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Payment Service App Taxes

Since 2009, apps such as Venmo have been evolving into common payment methods for businesses and individuals. Now, peer-to-peer payment apps are gaining the government’s attention regarding unreported income. To remain compliant with the IRS, there are some things to consider if you utilize these apps for business.

Report your payment app income

Sending money to friends and family isn’t exactly what the IRS is looking for. However, if you’re a business that accepts payment through Paypal, Venmo, or the likes, you are responsible for reporting your income. P2P platforms are expected to report business transactions receiving over $20,000 in gross payment volume and over 200 separate payments. The platform will send you a copy of Form 1099-K, which is also sent to the IRS. Even if you don’t receive the form, you are still required to report taxable income.

Does your transaction raise any flags?

Generally, small transactions aren’t on the IRS radar. Splitting the bill at dinner, for instance, is not a taxable transaction. The IRS is looking for potential noncompliant cases to crack down on unreported income.

Businesses that report less income, but have large transaction records reported by P2P apps, may be at risk of being audited.

What to do if you are found noncompliant

Owing back taxes to the IRS can be a scary time for any business owner. There are options available to help your business get back into compliance and avoid future mistakes with tax returns. At Optima, we amend tax returns and help our clients stay on track with our Optima Protection Plan. You can learn more about our process for resolving tax debt here.

Contacting Optima

Contact us at 800-536-0734 for a no-obligation consultation today. Optima Tax Relief aids individuals and businesses struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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How to Deal with a Revenue Officer

Optima in-house Revenue Officer expert and Enrolled Agent Rosie Steele returns to The Tax Show to continue the RO discussion with CEO David King. You may have been assigned one, or you might be expecting to hear from one if you owe a large sum to the IRS. What is the role of an RO, and how much do they affect your tax case? Rosie and David will tell you everything you need to know about dealing with a Revenue Officer.

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OC Civic 50 Honor Roll

SANTA ANA, CALIF. (PRWEB) SEPTEMBER 30, 2021

Optima Tax Relief has been named an honoree of The Civic 50 Orange County by OneOC and Points of Light, the world’s largest organization dedicated to volunteer service. The award recognizes Optima Tax Relief as one of the most community-minded companies in Orange County, California determined by an independently administered and scored survey. The Civic 50 Orange County initiative, modeled after Points of Light’s national program, provides a standard for superior corporate citizenship, and showcases how companies can use their time, skills, and resources to drive social impact in their company and communities.

The Civic 50 Orange County honorees were officially recognized at the OneOC Civic 50 Orange County Virtual Reception on September 28th, 2021.

“Our company has always been committed to investing in our community, both in and out of the office,” Christine Bui, chief customer officer, said. “Instilling awareness and establishing an efficient path to a charitable lifestyle in our employees is not only rewarding, but necessary; especially during the pandemic.”

Bui refers to the Optima employee benefits package—which includes Volunteer Time Off to make giving back during business hours fiscally possible for staff. With 20 hours a year to devote to local nonprofits, community engagement continues to soar as the company grows.

“We are so proud to be recognized as one of the most community-minded companies in OC for the fourth year in a row,” CEO David King said. “It was truly remarkable to witness the way our team was able to pivot, and match the increasing need for assistance in our community as a result of the pandemic.”

“OneOC is honored to work in partnership with Points of Light to celebrate the most community-minded companies in Orange County, “said Jessi Midstokke, community and corporate development director. Our mission at OneOC is to accelerate nonprofit success and we strongly believe that our corporate community is key to accomplishing this. Our collaboration strengthens not only our mission but enhances the longevity and sustainability of our community.”

The Civic 50 Orange County survey is administered by True Impact, a company specializing in helping organizations maximize and measure their social and business value and consists of quantitative and multiple-choice questions that inform scoring process.

For more information about The Civic 50 Orange County and this year’s honorees, visit https://oneoc.org/get-involved/community-events/the-civic-50-oc-2021/

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About Optima Tax Relief
Optima Tax Relief is the nation’s leading tax resolution firm providing assistance to individuals and businesses struggling with unmanageable IRS and state tax debts. Optima’s commitment to delivering unparalleled service and results has transformed the tax resolution industry and earned the company numerous honors, including the Torch Award for Ethics from the Better Business Bureau of San Diego, Orange and Imperial Counties, and Glassdoor’s Best Places to Work. Offering full-service tax resolution and employing over 600 professionals, Optima has resolved over a billion dollars in tax debts for their clients, helping their clients achieve a better financial future by making their tax issues a thing of the past.

