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​Hoods Tax &
Accounting Blog


​​​THE INFORMATION IN THIS BLOG IS INTENDED TO PROVIDE GENERALIZED INFORMATION DESIGNED FOR A BROAD SEGMENT OF THE PUBLIC; IT IS NOT PERSONALIZED TAX, INVESTMENT, LEGAL OR OTHER BUSINESS AND PROFESSIONAL ADVICE. YOU SHOULD ALWAYS SEEK THE ASSISTANCE OF A PROFESSIONAL WHO KNOWS YOUR PARTICULAR SITUATION FOR ADVICE ON YOUR TAXES, YOUR INVESTMENTS, THE LAW OR ANY OTHER BUSINESS AND PROFESSIONAL MATTERS THAT AFFECT YOU AND/OR YOUR BUSINESS. ​

End of the Year Tax Preparation (Part Two!)

12/24/2020

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In part two of this blog, we are going to be finishing up our recommendations on how to prepare for your end of the year tax prep. Our gift to you is to suggest that you get it done now so that when tax season is here in a blink, you'll be ready for it no matter what! 

Hello Goose Creek and to all of our readers! As we are now sitting in the last few days of 2020, and we hope that this blog reaches each of you and helps you prepare for the coming tax season. We have always believed at Hoods that being prepared way ahead of time can not only save you huge amounts of stress and worry, but it can also potentially save you huge amounts of money. This year has been difficult, we've touched on it in almost every blog of 2020. This pandemic has been a devastating blow in more ways than one, and our finances have taken some of the biggest hits and blows. While there is still so much uncertainty about what is to come with the future of our finances, what is in our power now is to control what we do know and what we do have. 

Being prepared can help make any transition or event that may or may not come from the government easier to deal with and easier to move forward with. Who knows what financial help we might receive between now at April 15th or what might even happen between now and April 15th. What we do know is that there will still be tax day and that we have the power in our own hands to organize our tax documents from this current year and get ready to face 2021 head-on. This season might not be as jolly or bright as the years past, we understand. However, we are here to make it as holly and jolly as possible. If you have any questions, concerns, or need help finishing out this year or starting off strong in 2021, please never hesitate to reach out. We believe in our community and what to help and support each of you as best we can, let us do our job for you! 

What is left of 2020 is still ticking down, so let's hop back into part two of this blog. We will be continuing and wrapping up with our tips, suggestions, and ideas on how to wrap up your finances and taxes this year, and get ready for the upcoming tax season! 

HELLO, 2021!
Now that you've read part one of this blog and you have a few ideas on how to prepare for the end of this current year, let's focus on how to prepare for the beginning of this new year. Remember, one of the first things we will always recommend in these situations is to work with a tax advisor or a tax preparation company. Of course, we would recommend working with us, but we understand if you work with another company currently. We've said it before, but please note that tax law does change every year. With how uniquely challenging this year has been, there are bound to be some very new and unique things we will be facing with our 2020 taxes. Working with a company like ours will help ensure that all of these new compliances are followed and that nothing is missed. This will help you avoid any tax penalties, avoid underpaying your taxes, will help avoid overpaying your taxes, and will help get your refund much faster! 
  • Don't begin your filing process until you've received all of your 1099s or W2s. Don't be quiet if a client or your employers are taking their time getting you your tax papers. Make sure to reach out and mention it to them once it's getting a little late in the year. If you haven't received anything by the end of February, it's time to start making phone calls! 
  • When you sit down to file your taxes, make sure you have all of your 2019 tax documents organized and ready to use. Make sure you have all of the documents that you will need and will be used to file for 2020 organized and within reach. This will help the process go faster and will be much less of a headache for you. 
  • Make sure to be prepared for and aware of tax scams and fraud that will begin to pop up starting January 1st!! We've already seen our fair share of scams this year involving our stimulus checks and promising to provide the vaccine early as long as you provide very personal and vital information about yourself, most of the time about your bank account. Please do your research about what scams and frauds are looking like right now, how to spot them, and how to protect yourself from them. Also, if you have loved ones who are unfamiliar with these scams, please make sure you help keep them aware of these possibilities and teach them about what scams are and what they can do. 
  • Decide who's going to prepare your taxes this year as quickly as possible. Decide if it is going to be a tax professional like us here at Hoods or an online option filled out by you. Make the choice now to save money and not miss out on working with a tax pro. The closer you get to tax season, the higher their rates will be. Also, take the time to familiarize yourself with the programs you're going to use and understand how much you will be paying to use them. 
  • Please do not ignore the IRS. If you owe late fees, back taxes, or penalties, please take care of them. Go one step farther and make sure to prepare your taxes on time, if not early, to avoid these issues again. 
  • Make sure your salary is correct, that all of your deductions from your paycheck are correct, and that you've been paid the proper amount throughout the year. This will determine a lot in your taxes. 
  • Consider turning your IRA into a Roth IRA, which will help you save money over time. With a ROTH IRA, withdraws are not looped into your income and you won't have to take out RMPs once you turn 70 and a half. 


