many assessments are done without entering the property, but if an assessor requests a walk-through, be there to explain any improvements or deficiencies.
​
Correcting an overvaluation is not quick nor easy, but it helps you, the assessor's office and even the community to challenge what you believe to be a mistake.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

​

Outsourced CFOs are particularly beneficial for startups, growing businesses, or companies undergoing significant changes or facing financial challenges. They deliver bench strength for accounting, compliance and financial operations while reducing costs.

Examples of the benefits to your company of an outsourced CFO include:

• Strategic financial planning — An outsourced CFO can analyze financial performance and identify future opportunities and risks to boost your company's profitability and ensure sustainable growth.
• Risk management analysis — An outsourced CFO can identify potential financial risks, from market fluctuations to regulatory changes, and develop strategies to mitigate them. They can also help safeguard the firm's assets.
• Financial reporting — An outsourced CFO can ensure that all financial statements — income, balance sheets and cash flow — are accurate and compliant with legal standards.
• Cash flow management — An outsourced CFO can monitor cash flows to ensure your company can cover its operational needs. They can also identify growth opportunities, maintain liquidity during downturns and capitalize on market upturns.
• Liquidity monitoring — An outsourced CFO can ensure that your company can cover its short-term liabilities and avoid financial distress.
• Budget analysis — An outsourced CFO can provide budget reviews and adjust forecasts based on performance and changing market conditions, helping your firm use resources efficiently and maintaining financial discipline.
• Forecasting — An outsourced CFO can analyze historical data and current market trends to estimate future financial performance, sales and expenses. They can help inform decision-making and strategic planning.
• Reports and presentations — An outsourced CFO can provide reports and presentations necessary to make key business decisions.

Outsourced CFOs offer varying levels of engagement and commitment, including:

• A fractional CFO is hired part time on a contractual basis to help your business expand and compete.
• An experienced CFO will bring financial strategy and management skills to your firm, giving you access to an objective perspective without the overhead of a full-time salary.
• A full-time CFO can be hired for a set time to navigate periods of significant change — for example, periods of rapid growth and/or mergers and acquisitions.
• An interim CFO is hired during a transition period, often to cover a permanent CFO's extended absence or to cover the CFO duties while your company searches for a permanent hire.

Why hire an outsourced CFO?
An outsourced CFO can help your firm achieve its financial goals through:

• Cost-effective expertise — An outsourced CFO has worked with other industries and has a broad perspective, including specialized skills. At the same time, you can scale back the service once your company no longer needs the help.
• Strategic insight — An outsourced CFO offers financial perspective that might not be apparent from inside the company. They have no vested interest and bring unbiased opinions that can be crucial when your company is facing tough financial decisions.

An outsourced CFO can instill confidence, steering your company to financial stability and success. They will help you understand financial processes like cash management, giving your company a strong financial foundation and assisting in decision-making to achieve growth.

If your company is well established, an outsourced CFO can assist with market expansions. They offer complex financial analyses and conduct due diligence. They provide accurate data to protect your firm's interests and attract investors by accurately communicating your firm's value and growth potential. By using the outsourced CFO's higher level financial planning, strategic guidance, risk management and financial reporting skills, your firm can grow and compete on a larger scale.

Consider an outsourced CFO when you need tailored, project-based solutions or when it's time to expand beyond just tax services.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

If you use part of your home for business, you may be able to deduct expenses for such things as mortgage interest, insurance, utilities, repairs and depreciation. But you must meet these tests:

• The business part of your home must be used exclusively and regularly for your trade or business.
• It must be your principal place of business where you meet or deal with patients, clients or customers in the normal course of your trade or business. It can be a separate structure not attached to your home.

If you use your car exclusively for business, you can deduct vehicle-related expenses. If used both for business and personal use, divide your expenses based on actual mileage. Use the standard mile rate to figure your deduction. Go to IRS.gov/tax-professionals/standard-mileage-rates for the most current standard mileage rates.

You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. You may not owe employment taxes on the value of fringe benefits. Typically, no deduction is allowed for activities generally considered entertainment, amusement or recreation, or for a facility used in connection with such activities. But it can be deducted if treated as compensation to the recipient and reported on Form W-2 for an employee.

You can deduct various federal, state, local and foreign taxes directly attributable to your trade or business as business expenses. Generally, you can only deduct taxes in the year you pay them. This applies whether you use the cash or the accrual method of accounting.

You can generally deduct reasonable advertising expenses directly related to your business activities. Ordinary and necessary expenses paid for the cost of the education and training of your employees are deductible. Fees charged by accountants and attorneys directly related to operating your business are deductible as business expenses. However, legal fees you pay to acquire business assets usually aren't deductible.

The costs of outplacement services you provide to employees to help them find new employment — career counseling, resume assistance, skills assessment — are deductible. Business expenses for heat, lights, power, telephone service, water and sewage are also deductible. However, any charges resulting from personal use aren't.

Drilling down on business expenses
You can deduct the full amount of a business expense if it meets the criteria of ordinary and necessary and isn't a capital expense. If your deductions for an investment or business activity are more than the income it brings in, you have a loss. There may be limits on how much of the loss you can deduct.

• Research and experimental expenditures generally must be amortized over a five-year period. A business cannot elect to deduct total research expenses in the current year.
  • Specified research or experimental costs paid or incurred must be capitalized and amortized according to a proportionate rate over a five-year period; 15 years for any expenditures related to foreign research.
• The cost of goods sold — Do you manufacture products or purchase them for resale? Then you must generally value inventory at the beginning and end of each tax year so you can determine your cost of goods sold.
  • Some of your business expenses may be included in figuring the cost of goods sold.
  • Deduct them from your gross receipts to figure your gross profit for the year.
  • If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.
• Capital expenses — Capitalize, don't deduct, some costs that are a part of your investment in your business. But you may be able to recover the amount you spend through depreciation, amortization or depletion.
  • The costs of starting a business — advertising, travel and wages for training employees — are capital expenses.
• Costs you spent though the business is unsuccessful — Costs incurred during a general search or preliminary investigation are personal and nondeductible.
  • Costs you incurred to acquire or build a business can be deducted as a capital loss.
  • If you're a corporation, you may be able to deduct all investigatory costs as a loss.
• Be mindful of capital versus deductible expenses — You may be entitled to take a deduction of up to 20% of the aggregate amount of a qualified real estate investment trust and qualified publicly traded partnership income. You can claim this deduction on Form 1040 or 1040-SR, not on Schedule C. This deduction can be taken in addition to the standard or itemized deductions.

What to fill out
Form 1099-MISC, Miscellaneous Income, needs to be filed for each person you've paid at least $600 during the year in your trade or business. This can be for rent, prizes and awards as well as medical and health care payments.

Form 1099-NEC, Nonemployee Compensation, should be filed for each nonemployee you've paid at least $600 for services.

When you can deduct an expense depends on your accounting method. Under the cash method, you generally deduct business expenses in the tax year you pay them.
​
The IRS Gig Economy Tax Center on IRS.gov can help with meeting tax obligations by streamlining various resources to make it easier to find information about the tax implications for companies that provide the services and the individuals who perform them. Get tips and resources on deductible business expenses.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

A will also has to be probated in each state where you have assets — a process that can be lengthy and potentially costly. Further, a will is a public document that can be scrutinized or contested, giving the public access to information you might want to keep private.

