Nancy modeling at the Beehive In Bloom Fashion Show | photo by Zak Jacobson
It’s not often I am described as either brilliant or insightful — so it’s a banner day when referred to as both.
And what better day than today, the 22nd anniversary of starting my own accounting firm?
To celebrate, I am delighted to share a recent interview with CanvasRebel, an online magazine and podcast that highlights voices of small business owners — in their words, “stories about our business or career that we might share at dinner or over coffee, but that wouldn’t necessarily make it into our memoir at the end of our lives; stories that illustrate the nitty-gritty details of what it takes to be successful day to day, how to build and grow a client base, recruit, train and manage a team or generate a living.”
I agree wholeheartedly with the folks who interviewed me. “There is so much we can learn from each other, and we hope these stories inspire you to pursue your passion and support those who are doing so themselves.”
Their questions were thought-provoking and caused me to truly reflect and think about some of the universal truths that I’ve learned in working with small business owners as their CPA. Questions such as:
What’s the best advice you’ve ever given to a client?
How did you get to where you are today?
What do you think helped you build your reputation within your market?
Do you have any insights you can share related to maintaining high team morale?
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Chase Bank seems to be having issues today… many small business owners have reported seeing duplicate Zelle notices, but it turns out: those aren’t just duplicate notices. Chase is actually taking the money out twice!
From Chase —- We’re sorry that some customers are seeing duplicate transactions and fees on their checking account. We’re working to automatically reverse any duplicates and adjust any related fees. 6/2/2023 11:59:40 AM ET
Chase banner notice as of June 2, 2023
Our professional advice to clients? Let’s just all take a deep breath and hope Chase fixes everything by Monday. Meanwhile and most importantly — make sure anyone who gets a duplicate payment knows that the second one will be reversed soon, and conversely, that any duplicate payments you receive are likely to be pulled back out momentarily.
This will also complicate small business owners’ QuickBooks bank feed this month, with a lot of duplicate transactions, duplicate reversals, fees and fee reversals… let’s wait until the dust settles and then decide how to handle them all. Generally, if you go ahead and accept them to the place where they would normally be categorized, then make sure to accept the reversal to the same category.
Please spread the word to other Chase users.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
I used to find it annoying when a client would forward me an article about a tax deduction or credit, to make sure I would take it on their tax return. But even though I take approximately 70 credit hours of continuing education each year (almost twice the requirement for Illinois CPAs), every once-in-a-while a new tax law falls between the cracks, or I might not realize a given client is suddenly eligible for an old one. So, while 99% of these shares are “old news”, it’s worth avoiding the eye roll and taking a look just in case. Out with the ego, in with the knowledge.
To that end, when you do share something with your tax preparer, I beg you to phrase it in respectful language that recognizes they are experts in their field. Examples: “I’m sure you already know about this but just wanted to play it safe,” or “I read about this new tax law and am constantly amazed at how much y’all have to keep up with; any chance this applies to my situation?”
There are five tax benefits I’ve noticed — in my interactions with colleagues at conferences, in webinar chat, or in our online communities — that seem to keep flying under the radar. Most likely the tax preparer is expecting the bookkeeper or taxpayer to bring it up if one of these situations exists, but they may not know it’s significant, and may forget to note it in the books or tax organizer. So, to make sure we’re all on the same page, here are a few choice tax benefits that are often overlooked.
Credit for Small Employer Retirement Plan Startup Costs
Credit for Small Employer Retirement Plan Startup Costs — SECURE 2.0 gets most of the airtime these days, but back in late 2019, the original version of this law passed, making it easier for small business owners to set up “safe harbor” retirement plans that are less expensive and easier to administer, and made them accessible to a wider range of employees. Although many of these benefits were modified and expanded upon with SECURE 2.0, the new rules didn’t take effect until 2023. But that shouldn’t stop you (or your preparer) from taking a look at the benefits in place in 2022. For starters, Form 8881, Credit for Small Employer Pension Plan Startup Costs provides for a maximum tax credit of up to $500 per year for startup costs, and another $500 per year to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment. This benefit is a win-win for employers and employees, especially when the employee additionally qualifies for the retirement savers’ credit.
