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Employee Retention Credit: What You Need to Know

Employee Retention Credit (ERC) could help a lot of businesses thrive if used properly. This is a refundable tax credit that appears to be difficult to attain but is far from impossible. ERC was created to encourage employers to keep employees on their payroll under the CARES Act. Eligible employers have immediate access to ERC by reducing employment tax deposits. Employers may even get an advance payment if the tax deposits are insufficient to cover the credit.

Eligible Employers

The qualifications for the Employee Retention Credit are two main attributes:

  1. Fully or partially suspend operation due to orders from government authority. This would limit commerce, travel and/or group meetings due to the pandemic.
  2. Experience a detrimental decline in gross receipts (income).

The IRS considers a significant decline in gross receipts to be less than 80% of the gross receipts from the previous year. For example: Amazon’s gross receipts for 2020 was 152,757, so if the company earned less than 80% in 2021, then that would qualify Jeff Bezos for the Employee Retention Credit.

How much ERC are you qualified for?

As an employer, you can receive 50% of qualified wages that you typically pay in a year. These wages also include qualified health plan expenses. The maximum amount of qualified wages considered is $10,000, and the maximum credit for wages paid to an employee is $5,000.

Qualified wages

Qualified wages are compensation and health plans paid for by the employer to some or all employees. Paychecks, for instance, are compensated wages.

Qualified health plan

Qualified health plans are group plans covered by the employer that are not reflected in the employee’s gross income.

Additional information

Employee Retention Credit is not compatible with Payment Protection Program (PPP) loans. An eligible employer may only utilize one of these programs under the CARES Act.

Employers are still required to withhold federal taxes on qualified wages. ERC does not make an employer exempt from paying taxes.

Should you find yourself in need of tax relief services, contact Optima Tax Relief at 800-536-0734 for a free consultation.

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The Future of Child Tax Credit

Child tax credit has been a reliable source of additional income for families struggling through the pandemic. While there were plans to continue the monthly checks for at least another five years, it seems the program will be coming to an end in about one year.

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Revenue Officers and Small Businesses

Many small business owners are at risk of being assigned a Revenue Officer (RO). If a small business withholds taxes from their employees but fails to hand it over to the IRS, the IRS can assign an RO, garnish bank accounts and wages, seize property and real estate, and even show up at your place of business. Here are some helpful tips for small business owners if they are assigned an RO.

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Optima Wins BBB Torch Award for Ethics

Optima Tax Relief is proud to announce that we have earned our second BBB Torch Award! This award puts the spotlight on businesses with exceptional dedication to integrity and ethical business practices. The Torch Award is just the latest in the series of awards Optima has earned this year, including the Orange County Civic 50, Top Workplaces USA, and several Stevie Awards for best-in-class Consumer Service.

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How to File Business Taxes for an LLC

It’s important to choose how you want your earnings to be taxed because the IRS will automatically treat your business as a partnership. This designation doesn’t fit if you’re a sole proprietor or prefer to file as a corporation. Once you choose your tax rules, you cannot change the designation again for five years, which is why you must choose wisely.

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The Future of Child Tax Credit

Child tax credit has been a reliable source of additional income for families struggling through the pandemic. While there were plans to continue the monthly checks for at least another five years, it seems the program will be coming to an end in about one year.

What is changing and why?

Proposals to extend child tax credit for one year are being discussed by lawmakers. Initially, the benefits were to be extended through 2025, but it’s now one of the programs being cut as the federal government plans for more stimulus checks.

The previous benefit checks lifted 3.5 million kids out of poverty, according to CNBC. With results like that, many democrats are debating to keep the child tax credit for years to come.

Others, however, are criticizing the program’s broad focus. Some proposed changes from opposing views include:

  • Limiting the credit to families earning $60,000
  • Adding a work requirement

Limiting the child tax credit could limit its impact on American households. Those in favor of extending the credit are hoping that Biden will include children with individual taxpayer identification numbers—such as undocumented children. This would help an additional 1 million kids.

Are the child tax credit changes concrete?

Negotiations are ongoing regarding the future of this benefit. Should the enhanced credit end in a year, there will be benefit options available for those who need it. Prior to the American Rescue Plan boosting benefits, the child tax credit was $2,000 per child under the age of 17. The credit was also partially refundable up to $1,400. There are also programs such as Supplemental Nutrition Assistance Program benefits, which have been enhanced to help low-income families.

Whether the child tax credit enhancement will continue permanently, for another five years, or end in just over a year from now is still being decided. Though it seems the fate of the program will fall into a middle ground to provide a more focused poverty program.

Utilizing child tax credit and other programs

As of now, you are still able to utilize the program and other credit tax programs that you may be eligible for. The child tax credit isn’t gone yet, so it’s best to use it while you still can.