About OneOC
OneOC is an Orange County based nonprofit organization with the mission of accelerating nonprofit success. We are committed to making nonprofits in Orange County as efficient and effective as they are passionate about their missions. Additionally, OneOC serves as a Management Services Organization, providing solutions and support services to nonprofits and companies, helping them to make greater impact and engage with the community. We proudly build bridges between the public and private sectors to make Orange County a better place for all.

About Points of Light
Points of Light is a global nonprofit organization that inspires, equips, and mobilizes millions of people to take action that changes the world. We envision a world in which every individual discovers the power to make a difference, creating healthy communities in vibrant, participatory societies. Through affiliates in 200 cities across 37 countries, and in partnership with thousands of nonprofits and corporations, Points of Light engages 5 million volunteers in 14 million hours of service each year. We bring the power of people to bear where it’s needed most. For more information, go to pointsoflight.org.

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IRS Signs Three New Collection Agencies

The IRS recently signed contracts with three private-sector collection agencies, taking effect Thursday, Sept. 23, 2021. Taxpayers that are behind on payments toward their debts may be contacted by one of the following agencies:

  • CBE Group, Inc., PO Box 2217, Waterloo, Iowa, 50704; (800) 910-5837
  • Coast Professional, Inc., PO Box 526, Albion, New York, 14411; (888) 928-0510
  • ConServe, PO Box 307, Fairport, New York, 14450; (844) 853-4875

What to expect from a private collection agency

Should you find that you owe back taxes to the IRS, you will receive notice prior to your account being transferred to a collection agency. A letter will arrive by mail and a representative will contact you regarding your account transfer. The rep and letter should state the agency name, contact information, and include a copy of Publication 4518.

The PCA (private collection agency) assigned to your account will also send a letter of its own. This letter will be a confirmation of the account transfer and identify the tax amount owed to assure their legitimacy.

How private collection agencies work

Your assigned PCA should identify themselves as contractors collecting taxes on behalf of the IRS upon contacting you. Collection representatives must adhere to the provisions of the Fair Debt Collection Practices Act, and provide the same respectful service expected of the IRS (see Taxpayer Bill of Rights). Private agencies are not authorized to take enforcement actions against taxpayers.

Discussing payment options

While payments should never be made to an agency other than the IRS, your assigned PCA is authorized to discuss payment options with you, including setting up payment agreements. When making a payment, be sure that checks are only payable to the United States Treasury.

Additional information about private collection agencies

For more information about private debt collection, click here. Ready to speak with a representative about resolving your tax liability? Optima’s team of tax professionals are here to help! Contact us at 800-536-0734 for a no-obligation consultation today. Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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What is an IRS Revenue Officer?

Revenue Officers deal with the most advanced tax collection cases that the IRS has on file. If you owe a large sum of money to the IRS, you could potentially have a Revenue Officer assigned to you. Optima CEO David King and in-house Revenue Officer expert and Enrolled Agent, Rosie Steele, provide helpful tips on what individuals can do if they have been assigned a Revenue Officer.

Got an IRS Notice? Get a FREE Risk Review with our Optima® TAX APP with Notice Analyzer

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IRS issues guidance on Taxability of Dependent Care Assistance Programs

The IRS has issued guidance on the taxability of dependent care tax assistance programs for 2021 and 2022. In the guidance, it was clarified that any amounts that were attributable to carryovers or an extended period for incurring claims would typically be non-taxable events. In addition, under the American Rescue Plan Act, the new guidance has mandated a one-year increase in the exclusion for employer-provided dependent care benefits from $5,000 to $10,500 for the 2021 tax year.

Due to the ongoing pandemic in 2020 and 2021, individuals were unable to use the money that they had previously set aside in their dependent care assistance programs. Under these plans, an employer typically allows employees to set aside a certain amount of pre-tax wages in order to pay for any dependent care expenses they may have.

In most cases, carryovers of unused dependent care assistance program amounts are not allowed. However, because of legislation related to coronavirus such as the Taxpayer Certainty and the Disaster Tax Relief Act of 2020, employers are allowed to change their plans and can now permit the carryover of unused dependent care assistance program amounts to plan years ending in 2021 and 2022.