Just to make sure that we didn't overwhelm you with either part of this blog, we listed only the top things and tasks you need to be thinking about and preparing for now for both your end of the year tax preparation and the tax prep you should be starting 2021 off with. Don't worry, there will be more to come over the next few months and as we inch closer and closer to tax day 2021. We hope that both of these checklists help prepare you to close this year out strongly and to start 2021 out focused and prepared. If you need help to make this upcoming tax season the most stress-free of them all, never hesitate to reach out! 

Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. As our last blog of 2020, we want to thank all of you for your support, your business, and for letting us be apart of this wonderful community. We will continue to work hard for the people of Goose Creek and our whole community. From our family to yours, we hope you had a wonderful holiday and have a fantastic New Year! We will see you soon! 

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End of the Year Tax Preparation (Part One!)

12/18/2020

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While the holidays are on the minds of so many of us, the end of this fiscal year and getting ready for the upcoming tax season needs to be just as important right now. Don't lose your holiday joy, but add this awareness to your to-do list before and after we ring in the new year! 

Hello, Goose Creek! Can you believe that we're almost at the end of this fiscal and taxable year? 2020 has seemed to drag on and pass by in a very strange flash. It has been a difficult year for our financials with a cut-off tax date of July 15th, a stimulus check, working from home, being furloughed, losing jobs, and starting all over again. While you might not have checked all of those boxes, we're sure you checked some of them. While the holidays are already difficult for so many people and their fiances, 2020 might be even more difficult. We also need to keep in mind that tax season, regardless of where we all are right now, is still going to be a lot sooner than you might think. The end of the year might seem like it's a long way off, but only a few weeks between us and the New Year remain on our calendars. Once January arrives, we'll blink and April 15th will be here in no time. With the strain of the holidays, 2020's toll, and an ending fiscal year, and another one starting soon, we wanted to give you a like holiday cheer with this blog. In this two-part blog, we will be sharing some tips and suggestions on how to prepare for the end of the year and the beginning of the year when it comes to doing your taxes, properly and professionally getting them done, and how to save as much money as possible. 

Goodbye, 2020! 
  • Please remember that tax planning and making moves to reduce what you'll be paying next year is unique and different for everyone. You need to find what works for you. 
  • Right now, one of our biggest suggestions is to get all of your tax paperwork collected now. This year came with its own brand of unique things that have changed and affected our financial standings. You might have filed for unemployment, lost your job, gained a new job, didn't receive your tax returns until late summer since tax season ended on July 15th, and we've all been given a stimulus check. For a lot of us, all of these things were new. If not that, the entire timeline of getting your taxes completed and refunds received were way off. Even these small, or for some, huge changes can throw off your organization and preparedness for the upcoming tax season. Avoid any headaches when dealing with what's left of 2020, stay prepared, and stay organized. 
  • Right now is the perfect time to make choices and moves to help cut what you owe on your next tax return, and you have just enough time to tie up these last few decisions to make tax paying a little less painful next year. 
  • Look into ways to make those end of the year last-minute tax deductions. Lower your tax bill by giving a little more, all while giving back to your community, helping your company, and more. A great way to add to your deductions is by giving to charity. Make sure, no matter how much you donate, that you keep all of your paperwork and receipts when doing so. You can make your donation count even more when you donate property or stocks instead of cash. According to TurboTax, if you've owned what you're donating for a year or more, you can deduct what the property value is on the day you give the gifts, and you can "avoid paying capital gains tax on the built-up appreciation". 
  • Make donations now to your HSA account and your 401(K). You can contribute to your HSA up to tax day of next year, but you only have until December 31st of this year to contribute to your 401(K). These donations will decrease your taxable income. Plus it's a great investment into yourself. 
  • If you've had a very difficult year financially, and you need to dip into your retirement savings to help you get by and make it through, make sure to do so by the end of the year. Thanks to the CARES Act, according to US News, you can take up to $100,000 out of your retirement savings and not pay the penalties for doing so as long as you take it before Jan 1st. You will also have three years to pay off your withdraw. 
  • Make sure to plan and start saving if you haven't already for what you'll be owning and paying for your taxes in 2020. 
  • Save all documents for deductible items. 
  • Are you a small business owner or are you self employed? You can save a ton of money now by purchasing goods and services for your company. If you are working from home, please make sure to double and triple check all of the things you and are not allowed to write off. For example; some of you, you'll be able to claim your home office if you strictly use it for work. 
  • Make time to meet with us or your tax advisor and dig into your 2020 taxes early to see if they can find any deductions or to cut back this year or other ways to cut down your taxes in the upcoming year. Our advice? When they give you a suggestion, take it!! 