Should you find yourself with a tax liability and in need of additional help with resolving back taxes, the Fresh Start Program may be the best option for you. At Optima Tax Relief, we help clients resolve their tax debt through Fresh Start and help them stay on track after through our protection plan.

Give us a call at 800-536-0734 to speak with one of our tax associates today.

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Revenue Officers and Small Businesses

Many small business owners are at risk of being assigned a Revenue Officer (RO). If a small business withholds taxes from their employees but fails to hand it over to the IRS, the IRS can assign an RO, garnish bank accounts and wages, seize property and real estate, and even show up at your place of business. CEO David King and In-house Expert & Enrolled Agent Rosie Steele provide helpful tips on what small business owners should do if they are assigned an RO.

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

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What You Should Know About Unemployment Taxes

Unemployment benefits saved a lot of American households this past year. Furloughs and lay-offs were at an all-time high due to the pandemic, leaving many without a lot of options.

However, unemployment comes with taxes that few people understand, or know about. Whether you’re considering applying for unemployment, or have already started utilizing these benefits, you should know how this affects your taxes.

Unemployment Taxes

Social Security and Medicare taxes are not something you have to pay for while receiving unemployment benefits. The taxes that are required for you to pay are federal and state taxes (depending on the jurisdiction). Some states wave income taxes for unemployment—states such as California and New Jersey for example. If your state’s benefits program is not tax-exempt like Florida and Nevada, you should opt to withhold taxes from each check.

Withholding Unemployment Taxes

Withholding is presented as an option when completing weekly or bi-weekly check-ins for your unemployment benefits. By withholding, you’re paying taxes upfront, rather than letting them accumulate throughout the year. If you choose not to withhold, then you’ll be expected to pay back the IRS when you file your return.

The flat rate for federal tax withheld is 10% of the benefits. This amount certainly adds up to a sizeable sum by the end of the year if it’s not paid weekly. If the taxes go unpaid, you could be at risk of liability.

To avoid a liability, you can send quarterly estimated tax payments to the IRS, fill out a W-4V with your unemployment office, or if you started working again you may qualify for EITC— Earned Income Tax Credit. Your EITC amount could reduce or cover the amount you owe in unemployment taxes.

What to do if you have a liability

If you’re expecting to owe more than you can pay at the time that you file your return, there are options available to you. You can contact the IRS to set up an installment plan, which allows you to make monthly payments until the balance is paid in full.

You can also contact Optima today for a free consultation, should you find yourself owing a large sum to the IRS. Give us a call at 800-536-0734 to speak with one of our tax associates now!

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Vehicle Mileage Tax

Senate recently passed President Joe Biden’s infrastructure bill, which includes a pilot program for vehicle mileage tax. This tax would charge drivers based on how many miles they drive in a year. The vehicle mileage fee will likely bring in revenue for transportation and future infrastructure projects.

Why is vehicle mileage tax is being enforced?

The goal of the mileage tax is to “test the feasibility of a road usage fee,” according to the infrastructure package. The bill goes on to say, “to conduct public education and outreach to increase public awareness regarding the need for user-based alternative revenue mechanisms for surface transportation programs.”  In short, the tax will be used to raise money and perform outreach regarding transportation options.

When are you expected to pay vehicle mileage tax?

This tax may or may not be implemented, so you don’t have to worry just yet. During a pilot program, volunteers from all 50 states will test out the taxing system by reporting their miles. Driver and passenger miles will be tracked through data apps and GPS. This pilot program could take a while to be completed before a final decision is made.

Will a vehicle mileage tax replace gas tax?

It is uncertain now as to whether President Biden will implement mileage tax in addition to, or in place of gas tax.

Advantages and disadvantages

While drivers could be taxed based on how much they drive, rather than paying more for gas, the drivers may be concerned with privacy. Sharing your GPS data with the government can raise some red flags for some Americans, as well as prove to be a difficult feat to accomplish. There is also the possibility of rural drivers paying more because they drive further than urban and suburban drivers.

More information

As additional information is gathered on the infrastructure bill, we will share with our readers and clients. For now, it seems that there is a lot of uncertainty around whether vehicle mileage taxes will be taken into action in the near future.

For tax relief services and questions, call Optima at 800-536-0734 for a no-obligation consultation today.

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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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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 new agencies. Here’s what you need to know:

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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.

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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.

Read More

What is the Vehicle Mileage Tax Program?

The Senate recently passed President Joe Biden’s infrastructure bill, which includes a pilot program for vehicle mileage tax. This tax would charge drivers based on how many miles they drive in a year. The vehicle mileage fee will likely bring in revenue for transportation and future infrastructure projects.

Read More

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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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