A trust is a fiduciary arrangement specifying how your assets will be distributed, usually without involvement of a probate court. Additionally, trusts can be structured to take effect before or after death, or in the case of incapacitation. They can be very specific about how, when and to whom your assets will be distributed. Depending on the type of trust, assets held in a trust will be managed by you while you are alive and/or by a disinterested trustee. After your death, your successor trustee will be appointed by the trust in a manner more private than the typical probate proceeding.

The following are among trusts' features:

• You can use a trust to transfer property, helping to minimize estate taxes and/or preserve assets for minors until they're adults.
• You can create a special-use trust to meet estate planning goals, such as charitable giving, that also has tax-reduction benefits.
• You may create a trust to ensure your resources are preserved, managed and spent in line with your wishes while you are incapacitated, perhaps by a long illness.
• You can use a trust to leave very specific legacies, identifying who may benefit from its resources while defining how and when.
• You can choose how to deploy a trust. You can appoint a trustee to assist beneficiaries who may struggle to manage their bequests.
• You can structure a trust to protect beneficiaries from creditors, to manage state income taxes and/or to preserve the generation-skipping tax exemption.

There are many kinds of trusts, including the following:

• Living or inter-vivos trusts allow you to plan during your lifetime and bypass the probate process, controlling decisions related to the distribution of your assets.
• Revocable trusts are often used by estate planners; they are a fundamental building block for most estate plans. With a revocable trust, you retain control over your assets, including the option to buy, sell and trade assets; you can move assets in and out of the trust at your discretion; and you can establish controls and additional designated trustees to help protect assets if you die or become incapacitated.
• Irrevocable trusts cannot be changed after the agreement has been signed. They are managed by a disinterested trustee — someone other than you. They are a way to move assets out of your estate, potentially reducing the estate's value and its associated estate tax liability.

​It is also possible to draft a will with trust provisions, known as a testamentary trust. This works in much the same way as other trusts but may still have to go through probate — and that could mean the probate court chooses to distribute your assets differently than you intended.
Paying an attorney to set up a trust represents additional front-end costs but may save your heirs significant money on the back end by avoiding probate. Some attorneys offer a basic trust package for a flat fee. Let your family and friends know the trust exists and share the thinking behind its creation to cultivate stewardship around the bequest. You've worked years to build a legacy, so make sure you optimize the legacy you leave to the people and causes you care about.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

You'll be balancing your Social Security benefits, Medicare premiums, taxes and savings, along with higher or lower inflation and possible market downturns, to realize that economic shifts make your plans somewhat unpredictable.
​
Keep these details in mind:

• Social Security payments are linked to cost-of-living adjustments and usually go up. The benefit boost provides a measure of protection against rising prices when the inflation rate inches up.
• Medicare premium costs for Part B rise and fall. Many enrollees have Part B payments deducted directly from their Social Security payments, but this can reduce some of the COLA boost.
• Dividend-paying stocks might help combat inflation because dividends tend to increase from year to year and the stock price of the investments is likely to rise over time too. However, market fluctuations may affect stocks and dividends, keeping them from going up each year.
• Even though their dividends do not increase, Treasury Inflation-Protected Securities bonds adjust their value in line with inflation; this might provide a hedge against market fluctuations. Another option would be to buy annuities with inflation-adjustment features built in.
• Most types of retirement savings accounts require minimum distributions for people 73 years (starting in 2024) or older. (This is not true of Roth IRAs, Roth 401(k)s and Roth 403(b)s.) The IRS uses a calculation based on the account balance and your life expectancy to determine the minimum you must take out each year. The withdrawal will be taxed at your regular federal income tax rate.
• If you sell investments in taxable brokerage accounts to access cash, you may be subject to capital gains tax.
• You can count on getting a bigger standard tax deduction if you or your spouse is 65 years old or older.
• The date on which you hit full retirement age is inching up based on birth year. In 2024, you can start collecting benefits at a minimum age of 62, but your monthly payment will be permanently reduced by 30%. You also can wait past full retirement age and reap Social Security's bonus for delaying benefits — an extra 8% a year until age 70. To get an idea of how much you can expect to receive based on when you claim benefits, set up a my Social Security account on the Social Security website.
• Health care costs are easy to overlook, but failing to plan for them can lead to disaster in retirement. Fortunately, there are ways to try to shrink your health care costs by being as fit and healthy as possible and by seeing your doctor for preventive screenings and care. If you are 65 years or older, money in Health Savings Accounts can be withdrawn penalty free and used for anything, though the money will count as taxable income. To participate in an HSA, you'll need to have a qualifying high-deductible health insurance plan, and there are yearly contribution limits, with people ages 55 and older allowed to contribute additional funds.
• It makes sense to head into retirement with as little debt as possible (ideally without any), so you can make the best use of your retirement dollars.

Advice on retirement these days includes working longer, which can reduce the long-term effects of inflation. It also means you can keep making contributions to your investments and retirement accounts while not withdrawing from your savings.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

What to expect when you onboard a freelancer or an independent contractor
When paying freelancers, you are not required to withhold any of the following from those payments:

• Federal taxes
• State income taxes
• Social Security
• Medicare

​The reason you don't have to worry about withholding is that freelancers are considered to be self-employed, meaning they must calculate and pay their own tax responsibilities. However, you can deduct payments that you make to freelancers as a business expense for your company, giving you an opportunity to reduce your business's taxable income.

What to expect when you hire an employee
When you hire an employee, you are required to withhold both federal and state-level income taxes. The same is required for Social Security and Medicare. This money is taken out of the employees' paychecks.

In addition to withholding taxes from your employees, you'll be responsible for paying your portion of Social Security and Medicare taxes as an employer, which equates to 7.65% per employee.

Last but not least, as an employer, it is highly likely that you extend health insurance and retirement plan options to your employees. While these benefits positively impact them, they also yield favorable effects for your business because you can deduct these expenses from your taxable income.

What to consider before bringing on anyone
When deciding between a freelancer and an employee, the nature of the work comes into play: Highly specialized or short-term projects may be better suited for freelancers, while long-term, core business functions usually require employees.

Freelancers offer lower upfront costs because you avoid employer taxes and benefit expenses. Employees can offer stability and loyalty.

But employees add an administrative burden in managing payroll and tax withholding, which can be more complex and time-consuming than working with freelancers.
And what about your company's long-term goals? Hiring employees may provide greater control over and consistency among your workforce.

The importance of properly classifying your workers
If you misclassify your employees as freelancers or vice versa, you could open the door to penalties that will complicate matters with your business, not to mention your business's relationship with the IRS. So, while independent contractors can serve as a way to reduce your business expenses, hiring them isn't a means of avoiding legal responsibilities.

At the same time, keep in mind that the IRS pays attention to how you classify the people who work for you. The misclassification of those who do work for you can result in costly outcomes, ranging from expensive penalties to time-consuming lawsuits, or even jail time in serious cases.

What classifies someone as an employee?
As defined by the IRS, a W-2 employee is someone whose work is controlled by you, meaning you dictate what they do and when they must do it. On the other hand, a 1099 freelancer is someone who decides when and how they perform their work-related duties.