Employer Credit for Paid Family and Medical Leave — Effective starting 2018, the Section 45S Employer Credit for Paid Family and Medical Leave is designed to cover up to 25% of the cost to employers of providing paid family and medical leave to their staff. The FMLA credit is claimed on Form 8994, Employer Credit for Paid Family and Medical Leave. To qualify, employers must have a written policy providing all eligible employees access to at least two weeks of paid family and medical leave annually, paid at 50% or more of normal wages (yes, short-term disability policies often count).
Policies must also include leave that covers one or more of the following: – Birth of a child – Adoption or fostering of a child – Care for a spouse or family member with a serious health condition – Employee’s own serious health condition – Spouses and family member of certain active military members
Employers can claim the credit for up to 12 weeks of paid leave benefits. It’s available through 2025 and the IRS has an FAQ on it that’s chock-full of details.
Restaurant Meal 100% Deduction — For 2021 and 2022 only, businesses can deduct the full cost of business-related food and beverages purchased from a restaurant; the limit is usually 50% of the meal, so this can be quite a savings. For our own clients, we’re simply exporting the entire “Meals” category from their financial software and reviewing all payees, sorting out the ones that are not restaurants… yet another benefit for small business owners who heed our cry to “please add payees to all transactions”.
Per the IRS, to qualify for the enhanced deduction: – The business owner or an employee of the business must be present when food or beverages are provided. – Meals must be from restaurants, which includes businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption. – Payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023. – The expense cannot be lavish or extravagant. – Grocery stores, convenience stores and other businesses that mostly sell pre-packaged goods not for immediate consumption, do not qualify as restaurants.
Self-Employed Health Insurance Deduction — Now, this may sound obvious, since almost everyone knows that self-employed people are generally allowed to deduct their health insurance premiums for themselves, their spouses, and their dependents (and in some cases, non-dependent children). Yet we often see this benefit overlooked on tax returns, especially when S-Corp shareholders pay for their insurance through work. There are special and complex rules regarding how this health insurance deduction is claimed, which I suspect is why it is often missed (or sometimes duplicated). It’s important to understand that this is not a business deduction; neither do you have to itemize to take it. The deduction is claimed as a reduction of taxable income, and applies only to income taxes, not to self-employment taxes. It also needs to be subtracted from Section 199A Qualified Business Income before calculating the QBI Deduction, and there are complex issues when it interacts with the Premium Tax Credit (see below), so keep an eye out for these potential issues when claiming this important tax benefit.
Premium Tax Credit — This one is often overlooked on tax returns in more than one direction… often the client forgets to provide Form 1095-A (Marketplace Health Insurance) to their preparer, which shows the advance premium tax credit, and therefore any increase or decrease in the credit based on the current year’s income is missed. How does this happen? Well, the credit is based on the prior tax year’s income, but “reconciled” on the tax return against the current tax year’s income — therefore, if the taxpayer had a good year, they may lose most or all of their credit. By contrast, in more difficult times, they may find out on the return that they’re entitled to more of a credit than they received. Not everyone enrolled on the Marketplace is eligible for a credit, so it’s easy to miss in the long list of tax organizer questions if the client doesn’t know to ask or to submit the form.
Per the IRS: If you benefit from advance payments of the premium tax credit, it is important to report life changes to the Marketplace as they happen throughout the year. Certain changes to your household, income or family size may affect the amount of your premium tax credit. These changes can alter your tax refund, or cause you to owe tax. Reporting these changes promptly will help you get the proper type and amount of financial assistance. For more information, see Claiming the Credit and Reconciling Advance Credit Payments.
To be fair to tax preparers everywhere, there is far more in the Internal Revenue Code (IRC) than any one person could ever know, which is part of why CPAs are required in most states to obtain more continuing education credits than almost any other professional designation. (Though keep in mind — there is no requirement that a tax preparer be a CPA, or even an EA. See here for my guide to finding a qualified tax preparer in your area.) The past five years have seen unprecedented increases in tax law complexity, and quite frankly — it’s hard to keep it all straight. So if you’re concerned your tax preparer is missing something, please approach the matter with respect and deference, and do not judge too harshly if they happen to have missed something. Just be glad you read this article and caught it in time! (And if you didn’t catch it in time, ask them about filing an amendment.)