Notice 2021-26 states that dependent care benefits would have been excluded from income if used during taxable year 2020 (or 2021, if applicable). These benefits will remain excludible from gross income and are not considered wages of the employee for 2021 and 2022.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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Tips on how to manage your Small Business

When it comes to filing a business-related tax, small business owners know that it can be extremely time-consuming and very complicated.  It can be especially difficult for owners who do not have a strong understanding of the federal, state, and local taxes required to file as well as knowing what type of taxes you will need to include on your return such as income, employment, excise, and sales.

It is critical for business owners to file their taxes in order to run their business and remain compliant with the IRS. Here are few ways a small business owner can manage their taxes.

Hire an Accountant

For the most part, small business owners will hire an accountant to make sure all of their tax filing is accurate and to also pay and keep track of all of their tax payments. Hiring an accountant can help reduce the amount of time a business owner spends on taxes and bookkeeping. An accountant’s services can range from making estimated tax payments, filing taxes and asset depreciation. Owners should specifically search out small business accountants who are well seasoned in their role and have had success working with current or previous small businesses.

Understand how much taxes you will owe and how to pay them

One of the first conversations you have with your accountant should be about your tax liability and how to determine how much you will owe. One thing that needs to be considered is the type of business structure an owner has; this will determine the type of federal income tax that a business will be required to file. Owners will also need to understand that the number of assets such as stocks, equipment, or property will also impact their businesse’s overall tax liability.

Avoid common mistakes

Businesses should take preventative measures in order to avoid common mistakes that many small business owners run into. For example, owners should always keep track of when their estimated taxes are due to avoid missing a payment and having to pay additional penalties to the IRS. Small business owners should also keep detailed and accurate records to help make their tax filing process much more seamless. Finally, business owners need to be prepared for the unexpected costs that come with having a business. Owners should keep extra money on the side just in case they have to cover any unexpected costs. 

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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IRS Audits: Tips for Staying on the IRS’s Good Side

The IRS has the authority to audit any tax return. Optima CEO David King and Lead Tax Attorney Philip Hwang explain what an audit is and help taxpayers understand what they can do to stay on the right side of the IRS. (One important tip: The IRS sends audit notices through the U.S. Postal Service. “Audit notices” coming to you over the phone or email can safely be considered a scam.)

Confused or scared by an IRS notice? Download the Optima®TAX APP and easily understand the severity of your tax situation.

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New Tax Plan could raise Taxes by $213,000 next year on wealthy Americans

As a result of President Joe Biden’s tax plan, the top 1% could see their taxes increased by more than $213,000. This could mean that households that earn $800,000 or more could see their after-tax income decline by about 11% according to the Urban-Brookings Tax Policy Center’s analysis.

The proposed plan would increase taxes on the ultra-wealthy Americans and corporations in order to pay for an expansive infrastructure plan and add more features to the social safety net that would largely benefit low- and middle-income families.

Americans that earn at least $3.6 million would be required to pay an additional $1.6 million which would make their income fall about 17%, according to the Tax Policy Center.

Biden’s plan would increase the top marginal income-tax rate to 39.6% from the current 37%. The plan would also tax the appreciation of unsold stock and other assets at death. Previously these assets were able to pass to many heirs tax-free.

The plan would additionally extend the recent temporary increases to the child tax credit, the child and dependent care credit, and the earned income tax credit. These benefits are largely to assist the low and middle-income households.

The plan would give households earning $26,000 or less an average tax cut of $600 next year which would increase their after-tax income by about 4%. Middle earners that make between $52,000 to $93,000 would receive a $300 tax cut, or 0.5% of after-tax income.

This new initiative is an attempt to help low to middle-income earners that have kids and need the additional tax breaks to stay financially afloat.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

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Received a Math Notice from the IRS? Here’s what to do.

The IRS sent out more than 5 million math error notices to individuals, many of them having to do with the economic impact payment issued in 2020 and 2021. Optima CEO David King and Lead Tax Attorney Philip Hwang help explain what this notice means and provide guidance on what to do if one is received in the mail.

Got an IRS Notice? Get a FREE Risk Review with our Optima® TAX APP with Notice Analyzer

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