Penalties for misclassifying workers
The intensity of the penalties that you will face if you are caught misclassifying workers will depend on whether the IRS and the Department of Labor believe that you made the error on purpose or by accident.

That said, here are some penalties you might face:

• $50 for each W-2 you fail to file correctly
• 1.5% of your wages
• 40% of any FICA taxes that you didn't withhold from employees
• 0.5% of your unpaid tax liability up to 25% for each month

The government does not take the misclassification of employees lightly, which makes sense when you recognize that underreported tax liabilities account for approximately 80% of the country's gross tax gap.

All in all, it's important to understand the difference between a W-2 employee and a 1099 freelancer, not only to avoid penalties but also because you can benefit from financial perks for your business. 
At the end of the day, your business finances will be influenced by your decision to either onboard freelancers or hire employees, especially because of the tax implications that each option carries. If you aren't sure which path is the best route to take for your business, reach out to a tax professional or an accountant who can help you navigate these complexities.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

With AI tools for your business, these outcomes — and more! — are certainly possible. Let's explore how AI can help you unlock new opportunities and optimize business operations simultaneously.

How is AI used in workplace environments?
AI can enhance departments within your company. From marketing to human resources and everything in between, AI can handle tasks that would otherwise be too costly to hire people to complete. With AI, you can eliminate certain costs of labor because AI can handle large amounts of information — far more than one human being can.

What are some examples of AI tools?
AI technologies — such as natural language processing, generative AI, ChatGPT, computer vision, neural networks and deep learning — are more cost-effective. That's why they have been adopted by businesses of all sizes — and are increasingly so, since they enable quicker and more informed decision-making processes compared to what human beings can output.

Tasks that AI performs
AI is often utilized as a way of enhancing data analytics, minimizing repetitive tasks, boosting efficiency and unlocking potential. Examples of AI applications often include customer service chatbots, applicant tracking systems for recruiting purposes and payroll platforms that can manage the accounting side of business.

Predictive analytics can process and analyze extensive datasets at incredible speeds. AI makes this possible by identifying patterns, behaviors and trends that you can then use to forecast outcomes based on existing and ongoing data.

Advanced data analytics can predict customer outputs, detect trends regarding employee turnover rates, estimate revenue on an annual or quarterly basis, and identify patterns of fraud. AI can also help you identify bottlenecks and personalize customer outreach with the help of data-based insight.
Just know that as effective and productive as AI tools are, the human touch is still invaluable. The expertise of people is a vital part of ensuring the accuracy and trustworthiness of key business operations. So while the assistance of AI is important, so is that of people.

What are examples of ways you can employ AI in your business?
AI has a lot of uses, namely the following:

• Content generation
• Customer service
• Marketing campaigns
• Human resources data collection
• Sales efforts
• IT operations
• Cybersecurity protection
• Content generation

AI can help you generate content in a way that is far faster than humans can do it. With tools such as ChatGPT, Gemini from Google and Copilot from Microsoft, you can easily input prompts that the AI tools will then use to generate content.

From outlines and emails to blog posts and newsletters, your options are endless. Plus, you don't have to accept the outputs as is; instead, feel free to add your own creative touch by editing the copy before posting it.

Similarly, tools such as Midjourney, Stable Diffusion and DALL-E are available for instances where you need to generate images with the help of AI. The best part is that all you need to do is input text prompts; the AI tools then take and create pictures with these prompts, all based on what you tell AI to create.

Customer service
Have you ever wished you could get help with the management of your customers' inquiries? You might have considered hiring an employee or two to assist you with customer service responses, but it's not necessary, especially if you want to automate the process.
With AI, you can identify relevant insights that lead to an improvement in your customers' experiences. Plus, AI makes it possible to provide your customers with availability and support 24 hours per day, all week long.

Marketing campaigns
When fast responses are a priority, you can use AI to deliver personalized messages based on consumer profiles. AI can also recommend products based on customers' purchase history, come up with strategies to improve sales, set up marketing campaigns, optimize targeted messaging and identify opportunities for upselling or even selling across platforms.

Human resources data collection
Predictive analytics can be applied with the help of AI. You can screen job applicants more quickly by relying on AI to conduct background searches, like analyzing social media profiles and other digital footprints.

AI is also capable of helping you compare resumes, source information, recruit prospective job candidates, onboard new employees and manage HR-related records. AI tools also have the potential to encourage team development, write job descriptions and simplify training protocols in the workplace.

Let AI centralize your employees' data, manage payroll, keep track of benefits, track employees' time, maintain documentation of employee attendance rates and train employees.

Sales efforts
Want to create personalized emails and customize your recommendations for each of your customers? Look no further than AI tools that can help you better understand what your customers want and how they respond to measures you take within your business. AI can also help you predict future demand, find new leads, prioritize prospective customers and engage with your audience in the most effective ways.

IT operations
By integrating various AI-based IT operations, you can identify disruptions and outages before they snowball. That way, you can prevent what would otherwise be a serious problem and stop major issues from becoming overwhelming concerns.

Cybersecurity protection
With AI, you can enhance the security of your company. For instance, artificial intelligence can help reduce the risk of new threats by identifying patterns that could be indicative of fraudulent activity. AI is a way to use detection models that can be updated over time as well.

AI-powered machine learning can scan emails for suspicious IP addresses, links, keywords and attachments while cluing you in to emails that are highly likely to be spam. With AI, you can also differentiate between real website traffic versus falsified data and reliable versus predatory bots.
​
From compliance with rules and regulations to the identification of discrepancies and the ability to reduce the amount of time spent completing certain tasks, AI tools yield many benefits for businesses. But remember — most successful AI initiatives are powered by human expertise, so do your research and only implement the AI tools that make the most sense for your company.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

From interest and penalties to an audit from the IRS, tax-related issues on your return can open the door to many consequences. However, you can take measures to avoid this outcome altogether.