There is a lot to do before the end of the year, and we hope these tips and suggestions have gotten you geared up and ready to get started. While it is so easy to just sit back and relax this time of year, we encourage you to get ahead of the game and end this year out strong. We hope you enjoyed the first part of this blog, and we look forward to bringing the second half to you soon. Until now and then, if you have any questions, please don't hesitate to reach out to us! Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

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Saving a Penny, Sharing a Turkey

11/25/2020

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​While we all want to open our arms and our wallets to our loved ones and a big turkey dinner, 2020 might not be the best time to do that. While this might be a hard holiday pill to swallow, it's all going to be okay.

Thanksgiving is in the air, and we know that many of our Goose Creek friends and customers are getting excited to gather with their loved ones to celebrate. While everything is still very up in the air and uncertain, we hope that when choosing to gather with your loved ones this year that you choose to do so safely and with your loved ones in mind. 2020 is the year of smaller Thanksgivings, outdoor gatherings, gatherings with bigger smiles and fewer hugs, and sharing a meal over zoom and FaceTime. This might be a different holiday season for so many reasons, and we are here to support and offer our comfort and condolences. It will look much different in our homes this year too, so we sympathize and understand how many of you are feeling right now.

While the Thanksgiving and Christmas holidays might be different when it comes to how far we can and cannot travel and how many of our loved ones we will be seeing, many of us might be tempted to make it look and feel the same. This is a quick route towards spending way more than is needed right now or ultimately what you actually want to do. Remember, Christmas is just a few short weeks after Thanksgiving, so make sure to spread out all of your holiday budgets wisely. With all of these ideas in mind, we were inspired to write this week's blog. We wanted to share a few tips and suggestions on how to save money through the 2020 holiday season, and what that can mean for you and your loved ones.

TRAVEL BILLS
Many of us won't be traveling for the holidays this year. Instead, we will be staying put and creating new traditions with our bubbles, our close friends, the relatives we live closest to, or just with our nuclear family members. While this is still an incredible way to celebrate the holidays, it can be difficult not to see the whole family or all of your friends during this time of year. The silver lining of all of this? You can save hundreds of dollars by not spending it on plane tickets, hotel rooms, and other travel expenses. You can save money not driving those long distances, save money not having to put a lot of work into your car to make those long drives, and you can also save a little peace of mind not having to worry about driving in the snow or ice when many of us haven't done that in years. Instead, make time to plan Zoom Calls, Facetime Calls, and group phone calls. Save this unused travel money to help pay for the shipping on all of the Christmas presents you have your eyes on for your loved ones, save it for when you can travel to see your family again, or save it to help out with those surprise extra bills that might appear at the end of the year. Don't forget, once we hit January 1, 2021, tax day will be here faster than you might think. Maybe saving a few dollars here and there can help with paying your taxes as well.

TO BLACK FRIDAY OR NO?
Black Friday has already started for a lot of our favorite big box stores with in-store deals, discounts, and online deals. While the big Black Friday shopping might not happen as it has in the past, that doesn't mean that it's going to stop or slow down online Black Friday or Cyber Monday sales. We've mentioned this in previous blogs, but as we all reach for our credit cards to buy everything we come across in our Black Friday shopping sprees and going with our "treat yourself" mentality to make these difficult holidays feel a little bit better, maybe step on the brakes. Trying to avoid these big shopping sprees right now can be a huge benefit to you and your bank account. If you're still planning on shopping, set a spending limit and a budget for yourself. This includes if you are planning to do your holiday shopping on Black Friday or Cyber Monday. Pick who you are shopping for, how much you're going to spend on each person, and stick with it. We know a big Christmas for your loved ones can be a knee jerk reaction to a difficult year, but be financially smart about it. Outside of budgeting your cash flow, make sure that these plans include putting a spending limit on your credit cards. You can come up with every excuse to use your credit cards when your Christmas budget has been depleted, but try and go easy with the plastic. Can you imagine the gift it would be to start 2021 financially stable with little to no outstanding balance on your credit cards? We also recommend that if you are planning to shop big on thanksgiving, try and shop small. Invest in local small businesses, local artists, or creators on websites like Etsy or Redbubble for all of your shopping needs. These are the people that need your Black Friday money more than Walmart or Target. If you're investing in local artists and small businesses, this is an investment in your local community and local economy.