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
It’s that time again… Tax Day is upon us and millions of taxpayers will need to have their returns extended for various reasons. What does this mean? The AICPA has released a “Tax Extension FAQ” for CPA members to share with their clients.
What does filing an “extension” do?
• An extension is a form filed with the IRS to request additional time to file your federal tax return. This extends the due date for submitting your individual return to October 15. • In some states, filing an extension with the IRS will automatically extend the time to complete a state income tax return. My note: In others, you must file a state extension. In still others, you must make a payment as your extension. • Filing an extension grants you additional time to submit your complete and accurate return, but you still need to estimate whether you will owe any taxes and pay that estimated balance by the original due date. • Extending your return allows you and your CPA more time to prepare your tax return to ensure the filing of an accurate tax return. In many cases, you may still be waiting for additional information (e.g., Schedules K-1, corrected Forms 1099, etc.) to complete your return.
Why does my CPA suggest we extend my tax return?
• If your CPA has recommended that you file an extension, it may be due to many reasons, such as: – The volume of data or complexity of certain transactions (e.g., sale of a rental property) on your return requires additional time. – The amount of time remaining in filing season is limited for the CPA to complete client returns by the due date* due to late-arriving information. – My note: Your small business accounting file needs to be tied out to source documents and all adjustments booked before we will finalize a return, and there may be delays in this process due to a variety of issues. • Many CPAs have a “cutoff” or deadline for clients submitting their tax information so they can plan their workload to ensure all client returns and extensions are completed by the due date. • Your CPA may suggest filing an extension if there are aspects of your return affected by pending guidance or legislation.
Am I more likely to be audited if I extend?
• Extending will NOT increase your likelihood of being audited by the IRS. • It is better to file an extension than to file a return that is incomplete or that you have not had time to carefully review before signing.
What are the primary benefits of extending my tax return?
• It provides for additional time to file returns without penalty when you are waiting for missing information or tax documents (such as corrected Forms 1099). Just remember that an extension provides additional time to file, but not additional time to pay. Penalties may be assessed if sufficient payment is not remitted with the extension. • You may qualify for additional retirement planning opportunities or additional time to fund certain types of retirement plans (e.g., SEP IRA). • It is often less expensive (and easier) to file an extension rather than rushing and possibly needing to amend your return later.
Should I do anything differently if I am filing an extension or “going on extension?”
• No, you still should give your CPA whatever information you have as early as possible or as soon as it becomes available. • Expect to pay any anticipated taxes owed by the due date.* You still need to submit all available tax information to your CPA promptly so they can determine if you will have a balance due or if you can expect a refund. • If you are required to make quarterly estimated tax payments, individual first quarter estimated tax payments are due on the same day as annual taxes. Your CPA may recommend that you pay the balance due for last year and your first quarter estimated tax payment for this year with your extension. • If you are anticipating a large refund, your CPA will likely try to get your extended return completed as soon as possible once all tax information is available. Your CPA may also want to discuss tax planning opportunities with you so that, in future years, you don’t give the IRS an interest-free loan.
My note: I’d like to add that we take filing extensions for our clients very seriously. We collect as much information as we possibly can about the year’s taxable income and deductions, extrapolate based on information from the prior year, and build a complete tax return — filling in estimates where needed. This way, we get as accurate a picture as we can so as to project how much might be owed to the tax agencies. We do our best, although it’s not perfect, and as a result, much more work is involved in putting together an extension than most folks might think.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
There are multiple options for paying personal quarterly estimated taxes. You can: have your tax preparer create vouchers that you then print and mail with a check; prepare your own vouchers for the IRS and IL DoR; or pay online.
Since March 2020, agencies have had so many challenges with paper-mailed checks and vouchers that we are encouraging everyone to make all tax payments online.
The due dates for estimated quarterly taxes are approximately: 1Q: April 15 2Q: June 15 3Q: September 15 4Q: January 15 — however for state taxes, especially for cash-basis filers and those in states with PTE tax, we recommend making the final payment by December 31st.
