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22 Jul

Posted at 17:01h in Taxes

What Are Estimated Taxes? Estimated taxes are advance payments of income tax. They apply to income that isn't subject to withholding, such as self-employment, investments, rental income, or gig work. The IRS requires these payments because the U.S. tax system works under the "pay-as-you-earn" model—meaning you must pay taxes as you receive income, not just at the end of the year. Who Must Pay Estimated Taxes? You must make estimated payments if: First, you expect to owe at least $1,000 in taxes for the year, after subtracting withholdings and refundable credits. Plus, your withholdings and credits will be less than the smaller of: 90% of the tax shown on your current return, or 100% of the tax from your previous year's return (if it covered the full 12 months). In summary, this applies to individuals such as: sole proprietors, partners in partnerships, S-corporation shareholders, and anyone who receives significant income without withholding. Corporations...

08 Jul

Posted at 16:24h in Blog

If your business helps provide childcare for employees, you may be eligible for a federal tax credit worth up to $150,000 per year. The Employer-Provided Childcare Tax Credit is a valuable incentive designed to support both working families and the businesses that employ them. What Is the Credit? The Employer-Provided Childcare Tax Credit allows businesses to claim: 25% of qualified expenses for providing or maintaining a childcare facility 10% of costs for childcare resource and referral services Combined, the credit can be worth up to $150,000 annually. What Costs Count? To qualify, your business must have paid for one or more of the following: Building, buying, or improving a childcare facility that complies with state and local regulations Operating costs like staffing, training, or scholarship programs for childcare workers Referral services to help employees find reliable childcare Your business must incur these expenses specifically to help provide childcare to your employees. Who Can Claim It? Any employer who...

13 May

Posted at 17:22h in Blog

When we talk about healthy businesses, people often think of sales, invoices, or even follower growth on social media. But there’s a quiet metric that actually holds everything together: cash flow. So… What Exactly Is Cash Flow? Cash flow is the real movement of money in and out of your business during a set period.Unlike invoiced income, cash flow shows how much actual cash you have on hand to operate—pay employees, suppliers, taxes, or just keep the business running day to day. 👉 In other words: you can invoice thousands and still run out of money. Revenue Isn’t the Same as Liquidity One of the most common mistakes we see at Optimum is assuming “If I’m making sales, everything’s fine.”But if that money doesn’t come in on time—or if your expenses outweigh your collections—your business starts to suffocate quietly. A negative cash flow (more going out than coming in) can lead...

14 Apr

Posted at 15:46h in Blog

Every year, small business owners count on their tax filings to unlock savings, reinvest in growth, and stay compliant. But those opportunities come with risks. Unfortunately, many business owners fall victim to shady tax preparers, misleading strategies, or misinformation that can trigger audits, penalties, or serious legal consequences. At Optimum Business Services, my mission is to protect entrepreneurs like you. I help you avoid the traps—while ensuring your business claims every legal credit and deduction it deserves. Why Legal Business Tax Returns Matter More Than Ever In today’s fast-moving world, you’ve probably seen ads targeting business owners with promises like “guaranteed refund” or “zero taxes owed instantly.” While tempting, these shortcuts can cause major problems later. Your tax return should reflect your real business operations—revenue, expenses, employee wages, assets, and IRS-compliant documentation. A responsible tax partner won’t throw out random estimates. They’ll take the time to understand your business...

04 Dec

Posted at 16:49h in Blog

Taxpayers who buy a qualifying new or used clean vehicle may be able to transfer their tax credits to the dealer in exchange for a financial benefit – such as a lower cost – starting Jan. 1, 2024. Benefits of transferring the creditTaxpayers can now claim tax credits for new and used clean vehicles they buy during the tax year and, starting Jan. 1, 2024, can transfer that credit to the dealership. This means that the taxpayer who is buying the vehicle can exchange their credit for a financial benefit such as reduced final cost. The financial benefit is equal to the amount of the credit, whether in cash, a partial payment or a down payment. New information about the clean vehicle creditThe IRS recently issued proposed regulations, Revenue Procedure 2023-33 and frequently asked questions that cover: How taxpayers can transfer clean vehicle credits to eligible dealers. How dealers can register with IRS Energy Credits...

17 Nov

Posted at 19:30h in Blog

WASHINGTON — With the nation’s tax season rapidly approaching, the Internal Revenue Service reminds taxpayers there are important steps they can take now to help “get ready” to file their 2023 federal tax return. This is the first in a series of special IRS “Get Ready” reminders to help taxpayers prepare for the upcoming tax filing season in early 2024. A little advance work now can help people have the paperwork and information ready to file their tax returns quickly and accurately. As part of this education effort, the IRS has a special page outlining items taxpayers can look into now to get ready to file their 2023 tax returns. Get helpful information to file through IRS Online AccountTaxpayers can create or access their Online Account at IRS.gov/account. New users should have their photo identification ready. With an Online Account taxpayers can access a variety of helpful information to help them during the 2024 filing season, including: View key data from...