TURKEY TIME
We know that Thanksgiving comes with this beautiful picture of a giant turkey with as many sides and desserts surrounding it that can fit on the table. When having a smaller 2020 Thanksgiving, why put that pressure on your family, yourself, your refrigerator, or your wallet? There is nothing in the rule book that says you have to get a huge 20-pound turkey for the holiday. There are smaller birds available, and the option of only getting half a turkey or just a fantastic cut of a turkey breast is out there too and at a much lower price than your standard turkey. This can help save a ton of money on your initial Thanksgiving grocery bill, and it can also help with your leftover situation. Not everyone is on board with eating Thanksgiving leftovers for days on end. So why buy a ton of food that's just going to go to waste? Also, there is no rule saying that you have to eat turkey for Thanksgiving. If you want to try a different protein, go totally vegetarian or vegan, or just have your favorite fast food to celebrate the day, that's okay too. However, if you end up with a big turkey and a large number of leftovers, it can help save you money on the following week's grocery bill following Turkey day. As you plan your turkey day menu, plan a menu for the week to follow that can reuse as many leftovers as possible. The key is to pick a wide variety of recipes that doesn't make you feel like you're just eating turkey for a week straight.

Also, save on the drinks. Many people who enjoy adult beverages during the holidays might go get some wine or beer for the day. Instead of buying multiple bottles of wine or cases of beer, choose a cocktail or punch to share. If you're going to be preparing a traditional meal, use Costco or Sam's Club to help save money. Also, keep an eye on online deals and coups. Don't forget, if you are hosting a small gathering, a potluck Thanksgiving is a perfect way for everyone invited to save money!

SIMPLE AND CHIC
While the Griswald's would disagree with us, keeping your decorations for Thanksgiving and Christmas on the simpler side can help you save money too. It's tempting because right now every store you walk into is already bursting with Christmas decorations. They might be calling out to you to redo all of your decorations this year, but stick with what you already have. Believe us, this will be a huge money saver and can help reduce your stress and anxiety about decorating the perfect house and home for your in-laws to see this year. Take that pressure off, you're staying safe and saving money by decorating with what you already have!

A LITTLE MORE, A LITTLE LESS
While many of us are still having a hard time adjusting to the fact that Thanksgiving will look different this year, and dealing with being away from our loved ones, we will still have food on our tables. Regardless of it being a big turkey dinner or a pizza, there will be something there. Take some of the extra money you're going to be saving by following these tips and donate to those in need.

PLANNING FOR WHATS NEXT
We know that Turkey Day and Christmas might be what has your full attention is focused on right now. What about the day AFTER Thanksgiving? Just like the day after Halloween and Valentine's day, a lot of Thanksgiving food items will be significantly marked down. Buy the non-perishable items that are on sale and save them for Christmas dinner or help lighten the load in your grocery bills over the next couple of weeks between Thanksgiving and Christmas. While everyone is participating in this year's unique and socially distanced black Friday events, head to the grocery store instead and save big for the next few weeks and beyond.

The great thing about Thanksgiving can be the goals you set for yourself financially, and being able to reach them without stress. This can be your reason for the season and your reason to celebrate without breaking the bank. Enjoy the little things this year, and be ready to financially step into 2021. Remember, if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!

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The Top Ten Best and Worst Things to Spend Your Tax Return On

5/1/2020

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It's tempting to use your tax return to buy something fun and exciting. It's also such a relief when those funds show up in your bank account. But, in a world that is very unsure and uneasy, it might be time to think practically when it comes to your tax return this year! 

Hello Goose Creek! How are you? We hope you and your family are doing well, and we hope you know we miss you! Know that through everything we are here for you, and if there is anything we can do to help you, please don't hesitate to reach out to us! It was a much different April than any of us expected or could have imagined. Tax day came and went without much attention. For the first time since 1955, when April 15th officially became tax day, we didn't have to pay our taxes on that day. It was also the first time since 1955 that tax day was moved, this time to July 15th. It was very strange for us, of course. But, we know that for many families in Goose Creek, this might have been a huge relief! Did this help you and your family? If you still haven't paid your taxes, you do have time to do so. But, we do recommend that you do so as quickly as you can. This way you can receive your tax return quicker and possibly your stimulus check too if you haven't already! 

Regardless, for every accounting service in Goose Creek and tax preparation in Goose Creek, this was a very strange April. Thankfully there are still plenty of great things to look forward to on the horizon. One of those great things being the appearance of our tax returns in our bank accounts or mailboxes. For many families, the appearance of this money comes with a lot of relief, bills being paid, and sometimes something very fun for the whole family. But, as we mentioned before, this April and the whole of 2020 has created quite a different dynamic for our everyday lives. As much as we love surprising the family with a new TV, A new car, or a family vacation, now might be the time to look at your tax return in ways you never have before. Being the best tax preparation service in Goose Creek, we wanted to share some of the best and worst ways you can spend your tax return. By doing so, we hope to help bring awareness to what is important right now, and what isn't. Please note, we are a family company. We love our town and want each of you to rise to the best of your abilities. We respect the freedom of your decisions but want to help you through these difficult times as best we can. 