For the Illinois Department of Revenue (IDOR), go to the MyTax Illinois site. If you already have an account for sales taxes or another reason — do not log in, unless you are making business tax payments. Then click the “> Make an IL-1040, IL-1040-ES, or IL-505-I payment” link (see screenshot above).
Next, follow the instructions for making a quarterly estimated tax payment; it will make you enter your personal information (SSN, etc.) and ask you what kind of tax payment you wish to make.
It may require you to enter your driver’s license information or your AGI from a past tax return to confirm identity and get your IL-PIN.
Then it will take you to a Payment Information page.
You’ll want to select “IL-1040 Estimated Payment” and enter your tax year. Make sure it’s for the correct year and quarter — this is very important. The example below is for the fourth quarter of 2021.
Then, enter your payment information and click the Submit button.
It will require you to enter and confirm your email address before clicking OK.
Make sure to print the confirmation screen, even though they will send you an email receipt — every once-in-a-while IDOR fails to push the request through, and the amount is not debited or recorded. If you have the print-screen, you can prove you attempted to pay it on-time and that the mistake was theirs.
It will also include a confirmation code, the date/time of the request, the reporting period and amount, and bank withdrawal information. You can click “Printable Confirmation” or just print the webpage to pdf.
Please make sure to note how much you paid to each agency and on which dates — and let your tax preparer know this information as well. Securely uploading copies of the final confirmation screen to your tax preparer or bookkeeper is a great practice, so they can easily store the info in your file.
And if you use QuickBooks or another bookkeeping program, please make sure to enter the quarter, year, and “estimated tax” so that you or your bookkeeper or accountant or tax preparer can make sure it’s applied to the correct year, and for the right type of tax.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
There are multiple options for paying personal quarterly estimated taxes. You can: have your tax preparer create vouchers that you then print and mail with a check; prepare your own vouchers and do the same; or pay online.
Since March 2020, the IRS, USPS, and state revenue agencies have had so many challenges with mailed paper checks and vouchers that we strongly encourage everyone to make all tax payments online.
If you want to pay your federal estimated taxes online, the easiest way is to use IRS Direct Pay. Paying online offers confirmation that the payment made it to the agency, reducing the chance of issues down the road, especially if the check is lost in the mail or routed incorrectly in the processing department. It also allows taxpayers to be very clear about what type of tax and tax period are being submitted, again eliminating confusion on the part of the agency and preventing future problems.
Pro Tip: if you have questions about estimated taxes — what they are, whether or not you need to pay them, and how to calculate them — I recommend this great YouTube primer by my colleague, Hannah Smolinski of Clara CFO. It can easily be as much as 20-30% of each freelance check you take home, so get on top of this now… don’t wait until the money’s already been spent.
The due dates for estimated quarterly taxes are approximately: 1Q: April 15 2Q: June 15 3Q: September 15 4Q: January 15 — however for state taxes, especially for cash-basis filers and those in states with PTE tax, we recommend making the final payment by December 31st.
If you are paying online, I recommend making payments one day before the due dates, as sometimes it takes a day for the agencies’ systems to process payments due to overnight automated workflows. The funds are usually pulled from your bank account the same day or one day later, so there is very little wiggle room. This organization will actually send you reminder emails for each payment!
The great news is that you do not need to have an account with the IRS in order to make payments using Direct Pay.
Internal Revenue Service (IRS)
For the IRS, once you get to the Direct Pay site, select the following options (noted in the screen shot below): 1) the reason for the payment; 2) the form you would be mailing in if you weren’t doing this online; and 3) the year to which the payment should apply. For example, for 1st-quarter 2023 personal estimated taxes, you’d select the following:
IRS “Direct Pay” Step 1 of 5.
Pro Tip: you don’t have to wait until the due date for each quarter to make quarterly estimated tax payments! You can pay as early as you like. And if cash flow is a challenge, a great hack is to take the total tax payments required for the year and make monthly or bi-weekly — or even weekly — payments online. (Another trick is to increase tax withholding from your other sources of income, but not everyone has a W-2 job, and not all retirement companies will do that.)