23 Oct

Posted at 16:58h in Blog

October 16, 2023, may seem like a distant date, but it marks a significant deadline for taxpayers. This article underscores the critical importance of filing before this date and highlights the need for choosing a preparer with a valid Preparer Tax Identification Number (PITIN) who diligently signs the return and ensures it is completed accurately. Let's delve into the reasons why these aspects are crucial for a smooth tax filing process. Compliance with Legal Obligations Filing taxes before the October 16 deadline is a legal requirement that cannot be ignored. Failing to meet this deadline may lead to penalties, interest charges, and potential legal consequences. By adhering to the deadline, you not only avoid these punitive measures but also demonstrate your commitment to fulfilling your civic responsibilities. Avoiding Last-Minute Rush Procrastination often leads to a last-minute scramble to gather documents and complete tax returns. This rush can result in...

09 Oct

Posted at 17:20h in Blog

WASHINGTON – As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses for 2023 when they file their federal income tax return next year. This is the same limit that applied in 2022, the first year this provision became subject to inflation adjustment. Before that, the limit was $250. The limit will rise in $50 increments in future years based on inflation adjustments. This means that an eligible educator can deduct up to $300 of qualifying expenses paid during the year. If they’re married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse. Who qualifies?Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12...

04 Oct

Posted at 18:34h in Blog

WASHINGTON – With the fall college semester quickly approaching, the Internal Revenue Service today reminded employers and employees that under federal law, employers who have educational assistance programs can use them to help pay student loan obligations for their employees. As part of a wider effort to promote this benefit the IRS will hold a free webinar on Sept. 14 to help interested taxpayers and tax professionals better understand this special provision. “The IRS wants to remind both employers and employees about this special feature that can help with student loans,” IRS Commissioner Danny Werfel said. “There is a limited window of time for this educational assistance program, and the IRS wants to make sure employers don’t overlook this option that can help businesses attract and retain workers.” Though educational assistance programs have been available for many years, the option to use them to pay student loans has been available only for payments made after March 27, 2020, and,...

07 Aug

Posted at 16:03h in Blog

WASHINGTON ― The Internal Revenue Service warned taxpayers today to be on the lookout for a new scam mailing that tries to mislead people into believing they are owed a refund. The new scheme involves mail coming in a cardboard envelope from a delivery service. The enclosed letter includes the IRS masthead and the wording that the notice is "in relation to your unclaimed refund." Like many scams, the letter includes contact information and a phone number that do not belong to the IRS. But it also seeks a variety of sensitive personal information from taxpayers – including detailed pictures of driver's licenses – that can be used by identity thieves to try obtaining a tax refund and other sensitive financial information. "This is just the latest in the long string of attempts by identity thieves posing as the IRS in hopes of tricking people into providing valuable...

31 Jul

Posted at 15:55h in Blog

As a responsible taxpayer, it's essential to stay on top of your financial obligations to the IRS. One crucial aspect of tax management is making estimated tax payments. Failure to do so can result in penalties and interest charges. In this blog post, we will explore the importance of making estimated tax payments, the consequences of not doing so, and strategies to ensure you meet your tax obligations on time. Understanding Estimated Tax Payments: Estimated tax payments are periodic payments made to the IRS throughout the year to prepay your tax liability, particularly if you have income that is not subject to withholding tax. This includes self-employment income, rental income, investment income, and other taxable earnings. Consequences of Not Making Estimated Tax Payments: Penalties: Failure to make estimated tax payments or underpaying your estimated tax can lead to penalties. The IRS imposes penalties for underpayment, and the amount...

24 Jul

Posted at 17:49h in Blog

Identity Protection PINs stop identity thieves from filing fraudulent tax returns. Taxpayers who participate in this program are assigned a six-digit number that they use to prove their identity when they file their federal tax return. The IRS’s Identity Protection PIN is an added layer of security for taxpayers. In the recent past, the Electronic Tax Administration Advisory Committee called the IP PIN, “The number one security tool currently available to taxpayers from the IRS.” How to request an IP PIN After a taxpayer verifies their identity, the Get an IP PIN tool allows people with a Social Security number or individual taxpayer identification number to request an IP PIN online. Taxpayers should review the identity verification requirements before they try to use the Get An IP PIN tool. Additional information about IP PINs An IP PIN is valid for one year. For security reasons, new IP PINs are generated each year. Some participants...

17 Jul

Posted at 15:39h in Blog

Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies and businesses are treated differently when it’s time to file a tax return. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation. Whether someone is having fun with a hobby or running a business, if they accept more than $600 for goods and services using online marketplaces or payment apps, they could receive a Form 1099-K. Profits from the sale of goods, including personal items, and services is taxable income that must be reported on tax returns. There are a few other things people should consider when deciding whether their project is a hobby or business. No single thing is the deciding factor. Taxpayers should review all of the factors to make a good...