WHAT NOT TO SPEND YOUR RETURN ON! 
  • The stock market has been tumultuous these past few months. Some view this as a great sign, while others are avoiding it like the plague. The market as a whole has been in a very unique and interesting flux. Some are calling this a buyers market and pressing people to buy now. Your tax return might be burning a hole in your pocket right now while you're sitting at home, but your tax return is not what you should be using to make a quick and hasty investment. Always make sure you research the investments you want to make and how to properly do so. Making a poor investment can lead to losing your whole tax return, and then some. 
  • The decision to not spend your tax return and just let it sit in your bank account might seem like a wise decision right now. But let us convince you otherwise. Just letting it sit there can tempt you to spend it on all kinds of fun or unneeded items, helping it disappear before you know it. Delegate where your tax return is the most useful to your budget and your needs right now. Put some in your savings, get ahead on your bills, bulk up your emergency fund, and plan out your grocery trips based on this money. This way you're using your refund where you need it right now, and don't wind up in an even more difficult position than before. 
  • One of the most obvious things not to spend your return on right now, and one that we've been hinting at, is a big splurge or big-ticket item. Think about it, most of these items or trips can't be enjoyed or used right now. A new car, unless it is needed, can add on a very expensive insurance policy you can't afford right now. Also, tax returns, just like a normal paycheck, don't last forever. As much as differing bills and payments have been helping right now, those bills aren't going away forever. Neither are your grocery bills, utilities, expenses, and gas expenses. A splurge can be very exciting for a short period, but it doesn't last forever. 
  • We are online more and more every day for work, school, and play. Some of us are looking for a way to supplement lost income, get a new job, or ease our boredom. The world might have shut down, but there are still so many get rich quick scams out there waiting to pounce on you and your tax return, promising to double your money overnight. If it sounds too good to be true, it is. Avoid buying into these companies regularly, but avoid them now even more in particular. 
  • Expanding on the idea of those 'get rich quick' ideas, avoid gambling online or other pay to play games online. It might be a fun and exciting thing to do while we're all at home, but it's just as easy to lose it all from the comfort of your living room as it would be in Las Vegas. Also, avoid spending your return on scratch-off lotto tickets and the state lottery in general. 

WHAT TO SPEND YOUR RETURN ON!
  • Buy groceries and other essential items. Hoarding these items is not helpful or necessary right now. But, buying a larger quantity of groceries and important household items than you normally would can help limit the number of trips you're making outside of your home. This can help keep you and your family members healthier and safer. 
  • Catch up on your bills and try and pay ahead. Like we mentioned above, these funds won't last forever, while your bills will. Help yourself by getting ahead as much as you can, and stay prepared. 
  • Like we have mentioned in our past few blogs, keeping up with paying into your retirement fund and leaving it alone right now is very important. If you haven't been able to do so because of the change in your financial situation, take the opportunity to do so now! 
  • Everything is so unknown right now, the job market is very unsteady, and hurricane season is right around the corner. Using this money to bulk up your emergency fund can help you make it through these unknown times now, and once hurricane season shows it's ugly face. 
  • Now is a great time to invest in yourself and your home. Thanks to online education, you can still sign up to finally finish your degree or start the new degree you've been dreaming of. We also offer Quickbooks training and services, which is a great investment for your personal and small business finances. Thanks to online shopping, you can still order those appliances you've been needing to replace or those materials you need to finish up all of your home makeover projects. It is also the perfect time to support local companies! Hire small companies to do all those repairs you've wanted that are just beyond your skill sets. Support local businesses of all kinds if you can, you're investing in your community and helping it stay strong and united. 

Money can be a difficult and tricky topic, but it doesn't have to be. We hope these tips help you and your family through this difficult time. Remember if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon! 


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New Beginnings for Tax Day

3/30/2020

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The face of tax day has been changed by the state of the world. But what does this all mean for us as individuals? How is this going to affect how each of us is expected to pay our taxes?  

Tax day truly means something very different than it has in all of its history now than ever before. This year, as of recent legislation, tax day has been moved from April 15th to July 15th due to the COVID-19 pandemic. Even in very normal situations, this is a very stressful time for everyone. During this unknown and uncharted time, it has become very stressful at a whole new level for businesses, closed businesses, employees who have been temporarily laid off, and for everyone not knowing what to do next. The government and the IRS hoped that this 90-day extension would ease the stress of not having funds on hand to pay for your taxes by their original due date, due to the loss of your job or paycheck, all in hopes that by July 15th everything will have returned to normal. It's is a very optimistic hope and wish that it is, and all of us are hoping that by July all of this will have blow over, but who knows what could happen.