10 common tax return mistakes that can cost you a lot of money
Here’s what you should avoid when filing your taxes every year:
​
1. Filing a tangible tax return instead of filing an electronic version
If your return is delayed or lost in the mail, the circumstances that follow could end up being a huge headache for you. That’s why it’s better to file your taxes electronically. Not only does this method take significantly less processing time but tax software can automatically check for tax breaks for you and apply the latest tax laws on your behalf.
2. Failing to report all your income, whether on purpose or by mistake
Report all your income, no matter the source or the amount that you received. If you fail to include any income on your tax return, you may face interest charges or a late filing penalty — if not both — when the IRS inevitably discovers these discrepancies.
3. Making typos or errors when providing your personal information
Have you ever accidentally misspelled your own name? What about forgetting a digit or two when writing down your Social Security number? Mistakes happen, but the IRS reserves the right to reject your tax return and request that you correct your mistakes.
4. Selecting a filing status that doesn’t accurately represent your situation
Did you know that your filing status will affect the tax rate that will be applied to your income level? Likewise, it will also influence the tax breaks you are eligible to claim.
As a result, choosing the appropriate filing status for your situation is vital. Otherwise, you could end up seeing a lower tax refund, receiving a bill for additional taxes or being audited by the IRS.
5. Miscalculating information when doing math
Believe it or not, the IRS identified more than 9 million mathematical errors among tax returns submitted by taxpayers last year. From simple addition and minor subtraction issues to complex calculations gone awry, many of those mistakes resulted from taxpayers not taking their time when performing tax-related calculations.
This is a prime example of why it’s a good idea to double-check your math when preparing your taxes. Alternatively, consider making use of tax software that will do all the heavy math-related lifting for you.
6. Reporting your bank information inaccurately
You can choose to have your tax refund sent to your bank account as a direct deposit, though if you choose to do so, you should triple-check that the account number and the routing number that you supply the IRS with are correct. If you provide the wrong information, either your bank will reject the deposit or the deposit will be sent to someone else’s bank account.
7. Mailing your tax return to the wrong address
Not everyone wants to file their taxes electronically, and there’s nothing wrong with that! However, if you prefer to file a tangible tax return, make sure you double-check that your tax return contains the correct mailing address. Mailing your tax return to the wrong address could slow matters down, but note that your tax return will eventually be forwarded to the correct mailing address — it will just be delayed.
8. Forgetting to add your signature or the date to your tax return
Sounds like a small detail, right? Sure, but the IRS won’t accept your tax return if you have not signed or dated it, and this can end up slowing down the entire process. Also, if you’re filing a joint tax return, make sure both you and your spouse sign and date the document.
9. Choosing not to make a copy of your return for your own records
Tax experts recommend keeping a copy of your tax returns for at least three years. This is ideal in the event that you are audited by the IRS. After filing your tax return, make a duplicate of it or download it. Either way, make sure you keep your copy of your tax return in a safe place.
10. Needing more time but failing to file a request for an extension
If you need more time to file your tax return, make sure you fill out Form 4868, which will grant you a request for an automatic six-month extension. This will prevent you from accruing late-filing penalties. However, you must either pay the taxes that you owe by the original filing deadline or establish a payment plan with the IRS.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

Hitting the right note
Tone is flavor. It can make all the difference in motivating the reader, strengthening relationships and boosting morale or engagement. It is especially important for delivering feedback, where the recipient has some personal investment in the content.

Workers sometimes interpret emails with a slightly more negative slant than the writer intended. To get very scientific about it, the connection between tone and feelings begins in the amygdala portion of the brain, where emotions are processed, and proceeds to the orbital frontal cortex, where decisions are made and words take on meaning. In plainer language, humans see words, interpret their meanings and add some emotional context. The bottom line is that just one jarring phrase can taint an overall impression.

You can learn to adjust your writing tone to situations and recipients. For each channel — email, live chat or social media — a certain tone is most well suited to convey a message. The choices are extensive, such as:

• Formal or informal
• Humorous or serious
• Optimistic and encouraging
• Assertive and stern
• Conversational and friendly
• Confident
• Courteous without insincere politeness, which may seem condescending Sarcastic (use sparingly!)
• Apologetic

Most of us agree on the general meanings behind words. We apply cultural norms and expectations in a conversational context. Imagine, for instance, that a certain email writer normally tends to use exclamation points and emojis liberally. If they unexpectedly start to leave them out, their latest emails might appear cold.

You will probably find friendly and respectful tones produce the best reactions. In setting your tone, think about the person to whom you are writing, the purpose of the communication and what you want them to understand, including any emotional subtext.

Reading between the lines
Style and tone are different. Do not confuse communication styles with personality. Workplace styles explain how each employee interacts with others, according to differing circumstances, and indicate how each team member interprets and processes information.

Styles are usually categorized in four classic clusters, each with typical traits.

The first category is the passive type of individual who avoids conflict, is overly apologetic and says "yes," a lot, in a soft-spoken voice. The second is the passive-aggressive worker who sometimes says one thing but means another, denying any hostile purpose. Third is the aggressive individual who often blurts out what they think and dominates discussions, interrupts and fixes on somebody with piercing eye contact. And the fourth category, which is the easiest to collaborate with, is the assertive type who communicates directly but with empathy.

The different styles help someone understand how someone else responds emotionally to a message, how they set boundaries or how they share ideas. They also may be a cultural hallmark. Teams from Japan, China and Middle Eastern countries like to build their business relationships more gradually and may seem to be beating around the bush, while Americans, Germans and Scandinavians are more forthright and to the point.

Composing a killer email
Here are some tips for constructing messages designed to hit home:

• Use neutral, nonjudgmental, nondiscriminatory language.
• Go easy on emotions and interjections.
• Check punctuation, grammar and spelling.
• Use the active voice, if possible.
• Avoid jargon and slang.
• Use neutral salutations or job titles if you don’t know the recipient’s gender, e.g., “To whom it may concern” or "Chairperson."
• Mention benefits and calls to action.
• Be concise.
• Write an interesting subject line.
• Never hit "Reply to all."
• Don’t shorten names, e.g., Dave, Mike, Phil, unless you are sure they use that form.
• Keep font type, color and size consistent.
• Add a signature block with your contact information.
• Say “Hi, X" or "Dear X,” but never “Yo!”
• Mind your p’s and q’s. Remember to say "please" and "thank you."

Start thinking about how you communicate; now is the time to up your game.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

There’s also the 1099R form, which pertains to income stemming from retirement accounts. Regardless of the forms or the source of your income, you must include all this information as part of your tax returns. Otherwise, you’ll find yourself in a situation where the IRS is raising its eyebrows at you and wondering why there’s a discrepancy in the information it received.

8 business tax errors to avoid
Let’s look at more business tax errors you should avoid if you want things to go smoothly with the IRS.

1. Ensure that you send the proper forms to the appropriate IRS agencies 
As a business owner, you are required to submit various forms and respective payments to the IRS. For some business owners, this is true only on a federal level, but for others, documentation must be sent to state-level tax departments as well.

While some people are expected to file documents on behalf of their business on a quarterly basis, this might not be true for all business owners, so keep this in mind and look into the specifics of your situation so that you can comply with the IRS’ expectations of you.

2. Make an effort to submit quarterly payments to the IRS
If you are filing as a self-employed individual, a sole proprietor, a partner or an S corporation, there’s a high likelihood that you’ll need to pay quarterly taxes to the IRS based on what you expect your estimated tax bill will be at the end of the tax year.

The government expects you to make payments that are as close as possible to the exact amount of money you’ll owe, and while this can be tricky, you could otherwise end up facing a penalty for underestimating your total tax owed or underpaying along the way.

3. Don’t misrepresent how much income you received
Never, ever lie to the IRS. If the tax agency has any suspicion that you were either negligent or unreasonably careless when reporting your income, you could face consequences. Also, if you substantially underreport the amount you owe in taxes, then you’ll likely be hit with a 20% penalty as a result.

4. Always tell the truth to the best of your abilities
Strive for accuracy when filing your taxes, and be as scrupulously honest as possible. If the IRS believes you attempted — in any way, shape or form — to intentionally defraud the agency, you could see fines as high as 75% of the money that you owe in the first place. You might also find yourself charged with criminal tax fraud as well, and that’s a serious crime.

5. Don’t combine your personal and business finances
Something you should certainly do — as it’s in your best interest to do so — is keep your business finances and personal finances entirely separate. Open different bank accounts for each category of money.

