Millions of Self-Filing Business Owners’ Bank on Returns
46 Million Americans Self-Filed Taxes: Big Dollars, Deductions and Huge Cash Saving’s’ at Stake for American Business Owners and High Net-Worth Individuals according to Tax Experts at “Tax Saving Professionals”
Getting the numbers right is not so easy and there’s a lot of tax money riding on those self-filer returns, say the tax experts at the Tax Saving Professionals.
More than 46 million American’s self-filed their taxes from their home computers. Small American Business Owners who self-file taxes have a lot to think about. Even more troublesome they yhave a lot to learn. As of 2013, the United States Tax Code is 73,954 pages and is nearly 4 million words long. A recent governmental report published by the General Accounting Office on April 8th, 2014, just one week in advance of one of the most dreaded deadlines in the annual American calendar – Tax Day, April 15th, the headline declared:
“Paid Tax Return Preparers: In a Limited Study, Preparers Made Significant Errors.”(GAO, 14-467T) The report is nothing short of alarming for tens of millions of Americans who have filed their taxes in recent years. Inaccuracies, inconsistencies misinformation and even incorrect refunds, among other problems pervasively plague paid professional tax preparers. According to the Tax Saving Professionals, which does not file taxes on behalf of clients, but who do provide “tax counsel and strategies,” the ramifications are extensive. The findings of the report don’t just impact on the typical average American taxpayer, but even more so for those in the high income brackets.
An at-a-glance analysis of the 24-page GAO report was conducted by the tax experts at the Tax Saving Professionals, a copy of which can be seen at the following web link:
The full GAO report can also be seen at the following link: https://www.tax-saving-professionals.com/gao-reports-paid-tax-return-preparers-made-significant-errors/
Tax Code Changes are hard to Follow: 5,000 Tax Code Changes Since 2001
If tax professionals at large across the country working for some of the nation’s most well-known tax preparer organizations consistently and frequently make errors in the filing of their clients’ taxes, the challenges for the typical American self-filer are not just daunting, but overwhelming. How complicated is the tax code? Since 2001 Congress has made nearly 5,000 changes to the Tax Code. That’s more than a change per day. Just think, if a paid tax professional preparer often, even frequently, doesn’t get it right, what are the chances of a do-it-yourselfer to accurately fill out and understand the labyrinth of cumbersome forms? Uh, probably not that good and that can have serious bottom line cash flow and business consequences.
In fact, according to Nina E. Olson, the lead voice for the National Taxpayer Advocate, in a report delivered in 2012 to the House Committee on Ways and Means and the Senate Committee on Finance said the following:
“The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns. It obscures comprehension, leaving many taxpayers unaware how their taxes are computed and what rate of tax they pay…”
Useful Tax Strategies for American Small Business Owners who Self File Taxes
Specializing in tax strategies coupled with a uniquely keen understanding of the tax code particularly as it applies to Small-to-Medium-Sized Business Owners, and High Net-Worth Individuals, the Tax Saving Professionals have provided a number of some of the most recent changes that impact significantly on small business owners.
Here are a few potential examples of what a do-it-yourselfer American Business owner may have missed in the filing of their taxes.
- Small Business Owners can use the Small Business Health Care Tax Credit, among a host of other financial benefits, to offset mandatory increased insurance coverage for its employees as proscribed by the Affordable Care Act of 2010.
“The mandatory increased insurance coverage for employees (for small companies) as proscribed by the Affordable Care Act of 2010 initially had many people worried,” says Marcus Rogers, a Tax Attorney with Tax Saving Professionals, “however, there are a number of provision in the new code that can be valuable and useful.” As with many ratified forms of legislation, the Act is very lengthy and complex, encompassing 10 titles and over 2408 pages of what has been described as “entertaining text” from the certified full length version of the bill.
Tax Credits for Small Business Owners
The Act also creates a tax credit for small business owners under Title 1, Subpart B, Part II section 1421 of the Act. Most small employers are unaware of how meaningful the tax credit can be to offset the increased cost of insurance. The IRS has issued an announcement on March 10, 2014, entitled “ IRS Encourages Small Employers to Check Out Small Business Health Care Tax Credit; Helpful Resources, Tax Tips Available on IRS.gov ”
“Entrepreneurs and small business owners are likely to find not only useful information, but surprisingly potentially significant tax saving opportunities and financial benefits they may be eligible to receive,” says Rogers. Below, Rogers points out some further advantages of a close examination of the new code section IRC 45R.
Available Tax Credits & Filing Requirements
- Eligible small business employers with no more than 25 full-time equivalent employees for such tax year will receive a maximum tax credit in the amount of 35% of premiums paid by eligible small business employers for tax years 2010, 2011, 2012, 2013.
- For tax year 2014, the maximum amount will increase to 50% for small business employers. The credit is based on the amount of employer shared premiums paid on behalf of the employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) marketplace.
- On average, small employers that pay at least 50% of the insurance premiums of its employees will be able to take advantage of the credit whether at the maximum or scaled down rates assuming their annual wages do not surpass certain thresholds.
- Under IRC §45R, the credit is a general business credit and thus any unused credit amount can be carried back one year and carried forward 20 years.
- Small tax-exempt employers who are eligible for the credit can have the credit refunded to them in the event they do not have any taxable income.
“With these kinds of savings and overall benefits,” says Rogers, “small business owners should actively explore the opportunities available from these credits and the impact it can have on one’s tax liability.” While there are a surprising number of potentially valuable tax credits and cash-savings opportunities, one of the most important according to Rogers is the fact that many business owners simply are not aware of the fact that the credit can be carried back and/or carried forward.
Take the “Credit”: It’s Not Too Late
Lastly, for those eligible employers whom have not filed to take the credit, it is not too late to still take advantage of the credit. Small business owners should inquire with their CPA’s and/or attorneys to explore the amendment of their business tax returns. For instance, a small business owner who has not claimed the credit but who is eligible should file Form 8941 for the years in question. For example, if the small business owner pays $50,000 a year toward workers health care premiums and qualifies for a 35% tax credit, the small business owner may receive a tax credit of $17,500 for years 2010 thru 2013 for a total savings of $70,000. For tax year 2014, the maximum amount goes up to 50%, so assuming premiums stay constant the tax credit will by $50,000. For the current tax year, if clients have not already done so they should consider extending their tax return to allow them to have time to discuss with their CPA the applicable small business tax credit under IRC section §45R of the Internal Revenue Code as it may unveil significant tax savings.