If you have already filed your taxes, we hope that your tax return is safely in your hands and has helped you through this difficult time. If you're planning to file and pay your taxes before the new July 15th deadline, the IRS is still processing paperwork and is ready to get your tax return back to you. But, if you still need more time, then you're in luck. Unlike a traditional extension, this is allowing filing and payment to be both sent in by July 15th. But, the IRS understands that you might be needing your return more than ever this year. This new deferment is just giving you a chance to take more time to file if you need it. All of us here at Hoods are ready to support our Goose Creek family through these new changes and to help guild, instruct and file for you. But, with all of the changes, do you know what this deferment means and who it applies to? Is this going to help you individually or not?

As of March 20th, the IRS made the official statement that federal income tax filing was moved to its new date of July 15th. Taxpayers are also able to defer federal income tax payments without any penalties and interest, no matter how much is owed. Thankfully this new deferment applies to all taxpayers. This means individuals, those who pay self-employment taxes, corporations, businesses, and trusts and estates. Everyone can benefit from these changes without any penalty. There is also limited paperwork that comes with this change. Unlike a traditional deferment, you do not need to let the IRS know that you're filing later. If you haven't filed by April 15th, the assumption will be made that you are going to be using the new due date as your official tax day. If you do decide to follow the new deferment, and July 15th is still not enough time, you can still ask for an additional extension. This is where the new paperwork comes in. If you need more time as an individual, you will need to file Form 4868, and businesses will need to file Form 7004. Outside of that, no new paperwork is needed!

Even with this extra relief, the IRS still recommends that you file as soon as possible, as the future is still very unknown. To help your financial situation and to get your return back to you as quickly as possible, they are taking no longer than 21 days to get your paperwork filed and refund to you. As we mentioned in past blogs, filing closer to the due date can cause your return to take up to 30 days if not longer to get back to you. This is no longer the case. The IRS is working harder and faster to help out where ever they can.

With the daily changes happening in our country, and the IRS being a vital key to keeping our government afloat in the days ahead, there could be a few bumps along the way with your taxes. Please be patient with them. We also recommend filing online if you were planning to do otherwise. All IRS workers have moved to remote work, and will no longer be accepting appointments in person. Hoods is still here to help you, but we suggest for all business to be done over the phone, through email, and other digital forms of communication for safety sake.

Tax time has never been more unique or shrouded with so many unknowns. During this time, if you have any questions or concerns, we continue to be your tax specialist in Goose Creek. We will get through this together, successfully get your taxes filed, and happily get your tax return back to you and your family. Continue to stay safe and stay at home!
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The Battle Between the 401(K) and the Pension

2/13/2020

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Tax season is here, and for many of our clients, as you grow professionally and through your financial years, you come to discover more and more things finding their way onto your tax documents that you have to pay for. One of the most expensive things that you will depend on later in life is your retirement fund. Are you prepared to retire and are you aware of what you may or may not have to pay taxes on once you do? 

February is here, and we are one day closer into tax season here in Goose Creek. We are here to provide the best tax preparation services to all of our current and new clients, so please don't hesitate to contact us this tax season! We are in full swing, and are prepared for what is going to be a very busy but very exciting tax season! With that being said, we are here to offer our clients at many stages of their lives help with their taxes. For those filing for the first time, for those filing for the first time as a married couple, and those filing for the first time after retiring. Just as you change through the stages of your life, how you pay your taxes will also change along with you. 

Planning for your retirement is one of the most important things you can start doing once you start working in the professional world. You'll be paying for your retirement your whole professional career, and it will most likely be one of the most expensive things you'll ever pay for. There are no loans, no short cuts, so you will have to save and work for it. As overwhelming and difficult as this can be at times, the sooner you can start, the better your years of retirement will be. In honor of that, we will be dedicating this two-part blog to the pros and cons of having a 401(k) versus a Pension, and what that will mean come tax season once you are thinking of retiring and once you do retire! 

The days of working for a company for 40 plus years and retiring with an amazing pension, health benefits, and security are becoming things of the past. Today, the 401(k) is dominating the world of the retirement plan. A 401(k) is a plan that was specifically designed to help you save for retirement and was created almost by accident! The 401(k) that we know today started its journey in 1978 with the creation of the Revenue Act passed by Congress that year. This Act was added to the Internal Revenue Code, Section 401(k), and it allowed employees to avoid paying taxes on deferred compensation. in 1980, a gentleman by the name of Ted Benna, benefits consultant of the Johnson Companies, was trying to come up with a way to have a more tax-friendly option for companies to provide retirement programs based on this new 401(k) idea. He came up with the incredible idea that allowed employees to save pre-taxed money in a retirement plan that the employer would then match and put back into the plan as well. This was the birth of the modern-day 401(K) plan, and The Johnson Companies were one of the first to provide these new benefits to their employees. 

