Diva’s Two Cents – Couple of tidbits – Inflation Reduction Act
The Inflation Reduction Act signed by President Joe Biden on Aug. 16 counts on increased revenue from IRS enforcement. The IRS has been allocated $80 billion dollars which means more audits in 2026 and 2027. 87 million new IRS employees will be in place to ensure compliance.
“These changes will not be immediate,” IRS Commissioner Chuck Rettig wrote in a memo to IRS employees. “It’s a 10-year plan, and it will take time to put these provisions into place.” But for small business owners here are a few tidbits for you to consider to ensure compliance.
* File your tax returns …if you haven’t filed in April hopefully you have filed an extension but make sure you file by the October 15, 2022 deadline. Failing to file will put you on the radar screen for sure.
*. File your 1099’s timely and truly understand the difference between an independent contractor and an employee of your firm.
There are facts that according to the IRS (www.irs.gov) are factors to consider such as: “ Does the company control or have the right to control what the worker does and how the worker does his or her job? Are the business aspects of the worker’s job controlled by the payer? Are there written contracts or employee-type benefits (i.e. pension plan, insurance, vacation pay, etc.)? and Will the relationship continue, and is the work performed a key aspect of the business?”(www.irs.gov)
Don’t despair because you should take the deductions you are entitled to, just make sure you have documentation to support them.
For example: Take the mileage deduction, in 2020 it was .575 a mile and in 2021 it was $ .56 a mile and for 2022 from Jan to June changi from July through December to .625 cents. This is a huge deduction for small business owners that have to use their automobiles to run business related errands.
Important to make sure you capture your mileage accurately by using an app such as Mile IQ that you can download for free.
In summary, with inflation on the rise and the IRS enhanced workforce it is ever so important as business owners to stay compliant and good stewards of your money.
That my friends is Diva’s Two Cents.
Diva R Mejias
Complete Tax & Business Solutions
402-850-8830
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