Use a business credit card when making purchases related to company purposes, and use a different card for anything you buy for personal reasons. Now, if you are planning to use any of your personal assets — such as your car or at-home office — for business reasons, it’s imperative that you maintain detailed records to support the deductions you take.

Make it a practice to not deduct something that you cannot prove via documentation. This will help you immensely in the event that the IRS pulls your tax return for an audit.

6. Work on your taxes throughout the year, not all at once
While many people view tax season as the weeks leading up to mid-April, business owners should view taxes as far more than a once-per-year proposition. If you end up leaving all your tax-related matters until the last minute, you’ll likely miss out on deductions you’re entitled to because you didn’t diligently keep track of your spending throughout the year. 

7. Keep a system that makes managing your finances easier
Did you know that you could end up spending more than you owe in taxes in accounting fees if you make grave tax-related errors? That would be an unfortunate set of circumstances to find yourself in, so we highly recommend that you establish some sort of system that will make staying on top of your finances easier than ever.

Find a way to track your income and expenses on an ongoing basis. Every month, you should reconcile your cash flow with both your bank statements and your credit card statements. There are a handful of software programs that can help you with this, QuickBooks and Peachtree being the two most popular options.

Either way, when preparing your tax returns, a solid bookkeeping system that you maintained during the tax year for which you’re filing will make all the difference.

8. Pay attention to business deductions all year long
The IRS views deductions as purchases you have to make as part of running your business. However, not everything is a deduction.

To better understand what is — or is not — deductible from a business perspective and how to handle deductions when filing taxes, refer to IRS Publication 535. Otherwise, you might end up taking deductions for items you should not classify as such, and this could open the door to an audit.

You might even find yourself in a situation where you’re facing severe monetary penalties if you claim deductions that the IRS does not approve of, so educating yourself is key. In fact, even the most legitimate of deductions can trip you up if they are not proportional to your income or profit margins.
If you report losses instead of profits to the IRS, the tax agency might end up declaring your venture a hobby rather than a business. In turn, you’ll be barred from claiming deductions altogether.

As you can see, there are many potential tax errors that business owners can make. Even when you’re doing your best to avoid tax-related mistakes, they can still happen.

That’s why it’s wise to work with a tax professional who can help you with your tax-planning efforts. In doing so, you’ll likely lower your stress levels — and maybe even the taxes you owe! — come tax-filing time.
​
It’s all about staying organized and maintaining a reputation of honesty with the IRS. Act with transparency and integrity with the IRS, and its representatives will be understanding should issues arise.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

One of the benefits of owning a home is building equity. This is the difference between what you owe on your mortgage and what your home is worth. Say your home is worth $350,000 and you owe $150,000 on your mortgage. You have $200,000 of equity. You can borrow against a portion of that equity to pay for anything you’d like, including home improvements. How do you do this? With either a home equity loan or a home equity line of credit.

Home equity loans
A home equity loan is a second mortgage that you take out against the equity in your home. If you have $200,000 in equity, your lender might approve you for a home equity loan of $170,000. You’ll receive that money in a single payment that you can spend however you’d like.

You’d then pay back your loan, with interest, in regular monthly payments, just like you do with your primary mortgage. If you have both a primary mortgage and a home equity loan, you'll make two payments every month until you pay off these loans.

The benefit of home equity loans is that they usually come with far lower interest rates than what you’d pay when using a credit card to cover home renovations or when taking out a personal loan.

Home equity line of credit
You can also apply for a home equity line of credit, which acts a bit like a credit card, with your credit limit determined by your equity.

If you have $200,000 of equity, you might qualify for a home equity line of credit, or HELOC, with a credit limit of $170,000, meaning that this is the maximum you can borrow.

With a HELOC, you only pay back what you borrow. Say you have a HELOC with a spending limit of $170,000 and you borrow $70,000 to pay for a major kitchen remodel. If that’s all you borrow, that’s all you’d pay back.

HELOCs come with two phases: the draw period and the repayment period. The draw period is when you can borrow money. This period typically lasts from five to seven years. During the draw period, you only pay for the interest on what you borrow.

When the draw period ends, your HELOC enters its repayment period. During this period, you can no longer borrow money and must instead pay back both the principal and interest of what you’ve borrowed in regular monthly payments. Your monthly payment, of course, will be significantly higher during the repayment period.

You get tax benefits
Taking out a home equity loan or HELOC can provide tax benefits, too. If you use the funds from these loans to pay for home improvements that increase the value of your home, you can deduct the interest that you pay on them on your income taxes.
​
You can’t take this deduction, though, if you use your home equity loans to pay for anything else, such as paying off credit card debt or funding your child’s college tuition. The rules can be complicated, so work closely with a tax professional.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

When does probate begin?
Probate begins with you death whether or not you have a legal will in place. If you have documentation with instructions on how you want your assets to be distributed, then you’re in an ideal situation.

What is an executor?
Your executor is the person you decided will be responsible for initiating the probate process on your behalf. The will should contain details that the executor will read and abide by while acting in the best interests of your estate.

The executor files the will with the probate court, which initiates the probate process. Probate is a court-supervised proceeding that determines the authenticity of the will. In addition to beginning the probate process, the executor will locate and then oversee the dispersal of your assets.

The executor must pay off any taxes or outstanding debt that you still owe. Creditors usually have a limited amount of time — which is usually approximately one year — to make any claims against your estate for money that you owe them posthumously. At the end of the day, probate judges have the final say as to whether the creditors’ claims are justified.

Furthermore, the executor of your estate is responsible for filing a personal income tax return for your accounts. After the inventory of the estate has been assessed, the value of your assets will be calculated and your debts will be paid off. From there, the executor will seek authorization from the court to distribute what remains in your estate to the beneficiaries named in your will.

What if there wasn’t a will in place before death?
If you pass away prior to writing your will or the will you leave behind is determined to be invalid, your assets will be distributed according to state laws instead of your personal wishes. An administrator will be named to act on your behalf and oversee your estate.

The administrator of your estate will also be tasked with locating or contacting legal heirs of your estate, beginning with any spouses — if applicable — followed by any children and other family members. From there, if need be, the probate court will assess which assets need to be distributed and how to distribute them.
​
How long does the probate process typically take?
The probate process can take a long time to finalize once it begins. The more complex or contested the estate is, the more time it will require to settle and distribute your assets. Also, the longer the duration of the process, the higher the total cost.

How much does the probate process usually cost?
As you would expect, probating an estate without a will is typically more expensive than doing so with a valid will. However, the time and cost requirements of either situation are still rather high.

Different states have their own laws regarding probate, including decisions as to whether probate is a must-have step of the post-death process. For example, Texas does not require the probate process in situations where the estate amounts to less than $75,000.

Are there ways to bypass probate?
Some assets can bypass probate because the beneficiaries have been initiated through contractual terms. These include pension plans, life insurance proceeds, 401(k) plans, medical savings accounts and individual retirement accounts with designated beneficiaries.

Another popular way to bypass probate is by using a trust. This can yield massive benefits because minimizing the costly expenses associated with the probate process is ideal.