In the very beginning, the original section of the 401(K) in the Internal Revenue Code, did not allow stand-alone accounts to be created and to be funded by salary reductions. Mr. Benna pushed the IRS to change this idea, and they followed through. Those employees who now decided to partake in a 401(k) could now use their deferred income to make investments and not be taxed on any gains. By 1982, 401(k)s were being offered by thousands of companies, and they are commonplace for most companies today. 

There are many benefits 401(k) programs give to business owners and employers, and many of these benefits are why pensions are becoming an endangered species. 
  • The amount that the employer contributes to its employees 401(k) is tax-deductible for the employer or company. 
  • There is huge flexibility available in plan options that an employer and company can offer to their employees. 
  • Offering a strong retirement plan like a 401(k) can be very attractive to outstanding employees and can keep them at a company for many years. This can prevent constant turn over and save a company money on training new employees. 

The benefits a 401(k) can offer to the employee are also very positive. 
  • You can carry your 401(k) from one company to the next (with some exceptions). 
  • It allows small contributions over time to grow into large sums for retirement. 
  • The amount of money in your 401(k) is not taxed until you begin taking money out of the account. 
  • The amount of money put into your 401(k) from the company you work for can lower the amount of taxes on your income. 
  • It is very easy to pay into a 401(k) 
  • Traditional 401(k) plans are tax-deferred 

Right away in just these two short lists (they could be much longer, this is just an overview), you can see how a 401(k) can be such a relief on your taxes now, and it won't be an issue on your taxes or even something you have to worry about until you start pulling money out of it. But even though there are some wonderful benefits to a 401(k) there are still some cons. 
  • Depending on if you have a larger income when you retire compared to when you were paying into your 401(k) you could be put into a different tax bracket and will have to pay a large fee in taxes once you begin taking money out of the account. 
  • You might have fewer investment options and you might run into high account fees. 
  • If you do withdraw from your 401(k) before you are 59, you will be faced with a penalty charge. This happens most often when someone runs into some kind of financial hardship, and they need the money. Even in these desperate circumstances, the account owner will be facing a 10% penalty. 

Don't be overwhelmed with these cons. When deciding on your future, especially your financial future that could affect your taxes, you need to be aware of both sides of the coin. It is good to remember that what you pay into your 401(k) can help reduce the liability rate on your taxes every year and can help with tax withholding during every one of your pay periods.

You have a lot on your plate right now when it comes to tax season, so for those who aren't taking money out of their 401(k) this year, it's one less thing you have to worry about when filing. For those who are just starting to use their 401(k) plan as retirement or in a situation based on need, this tax season might be a little different for you. But don't worry, we are here to help. We hope this information has enlightened you a little more on 401(k) plans, and one of the many options available to you for retirement. In our next blog, we will be exploring pension's and what kind of taxes you may or may not be facing with those. Until then, we are Hood's Tax and Accounting Service, here to help you with all of your tax needs in Goose Creek, SC! 

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The Truth about Year-End Taxes

1/2/2020

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There are many loose ends you need to tie up at the end of any year for your personal taxes and those of your small business. You also need to be staying on top of the many changes coming your way in 2020 taxes. You might have more work ahead of you, so it's better to be prepared now for what is quickly heading your way. 

You've made it through the holidays and all the celebrations that go along with them, both in your job and with your families. As tax season approaches for the 2019 fiscal year, you need to start thinking about a few new changes that you'll be seeing sooner rather than later, along with tying up a few loose ends. 
  • Do yourself a favor and don't put yourself in a bad position scrambling to figure out what has changed in health care and new tax legislation. Use this blog and other resources to stay up to date with this information. Try and update yourself at least once a quarter, and keep your eyes and ears open to what might be heading your way. The information is out there for you, don't avoid it.  
  • If you aren't prepared or wanting to stay on top of this information, hire and work with someone who is. 
  • You must figure out what year-end tax reporting requirements have changed between the last tax season to now. 
  • You need to figure out what new tax compliance challenges 2020 is going to bring. There are also a handful of changes that you will be seeing come this tax season as well. 


In this blog, we won't be discussing all of the changes that are heading your way. We will just be touching on some of the most important. You will see changes in the W-4 form in 2020, in State withholding, Federal W-2s and State Deadlines, ACA Compliance from the State, and in Gig Economy and worker classification. 

Changes with W-4 Forms
In 2020 you're going to see changes with the IRS W-4 tax form. They have changed the form and given it a bit of a facelift. The changes include calculations for income tax withholding. There is a new form that has been added for the head of the household as well. The new form eliminates withholding allowance. As an employee, you will just adjust your withholdings by putting your tax information on your W-4 forms. This will include non-wage income, full-year deductions, and any child or any other dependent tax credits. If you own a small business or are getting a new job in the year to come, filling out tax papers will be much different than previous years. Since you probably don't know all of your tax information off the top of your head, and you probably won't be carrying around copies of last year's tax refund, take more time filling out the paperwork. If you are a business owner, allow your employee to take it home. Ask your new employer for a private space to call home or your tax professional to fill out all the information. If you are happy with your current withholdings at your job now, you will not need to fill out the w-4 form again. If you need to change anything for your future taxes, you will have to fill out the new paperwork. 