There are many possible reasons for payment — such as extensions, balances due on a filed return, installment payments, amended returns, and so on. The IRS offers a list in their dropdown. For the purposes of this article, we’re focusing on quarterly estimated tax payments.
IRS “Direct Pay” List of Payment Reasons.
It’s extremely important that you select the correct year for payment. The IRS will levy late penalties and interest if you pick the wrong year, and the amount of time and effort that goes into contacting them and getting payments reapplied to the correct year will often cost more for your tax preparer’s time than filing your return in the first place. So keep in mind that the current year is usually the one you want for estimated tax payments, and a prior year is generally for extensions, balances due, installment payments, amended returns, and most other options. Selecting the correct year and type will ensure that these payments show up properly on your transcript.
Once you click the Continue button, you’ll be prompted to confirm the type of form and the period.
IRS Direct Pay Estimated Tax Payment and year confirmation.
At that point the system will ask you to enter a bunch of info to confirm your identity. The basic idea is to provide them name and address data from a prior-year tax return so that… well, so they know it’s really you. Since IRS Direct Pay works without a login, you will need to verify your identity each time you revisit it. Make sure you enter your name and address exactly as they appear on the tax return you are using for verification. If your name or address have changed, try selecting an earlier year for verification and enter the information from that year. This information does not need to be for the same tax year on which you are making your payment. It can be from as far back as 5 to 6 years ago depending on the time of year.
IRS “Direct Pay” Step 2 of 5, part one.IRS “Direct Pay” Step 2 of 5, part two.
Once you enter all this information and hit the “Continue” button, it will take you to a screen to enter the payment information — amount, bank account, and email address for confirmation. If you are having issues with the system accepting your information, double-check that you’re entering your name, SSN, date of birth and address exactly as it was on the tax return for the year you selected. The IRS has a Direct Pay troubleshooting page if you have more questions.
IRS “Direct Pay” Step 3 of 5, part one.IRS “Direct Pay” Step 3 of 5, part two.
Next, you’ll need to agree to the disclosure pop-up.
IRS “Direct Pay” disclosure pop-up.
In the final step, you will need to review all the information you have entered, provide an electronic signature including social security number or ITIN, and check the box to authorize the debit. Click Submit and you are done!
Please make sure to note how much you paid to each agency and on which dates — and let your tax preparer know this information as well. Securely uploading copies of the final confirmation screen to your tax preparer or bookkeeper is a great practice, so they can easily store the info in your file.
And if you use QuickBooks or another bookkeeping program, please make sure to enter the quarter, year, and “estimated tax” so that you or your bookkeeper or accountant or tax preparer can make sure it’s applied to the correct year, and for the right type of tax.
Many self-employed folks get surprised at tax-time with huge balances due, penalties and interest. Don’t let yourself fall into that trap — make regular payments online and taxes will be a breeze next year.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Unless you’re an accountant, you’ve probably never even heard of an IRS account transcript—but it’s the best hack there is for getting an accurate snapshot of your income, deductions, tax payments, tax filings, and account activity records.
Here’s how it works: the IRS receives a copy of every single tax form filed by you – or “on” you (by, say, an employer or brokerage firm). If you’re paralyzed with fear of filing your tax return because you might be missing documents, you can easily find them by accessing your IRS transcript. It’s such a helpful (and free) tool that I urge all of my clients, family and friends to take advantage of the option – and the Taxpayer Advocate Service does, too.
There are five different types of IRS transcripts, but for this hack we’re focusing on three of them: the wage and income transcript, the account transcript, and the prior-year record of account transcript.
“Why Should I Download My IRS Transcript?”
First, it’s important to note that there is more than one type of transcript, and each meets a different need… a different “why should I”. The most important one for filing your taxes is called the “wage and income transcript”:
Can’t find some of your W-2s from working several jobs?
Not sure whether your freelance gig issued a 1099-NEC? Or maybe you lost track of countless different contract work payments?
You’re pretty sure you have an old dividend- or interest-bearing account given to you by your grandparents but can’t ever find the form they mailed?