With everything from court fees and payment for professional service hours to administrative costs and more, probate is not a cheap process. But when you have an authenticated trust in place, you can expedite the probate process, making it far faster and more efficient, resulting in lower costs overall.
Since the laws are different in every state, it’s a good idea to consult an attorney to determine whether a probate proceeding is necessary. A lawyer can notify you of the types of reports that must be prepared as well. Thankfully, many states have simplified or streamlined their probate processes over the years.

Many types of property routinely pass outside the probate process. With a properly drafted will, you can eliminate some of the steps that are otherwise required in probate proceedings in which a will does not exist.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

One-time bonuses are generally calculated by percentages. The rates cluster around 3% to 5% of annual salary for clerical and support staff. Managers might receive in the low-double-digit percentage range and executives in the mid-double-digit range. However, bonuses can also be flat rate.

You can generally deduct the cost of bonuses, assuming the bonus is compensation for services rather than a gift. If you use cash-method accounting, remember that you can't deduct bonuses paid in 2024 on your 2023 tax returns. Accrual-method businesses benefit from the rule that lets them deduct a bonus paid for performance in the past year if the employee receives it within 2 1/2 months of the year's end. If you miss that window, the IRS assumes that the bonus is deferred compensation, which is deductible in the year paid rather than the year earned.

An important caveat is that the 2 1/2-month rule applies only to nonrelated employees. If the employee is your spouse, child, sibling, parent or grandparent, you must deduct the bonus in the year the bonus recipient reports it as income, which most likely is the year it's paid.

Tax considerations
Bonuses are considered supplemental wages. (Other forms of supplemental wages are commissions, overtime compensation, severance pay, awards and prizes, back pay, tips, payments for nondeductible moving expenses, retroactive raises, and payments for accumulated sick leave.) That means that you will withhold the usual FICA and federal unemployment tax as well as any applicable state taxes. The federal income tax withholding amount depends on the total amount of supplemental wages received by the employee during the tax year.

If the supplemental wage payment exceeds $1 million, the first million gets taxed at 22% and every dollar over that is taxed at 37% or the highest income tax rate for the year.

For supplemental wages of $1 million or less, you can choose one of the following methods for calculating tax:

• If you pay supplemental wages with regular pay without specifying the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period.
• If you pay supplemental wages separately, or combine them in a single payment with wages and specify the amount of each, you can:
  • Withhold a flat 22% of the bonus. (So if the bonus, paid separately, was $100, you'd withhold $22 and cut a $78 check.)
  • Use the aggregate method — an IRS formula based on the employee's tax bracket (as given on a W-4) — to calculate the amount to withhold. This is a more complicated way to calculate taxes and may better ensure that you cover the employee's tax liability.

If you end up withholding more tax than necessary, the employee receives a refund. If you withhold too little, the employee gets taxed by surprise.

A tax-free bonus is basically impossible. If you pay the employee's share of taxes on the bonus, taxes paid are considered additional wages and are themselves subject to tax.
​
You may use bonuses to increase productivity, improve employee retention, thank your team for their efforts and/or create a positive work environment. A bonus is always a welcome bump in pay. You may want to calculate the bonus yourself or consider consulting with your accountant or tax adviser to learn how bonuses affect company and employee taxes.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

How much are the closing costs?
How much you pay in closing costs will vary, but you’ll usually pay from 2% to 6% of your total loan amount. For example, if you are borrowing $325,000, you can expect to pay from $6,500 to $19,500 in closing costs.

That’s a lot of money, and that doesn’t even include the cost of whatever down payment you provide. It’s not surprising, then, that many homebuyers struggle to come up with such a large amount of cash.

Fortunately, you have a choice. You can either pay your closing costs upfront or you can roll them into your mortgage amount.

How does that work?
You might choose to pay your closing costs upfront if you first sold a home before buying your new one. That way, you can use part of the money from your home sale to pay your mortgage’s closing costs. This approach will save you money: If you instead roll your closing costs into your new mortgage, you’ll be paying interest on those fees, something that will cost you more in the long run.

But what if you don’t have much extra cash? Then rolling your closing costs into your total loan amount might make sense, even if it will cost you more over time.

If you take out a $300,000 mortgage and you owe $5,000 in closing costs, instead of paying your closing costs upfront, you could instead add them to your mortgage amount. Instead of taking out a loan of $300,000, you’d take one out for $305,000. You’d then pay back that amount over time with regular monthly payments, with interest.

Again, rolling your closing costs into your loan amount makes sense when you don’t have as much extra money to spend. Buyers who haven’t sold another home first, for instance, might go this route because they can’t rely on the proceeds from a home sale to cover thousands of dollars in closing costs.

The downside of rolling your closing costs into your mortgage
When you roll your closing costs into your mortgage amount, you’ll pay interest on these costs throughout the life of your loan. This means that you’ll pay much more for these costs than if you paid them upfront. If you can afford to cover your closing costs, it always makes more sense to pay them upfront.

Depending on how large of a mortgage for which you can qualify, you might not be able to add your closing costs to your loan amount. Say you are approved for a maximum mortgage amount of $310,000. If you take out a mortgage for $308,000 and your closing costs are $5,000, you wouldn’t be able to roll all these fees into your mortgage.

The best move? Talk with your mortgage lender about your closing cost options. Your lender can help you decide whether paying upfront or rolling your costs into your mortgage is the better choice.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

In the end, roughly two of every 1,000 estates are subject to the federal estate tax, which means that 99.8% of estates owe no estate tax at all. Additionally, many states don't have estate or inheritance taxes. Those states that do have estate taxes have lower thresholds than the federal rate. 

In other words, it's a myth that the estate tax forces estates to turn over most of their assets to the government. What are some other estate-tax myths?

• That a will alone is sufficient for inheritance tax planning. A well-crafted will is undoubtedly a cornerstone of inheritance planning, but it's not the sole solution. Various other strategies, like trusts and lifetime gifts, can complement a will and enhance overall tax planning. A comprehensive approach that considers all available options is essential for maximizing tax efficiency.
• That the estate tax constitutes double taxation because it applies to assets that already have been taxed as income. This is not true for small estates, because they are generally exempt from estate taxes. Large estates consist to an above-average degree of unrealized capital gains — that is, assets that have never been taxed. The estate tax is the only means of taxing this income.
• That the estate tax unfairly punishes success. The truth is that the estate tax affects only those most able to pay, and the funds the tax raises help support a range of programs that benefit the nation.
• That inheritance taxes can be entirely avoided. Though there are legal ways to minimize the estate tax's impact, large estates will find themselves subject to it.
• That loopholes enable many large estates to avoid taxes. Many wealthy estates do employ lawyers and accountants to develop and exploit ways around estate tax, allowing portions of their assets to be inherited tax free. One such strategy is a grantor retained annuity trust, which allows the grantor to transfer future appreciation on assets to their heirs while bypassing the estate tax. However, GRATs only work well when interest rates are low; in other markets, the full asset value still goes back to the estate.
• That eliminating the estate tax would encourage people to save and thereby make more capital available for investment. This argument doesn't account for government borrowing. If the objective is increased savings, it would probably be more effective to keep the estate tax and use proceeds to reduce the national debt. Further, the added government borrowing would more than outweigh any added private savings, leaving the economy no better and possibly worse off.