04 Apr

Posted at 16:27h in Blog

All income is taxable, including gig economy and tip income The IRS informs us that it’s important for taxpayers to file a federal tax return that has a complete and correct reporting of their income – which may mean including income from sources other than regular wages from an employer. Income from gig economy activities and tip income are two common sources of such income. Gig economy earnings are taxableThe gig economy is activity where people earn income providing on-demand work, services, or goods, such as selling goods online, driving a car for deliveries or renting out property. This income is often received through a digital platform like an app or website. Taxpayers must report income earned from the gig economy on a tax return, even if the income is: From part-time, temporary, or side work. Paid in any form, including cash, property, goods, or digital assets. Not reported on an...

10 Mar

Posted at 16:14h in Blog

Some people choose not to file a tax return because they aren’t legally required to file, but they could be missing out on refundable tax credits or an income tax refund. This could apply to someone if they: Have had federal income tax withheld from their pay. Made estimated tax payments. Qualify to claim refundable tax credits. Here are a few of the valuable tax credits eligible people can claim on a tax return: Earned Income Tax Credit – The EITC helps workers who earned $59,187 or less when they file their tax return. Taxpayers can use the EITC Assistant on IRS.gov to check their eligibility. Child Tax Credit – Taxpayers can claim the Child Tax Credit if they have a qualifying child under the age of 18 and meet other qualifications. Credit for Other Dependents – Taxpayers who do not qualify for the child tax credit may qualify for the Credit for Other Dependents. This includes...

21 Feb

Posted at 15:49h in Blog

The EITC helps workers who earned $59,187 or less when they file their tax return. Unfortunately, many people risk missing out on the credit because they don't know they’re eligible — especially people who had a major life change and may qualify for the first time this year. Other workers at risk for overlooking the EITC include those: Living in non-traditional homes, such as a grandparent raising a grandchild. Whose earnings declined or whose marital or parental status changed. Without children. With limited English skills. Who are veterans. Living in rural areas. Who are Native Americans. With earnings below the filing requirement. Taxpayers can check their eligibility and how much they qualify for at IRS.gov/EITC. The EITC is a tax credit for certain people who work and have low to moderate income. A tax credit usually reduces tax owed and may also result in a refund. How to claim the EITCTo get the EITC, qualified workers must file...

14 Feb

Posted at 16:05h in Blog

Every year there are changes to the Social Security program. And with more than 65 million Social Security beneficiaries, these changes impact a lot of people. Here are three significant changes that will take effect beginning January 2023. 1. Social Security beneficiaries will receive more money each month. There will be an 8.7% increase in benefits in 2023. This is the Cost-of-Living Adjustment commonly referred to as COLA. Beginning January 2023, more than 65 million Social Security beneficiaries will receive an 8.7% increase in their Social Security benefits. The average monthly Social Security benefit for 2022 is $1,681. With an 8.7% increase, the average beneficiary will expect to receive almost $150 more each month, making the average monthly Social Security benefit for 2023 $1,827. This means the maximum monthly benefit has also increased. If someone filed for Social Security benefits at their Full Retirement Age (FRA) in 2022, the maximum monthly benefit...

20 Jan

Posted at 19:33h in Blog

Anyone pursuing higher education, including specialized job training and grad school, knows it can be pricey. Eligible taxpayers who paid higher education costs for themselves, their spouse or dependents in 2021 may be able to take advantage of two education tax credits. The American opportunity tax credit and the lifetime learning credit can help offset education costs by reducing the amount of tax they owe. If the American opportunity tax credit reduces the tax to zero, the taxpayer could receive a refund up to $1,000. To be eligible to claim either of these credits, a taxpayer or a dependent must have received a Form 1098-T, Tuition Statement, from an eligible educational institution. However, there are exceptions for some students. To claim either credit, taxpayers must complete Form 8863, Education Credits, and file it with their tax return. Here are some key things taxpayers should know about each of these credits. The American opportunity tax credit is:  Worth a...

22 Nov

Posted at 22:25h in Blog

Business grants for your minority-owned business will get you access to free financing. Written by Steve Nicastro Minority business owners face challenges when starting or expanding a small business, including access to affordable small-business loans. Business grants and financial assistance can help bridge the funding gap. Here are some of the best small-business grants and other useful financing resources for minority-owned businesses. NerdWallet also has compiled a list of the best small-business loans for minorities. 1. Grants.gov Grants.gov allows grant seekers to find and apply for federal funding opportunities. It contains information on more than 1,000 grant programs across federal grant-making agencies, including the Department of Commerce and the U.S. Small Business Administration. To apply for federal grants, you must obtain a DUNS number from Dun & Bradstreet (a unique nine-digit identification number) for your business; register to do business with the U.S. government through its System Award Management website; and...