State Withholdings 
The new W-4 paperwork could affect state tax withholdings. Many states are still trying to figure out how to work with these new changes, so you or your small business won't be the only one trying to follow along. You will need to prepare for these changes by the end of next year, as their decisions on how to deal with these new changes will also affect how you file your taxes. The main issue many states are dealing with right now is the fact that there is no longer a box for allowances on the federal tax forms. Different states are picking different ways to handle the situation. One option that might become the norm is taking the focus away from income tax and shifting to pay-roll taxes. This might not be a very fun solution for many of us, but be prepared. When it's time to do taxes and paperwork for 2020, make sure to pay attention to the choices your state has made to deal with the W-4 changes. 

Federal W2s and State Deadlines
In 2020 the tax rate will remain the same for employees and employers, at 6.2%. Medicare tax rates will also stay the same as they were in 2019. The IRS has now moved up the W-2 submission deadline to January 31st. They have done this to continue the fight against tax fraud and identity theft. Most states will now require electronic W-2 filing from your employers. Many states have also increased the penalties for late filings of W-2 forms. Be very aware of these due dates. These fees can add up very quickly and become very costly. 

The good news for you, if you're feeling overwhelmed for next year's tax season, is that we are here to help you keep up to date on these changes. We are here to help you understand them, help guide you through them, and prepare for them. These charges vary from small differences to ones that will affect you on a state and federal level. Just like any tax law changes, the new ones we will be seeing in 2020 will evolve into others. So don't get too comfortable. Stay connected, educated, and ready for the unexpected. 


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A Gift for Everyone this Season

12/24/2019

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This season is meant for celebrating, and no matter how you celebrate it can be overshadowed by the fear that tax season is getting closer. But fear not, we have the perfect gift you can give yourself to make this tax year and the years to come pain-free with more celebration in store for you! 

The holidays are here, and with a rush of mistletoe and delicious treats, in comes the last fiscal quarter of 2019. We've made it, and that in itself is a reason to celebrate. While we sit here enjoying a mug of holiday cheer, we can't help but start to think of tax season. We are about to put this year to sleep and tuck it in to the IRS come April. But come January 21st, the IRS will start taking e-file returns, which means getting your tax return back even sooner! There is one more step you can go about doing to make your tax holiday season even better. That is to gift yourself with hiring a Tax Professional! 

Perhaps you've done your taxes for the last handful of years. That's amazing, ambitious, and very time-consuming. We understand your hesitation in hiring someone to help you with your taxes. It does cost money. But in the spirit of giving, we want to pass along five of the top reasons why you should consider hiring a tax professional to do your 2019 taxes! 

  • Going about doing your taxes alone is hard. You have to stay up to date on tax code and low, and how it affects you personally depending on your profession. Guess what? A tax professional is paid to do that for a living! They know the ins and outs of this daunting task so you don't have to. 
  • The goal of getting your taxes done as soon as possible is to get as much back in your bank account or keeping as much in your bank account as possible. A tax professional is paid to find any missing deductions or tax credits your eye might not see, notice, or understand. This could automatically mean paying less or getting more back in return. Think about it this way: This could even mean covering the cost, if not more, that you are dedicating to your tax professional. 
  • It will save you time! Your time is worth money, spending it with your loved ones, and doing the things you love. It is estimated that filing out, gathering receipts, and filing a tax return can take up to 20 hours or more. That's half your work week! Do you want to give up all of that in free time or lose hours at work? I would say not! Let the professionals take care of this for you, so you can have more time for what matters! 
  • If this is your first time working with a tax professional, they might save you more many than just on this year's tax return. They can look at and review your previous tax returns to see if any deductions or tax credits were missed there too. If so, they can have these issues amended, meaning more money for you! 
  • One of the scariest and most difficult things to come across with your taxes is an audit. The stress of going through and meticulously proving your write-offs, correcting mistakes, and other missing pieces is horrible. This can be financially taxing too because it could prevent your tax return from arriving when you expected it or cause you to pay more in missing tax money you didn't pay correctly. Then, of course, what about the questions you can't answer that the IRS is imposing on you? A tax professional can not only prevent an audit with meticulously filed paperwork, but they are also there with answers to even questions the IRS might have for you! 

In five easy steps, this can be the best holiday yet. Fill your mug up with holiday cheer and settle into the last few weeks of the holiday. Don't fear tax season. 2020 is going to be an excellent year, just you wait! From all of us at Hoods, we wish you and yours a wonderful holiday and a happy New Year! 
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