​The estate tax is the nation's most effective tax policy tool to mitigate the negative effects of inheritances, which account for about 40% of household wealth and are extremely concentrated in the top income brackets. Because the estate tax affects only those who are most able to pay, it can be looked at as the most progressive component of the tax code that is itself only modestly progressive.
It's essential to focus on lawful strategies to manage, rather than eliminate, tax burdens. Dispelling common myths surrounding the estate tax is one step.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

But if this information falls into the wrong hands, it can lead to fraud or identity theft. Have you considered how to protect this sensitive data? What are the threats for your business? What does your security look like? How do you keep only what's essential? How long has it been since you reviewed your security plans and policies?

The cost of a security breach is huge: Not only will your employees be upset, but you may lose your customers' trust. You might find yourself defending your company against a lawsuit. That makes safeguarding personal information a good business decision.

The Federal Trade Commission has outlined how to protect the information you keep and how to properly dispose of what you no longer need in "Protecting Personal Information: A Guide for Business." The agency urges you to create a plan to respond to security incidents.

Getting down to basics
Here are five key principles of a sound data security plan.

1. Assess. Know what personal information you have in your offices and files.

• Inventory company servers, laptops, mobile devices and flash drives to discover where sensitive data is stored. Pay particular attention to Social Security numbers, credit card information, bank account numbers and other financial data.
• Inventory nonowned devices. What information is received through websites, from contractors and at call centers? What information is saved on employees', contractors' or vendors' personal computers, phones or digital copiers?

2. Reduce. Collect and keep only what you need for your business.

• Restrict access to sensitive data: Each employee should have access only to those resources needed for the job.
• Consider how much information nonemployees should have access to.
• Use information lawfully.

3. Secure. Protect the information that you collect and keep.

• Create effective security plans to assess physical and electronic security, employee training, and the security practices of contractors and service providers. Security is the responsibility of everyone in the company.

4. Delete. Properly dispose of what you no longer need.

• Implement information disposal practices from paper shredders to secure data erasing. Make sure employees who work from home follow the same procedures.

5. Plan. Create a response to security incidents.

• Designate a senior member of management to be the point person for any response to security breaches.
• Employ a comprehensive response, ranging from disconnecting compromised equipment to knowing who needs to be notified of the breach. Be sure to consult your attorney to be sure you are following applicable laws when contacting customers, law enforcement, credit bureaus and other businesses that may be affected.

It is also important to review any legalities that may impact your plans. Statutes like the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act and the Federal Trade Commission Act may require you to provide reasonable security for sensitive information. California, Colorado, Connecticut, Utah and Virginia have consumer data privacy laws with provisions like the right to access and delete personal information and to opt out of the sale of personal information. Other states that are working on such legislation include West Virginia and Georgia, where the legislation has passed but is not yet signed into law, as well as Rhode Island, Vermont, Kentucky and Wisconsin.
​
Understanding how sensitive information moves into, through and out of your business and who has — or could have — access to it is essential to assessing security vulnerabilities.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

The most common classifications are exempt and nonexempt. Exempt employees are typically salaried workers who (a) are paid the same amount each week regardless of hours worked, (b) are paid at least $844 each week and (c) hold administrative, professional or executive positions. Nonexempt employees are often hourly workers who perform more manual or technical duties. Nonexempt employees are entitled to overtime pay for any hours worked beyond 40 in a workweek, which is defined as seven consecutive 24-hour periods.

Classifying employees as exempt or nonexempt under the Fair Labor Standards Act determines their eligibility for overtime pay as well as meal and rest breaks. Most employers have both exempt and nonexempt workers.

Other employment types come with their own sets of laws and considerations:

• Full time describes someone who works a specified number of hours a week and gets access to company benefits. The specific terms are set by the employer and may be subject to state-specific labor laws. The category is subject to FLSA.
• Part time describes someone who works fewer hours than full time, though the exact number of hours that constitutes part time is left to the employer to define. Part-time workers are covered by FLSA.
• Contract employees are hired for a defined period, often for their specialized knowledge or skills. They work varying hours according to the contract and are eligible for FLSA benefits.
• Independent contractors are like contract employees but aren't on the company's payroll. Their work hours and exemptions are determined by the organization they work for. Independent contractors are not covered by FLSA.
• Temporary employees are hired on a short-term basis and are eligible for FLSA benefits.
• On-call employees are expected to be able to work during specific hours, are paid hourly and may be covered by certain provisions of FLSA.
• Seasonal workers or employees are hired for a specific period — typically of six months or less. Seasonal workers tend to be hired for the same six months from year to year (for example, summers), while seasonal employees tend to work as help during peak times (for example, winter holiday workers). FLSA does not specifically cover these categories, but certain provisions of the act may apply.
• Volunteers are not employees, so they are neither exempt nor nonexempt.

Because employee classifications impact companies' budgets, some employers may seek to treat workers as independent contractors to avoid compliance with unemployment insurance, workers' compensation, Social Security, tax withholding, temporary disability, and minimum wage and overtime laws. However, if you instead establish an employee classification policy and apply it consistently, you will be less likely to face costly fines for misclassification. Payroll software, which offers such extras as analytics to aid in decision making, can help with compliance while fostering business growth.

Employee classification is essential for workforce planning, recruitment and retention strategies, and compliance. Be sure to talk with professionals to create your classifications thoughtfully.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

Here are some steps to consider when making a financial plan:

• What are your goals? Identify what you hope to achieve and how you'd like to get there. For example, do you want to own a home in three years? Start a family in five? Return to school to pursue an advanced degree? Retire early and travel the world? Each one of these has different implications for how you need to plan.
• What do you need to accomplish your goals? The fact-finding stage includes gathering numbers to see how things add up.
  • Your financial adviser may ask questions to calculate your personal balance sheet, estimating your net worth based on assets and liabilities. Your income, spending habits, monthly bills and outstanding debts should be accounted for.
  • The price of future goals needs to be quantified so you can determine what you need to save to afford them.
  • If your goals don't match your financial circumstances, one or the other needs to change.
• What does the actual plan look like? When you have your financial plan, plot how to reach the goals you set within the context of actual income and expenses. You may create an investment strategy, asset allocation and portfolio recommendations based on your individual goals and personal risk tolerance to help optimize your finances. You may select savings vehicles suited to your investment goals.
• How will you implement your strategy? This is where things get real. If your plan requires you to save a certain amount of money each month, you are responsible for making that happen. Do you need to trim expenses? Increase your income by making an extra effort to get a promotion, or by switching jobs or even fields?
• How often will you review your plan? Your financial plan is dynamic and should be adjusted to reflect your life circumstances. Set dates to review where your plan stands and make any necessary adjustments. Meet with your adviser at least annually to check your progress toward your goal and fine-tune your financial plan.

The process of financial planning can be very rewarding. Taking small steps toward achieving your goal gives a more immediate sense of accomplishment, making the goal loom less large. Being in charge of the day-to-day decisions gives you the confidence to ride out any bumps along the way.

How to create your plan
Online services, like robo-advisers, employ algorithm-driven financial management with little or no human intervention. They use online questionnaires to obtain information about your degree of risk aversion, financial status and desired return on investment.

But robo-advisers lack subjectivity to offer fully personalized services. Human advisers check in with clients to reevaluate investment goals based on changes in the market. A hybrid robo-human model can combine the strengths of both, offering a balance of automated efficiency and personalized advice.