22 Nov

Posted at 22:10h in Blog

Knowledge is a taxpayer’s first line of defense against scammers who pretend to be from the IRS with the goal of stealing personal information. Here are some facts about how the IRS communicates with taxpayers: -The IRS doesn't normally initiate contact with taxpayers by email. Do not reply to an email from someone who claims to be from the IRS because the IRS email address could be spoofed or fake. Emails from IRS employees will end in IRS.gov. -The agency does not send text messages or contact people through social media. Fraudsters will impersonate legitimate government agents and agencies on social media and try to initiate contact with taxpayers. -When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. Debt relief firms send unsolicited tax debt relief offers through the mail. Fraudsters will often claim they already notified...

13 Oct

Posted at 15:39h in Blog

Businesses hanging up their Help Wanted signs should be sure to check out the work opportunity tax credit. This credit encourages employers to hire workers certified as members of any of ten targeted groups facing barriers to employment. The credit has been extended through the end of 2025.The 10 targeted groups are: Temporary Assistance for Needy Families recipientsQualified unemployed veterans, including disabled veteransFormerly incarcerated individualsDesignated community residents living in Empowerment Zones or Rural Renewal CountiesVocational rehabilitation referralsSummer youth employees living in Empowerment ZonesSupplemental Nutrition Assistance Program recipientsSupplemental Security Income recipientsLong-term family assistance recipientsLong-term unemployment recipients Certification requirementTo claim the credit, an employer must first get certification that an individual is a member of the targeted group. They do so by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency within 28 days after the eligible worker begins work. Employers should not...

13 Oct

Posted at 15:11h in Blog

When the IRS needs to ask a question about a taxpayer’s tax return, notify them about a change to their account, or request a payment, the agency often mails a letter or notice to the taxpayer. Getting mail from the IRS is not a cause for panic but, it should not be ignored either. When an IRS letter or notice arrives in the mail, here’s what taxpayers should do: Read the letter carefully. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. A notice may reference changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return. Taking timely action could minimize additional interest and penalty charges.Review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with...

26 Sep

Posted at 19:56h in Blog, Business, Taxes

Pros: Free and fastSecure transactionsIntegrates with many banking appsYou don't need the recipient's banking informationThere are no receiving limits. Cons: There is currently no fraud protectionYou can't transfer funds from a credit cardOnly supports U.S. bank accountsYou can't cancel certain paymentsThere are payment limits What is Zelle and how does it work? Zelle is a free payments app that is easy to use and transfers money fast. This mobile peer-to-peer payment app lets you send money directly from one bank account to another. It's a good way to send money to someone you already know. To send money via Zelle, you don't need to know the recipient's bank account details. Instead, you can use their phone number or email address. Zelle will then send a text message or email to let them know there's a payment waiting. This mobile payment app was created by some of the big banks and it now...

26 Sep

Posted at 19:43h in Blog, Business, Taxes

A business might pay an independent contractor and an employee for the same or similar work, but there are key legal differences between the two. It is critical for business owners to correctly determine whether the people providing services are employees or independent contractors. Here’s some information to help business owners avoid problems that can result from misclassifying workers.An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker's services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public.Independent contractor vs. employeeWhether a worker is an independent contractor, or an employee depends on the relationship between the worker and the business. Generally, there are three...

26 Sep

Posted at 18:59h in Blog, Business, Taxes

Taxpayers have the right to retain an authorized representative of their choice to represent them when they are dealing with the IRS. They also have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation. This is one of the ten fundamental rights of all taxpayers as outlined in the Taxpayer Bill of Rights. What the right to retain representation means for taxpayers: Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS.Taxpayers who are heading to an interview with the IRS may select someone to represent them.Taxpayers who retain representation don't have to attend with their representative unless the IRS formally summons them to appear.In most situations, the IRS must suspend an interview if the taxpayer requests to consult with a representative, such as an attorney, certified public accountant or enrolled agent.Any attorney, CPA,...

26 Sep

Posted at 15:42h in Blog, Business, Taxes

After an emergency or disaster, people rally to help victims by donating money. Unfortunately, this can give criminals an opportunity to prey on them by soliciting donations for fake charities. Scammers may also pose as federal agencies to dupe disaster victims trying to get disaster relief.People should always be suspicious of unsolicited contact. Scammers often contact their possible victim by telephone, social media, email or in person. People donating to charity should make sure their money is going to a reputable organization. Thieves may pose as a representative of a charity to ask for money or private information from well-intentioned taxpayers.Scammers may set up bogus websites using names that sound like real charities. When a taxpayer searches for a charity online, they find the fake website or social media page, instead.Donors can use the Tax Exempt Organization Search to find or verify qualified charities. Donations to these real charities may...