Between fees, features and funds, there are myriad aspects to compare and consider. Financial advisers can help you with tax strategies to maximize deductions. They should also advise on scheduling tax-loss-harvesting security sales to ensure the best use of capital gains tax rates and on minimizing taxes in retirement. Financial advice should also consider estate planning and long-term care. Your plan should create simulations of best- and worst-case scenarios.
​
Financial advisers work for the client, not the company that employs them. They should be responsive, willing to explain financial concepts and keep your best interests front and center. You want a financial plan that helps solidify your future.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

10 rights taxpayers have according to the IRS
1. The Right To Appeal an IRS Decision in an Independent Forum
You are allowed to respond to IRS decisions that you don’t agree with by appealing them.
2. The Right To Be Informed
In order to comply with tax laws, you are entitled to have access to information that tells you what the rules of the IRS are and how to adhere to them.
3. The Right To Challenge the IRS’ Position and Be Heard
As a taxpayer, you are allowed to challenge any decisions made by the IRS regarding your taxes. You can object to their claims or proposed actions.
4. The Right to Confidentiality
You should be able to trust that any information you share with the IRS will not be disclosed unless you authorize the disclosure of said information.
5. The Right to a Fair and Just Tax System
It is fair for you to expect that the tax system will consider all the facts and circumstances that affect your tax situation, including your ability to pay back taxes or afford your tax balance.
6. The Right to Finality
You deserve to be notified when the IRS has finalized an audit of your taxes.
7. The Right To Pay No More Than the Correct Amount of Tax
You should never pay more in taxes than you realistically and reasonably owe. The IRS is responsible for ensuring that this is the case.
8. The Right to Privacy
You have the right to expect that the IRS will always comply with the law when making inquiries, conducting examinations of your tax account or enforcing actions based on your situation.
9. The Right to Quality Service
You deserve the right to prompt and professional assistance when speaking with the IRS, no matter the details of the interaction.
10. The Right To Retain Representation
If you want to retain an authorized representative to advocate for you when you are working with the IRS, then this is a right awarded to you. If you cannot afford to pay for representation, you are permitted to seek assistance from low-income-taxpayer clinics.

As a U.S. taxpayer, you are automatically granted the rights to be communicated with in a way you understand, to obtain clear forms of communications from the IRS, and to discuss the lack of adequate services with an IRS-appointed supervisor. In addition to those three rights, you are typically allowed to take your tax-related case to court as well.

What’s more, you can also reach out to the IRS and receive assistance from the Taxpayer Advocate Service, which is an independent organization, though it is still part of the IRS. Those who work for the Taxpayer Advocate Service do exactly that — advocate for taxpayers such as you and act as a voice for you with the IRS.
​
If you ever find yourself facing financial difficulties or you can’t seem to get through to the IRS but you need to resolve your tax issues, reach out to tax professionals for advice on what to do next.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

Qualified expenses under the child and dependent care credit
Expenses that qualify for this credit include things such as day care, babysitters, after-school programs and summer day camps. (Overnight camps are generally not eligible.) If your child has special needs, you might also be able to claim additional expenses such as tutoring, therapy or specialized equipment.

Major tax benefits of the child and dependent care credit
Tax deductions lower your total taxable income, but unlike deductions, tax credits can directly decrease the amount of taxes you are responsible for paying. In other words, instead of reducing the income that your taxes are based on, tax credits lessen the amount of money you have to send the IRS after filing your taxes.

How much will the child tax credit be in the coming year?
This tax credit will be equivalent to $2,000 per child as long as each eligible child qualifies. There is a potential for approximately $1,700 to be refundable.

How to claim children for the child and dependent care credit
In order to claim children in an effort to benefit from the child and dependent care credit, your child must be classified as a dependent in the eyes of the IRS. This child has to have lived with you for at least six of the 12 months in the relevant tax year.

And the child in question must be a dependent whom you paid the living expenses for in the past year as well. Last but not least, it is a requirement that the child have a Social Security number of their own, meaning they are either a citizen, a national resident or an official resident of the United States. The child must be under age 13.

How to claim dependents for the child and dependent care credit
Dependents don't necessarily have to be your children. There are instances where people whose dependents include spouses or other individuals who meet the IRS' requirements for eligibility as a dependent.

You are entitled to claim this tax credit for money you paid for care that went toward an eligible dependent. However, this is only possible if the person whom you paid care for was not your spouse, or the parent of the child being cared for, or someone who is denoted as a dependent on your tax return or any children of your own.

If you are married to your partner and trying to claim the child and dependent care credit, your money must be from income you earned by working a job. This means income from nonwork-related sources such as investment profits does not count. Also, if you and your partner are married, you have to file a joint tax return together.

How much can you, in particular, expect to receive through this tax break?
The amount of money you'll receive in the form of the child and dependent care credit will be based on how much of your own money you spent on care for children, dependents or both. Your income will also be taken into consideration.

Essentially, you will need to calculate the total amount of care expenses you have paid. Subtract that value from the amount of allowable expenses you are permitted. Make sure you include any stipends that your employer grants you to put toward child care expenses or any money that is withheld from your pretax income for the same purpose.
​
From there, compare the value you intend to claim with the amount of money you earned. Do the same with your partner's financial situation if the two of you are married. The lowest of these values will be considered your allowable expenses and the credit value will be a percentage of those allowable expenses.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!

Here are five steps for preparing to find funding in an uncertain economic climate:

First, assess the growth outlook for your industry. Services that will experience the highest growth over the next few years include renewable energy, AI and automation, cybersecurity, fintech and online gambling, information technology, health care services and wellness industries, and construction, particularly residential remodeling. Each of these broad categories has many subcategories ranging from professionals (e.g., engineers) to unskilled workers (e.g., laborers).

Next, understand market conditions. The rise in interest rates has severely affected valuations. Small companies will be impacted even if they are looking for funding from traditional lenders — such as banks or the U.S. Small Business Administration — rather than angel investors or venture capital (as on “Shark Tank”). Venture capitalists are also more likely to want an ownership stake in your business in exchange for funding.

Third, implement measures that will enhance your financials, such as cutting costs. Examples of cost-cutting measures include a) taking advantage of common insurance bundles, such as a business owner's policy, which pairs general liability coverage with commercial property insurance; b) assessing whether staff is being employed appropriately and efficiently, including bringing in automation where possible; and c) letting current vendors (from the leaseholder to the office supplier) know that you are looking for lower prices; they may offer you a loyalty discount or you may find a better price elsewhere.

Attracting financing takes time, but it helps to be prepared. As a fourth step, be ready with a statement that outlines your business model, the reason you are requesting funding (e.g., buying inventory or hiring new employees) and profitability projections. The specific documentation will vary according to the type of loan and the lender but generally includes business and personal tax returns, bank statements, business financial statements (e.g., balance sheet, income statement and cash flow statement), leases, collateral and articles of incorporation.

Finally, develop a list of potential funding sources. Your current advisers may be able to introduce you to trusted sources interested in financing your business.
​
Financing your business can be especially difficult in unsettled times, but with careful planning, research and patience, it is possible to meet a financing entity's criteria.

Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much!