Do you pay student loan interest, tuition, or mortgage interest and you can’t find the forms because you moved during the year?
The beauty of a wage and income transcript is that every one of those documents sent to you – they’re called “information returns” – is also sent to the IRS, with your social security number as a unique identifier. So by downloading this list of documents from the IRS, you get a summary of everything filed on your behalf.
However, it takes time for the IRS to wade through all these filings and post them to your account. Sometimes they’re not all posted until a month or two after Tax Day. If nothing has posted yet, it will simply say “No record of return filed.”
But if you’re filing taxes for a prior-year or on extension, it’s a total gold mine. Our firm has even helped clients catch up on tax returns from years’ past by recreating their history based on these transcripts. (That said, I recommend downloading it even if you’re filling on time, just to verify that you’re not missing anything in your pile of tax forms.)
The second most-important transcript during tax-filing season is the ”account transcript”. This lists information on payments and credits posted to your account throughout the year, and we actually require our own clients to submit it to us with their tax organizer annually:
And lastly, there’s the “record of account transcript”, which combines a “return transcript” of a prior-year tax return with any activity posted since then.
Do you need to review last year’s return to make sure you’re not forgetting something important this year?
Are you being asked to verify your income when applying for a mortgage or financial aid, SBA loan, social services or checking on a prior-year tax refund?
The best news where downloading any transcript is concerned? All you need is a photo ID, a mobile phone with a camera, an email address, and an Internet connection.
Keep in mind that the IRS will not email you a transcript; you must go online and create or log in to your account and download it. There are email scams out there that entice folks to click on a link or attachment with the promise of an IRS Online transcript – don’t fall prey.
“How Can I Download My IRS Transcript?”
1. From the IRS website, you’ll need to create an ID.me account. (This is the most involved of the steps, but thankfully you only have to do it once; moving forward, you’ll simply sign into the same account each time.) The ID.me website uses facial recognition to confirm your identity, so you’ll need your phone to take a selfie.
If you need help creating your ID.me account, the ID.me Help Center spells out the process very clearly. You can also watch this video or review these written instructions if you want to review the process first.
2. Once your account is created, log in, go to the IRS’s Get Transcript page and click the “Get Transcript Online” button.
3. Select the reason you need a transcript (it’s fine to just select “Other”).
4. Leave the Customer File Number blank and click “Go.” The screen will display all four (or five, if you have non-filing years) transcript options and the available years.
5. Under Wage & Income Transcript, select the tax-filing year.
6. After you select your transcript, like magic, a PDF will pop up in a new tab of your browser with all the information you need. (Or it will say “No record of return filed,” if nothing has posted yet.)
7. Print the file to PDF and save it somewhere safe, along with the rest of your tax season documents.
As explained above, your wage and income transcript will list all forms W-2, 1099, 1098, and 5498 that have been processed by the IRS so far for the tax year in question.
8. Then go back to the open “Get Transcript” tab and click the tax year under Account Transcript, which will list all payments and credits on your account.
9. Lastly, go to the Record of Account Transcript section and click the prior-year link. It will list all account activity for the tax year in question, followed by every single field from your tax return.
(And if you want to get deep into the weeds, NASFAA has an amazing “Tax Transcript Decoder” that compares the fields on a tax return to the fields on a tax return transcript, and Saving To Invest had fun with highlighters when creating a legend for each row on an account transcript.)
Done! Let the tax return preparation begin!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
There were three SBA reporting dates: December 31, 2021; December 31, 2022; and a final report date of April 30, 2023 — which is fast approaching. The RRF eligible expense period, however, allows costs from the very beginning of the pandemic, February 15, 2020, clear through to March 11, 2023. The two year-end reporting dates were intended as just a progress report of what the recipients had spent so far in eligible costs.
The great news for most businesses was that if all the RRF funds were allocated to eligible costs before the first reporting date, no additional reporting was required. If not, then the business needed to come back the following year and report a second time. At this point, most restaurants have (hopefully) already submitted their final report.
However, for those who missed the first two reporting dates; or somehow didn’t expend all the funds before the end of 2022; or simply did not understand how to report properly; or didn’t realize what a wide date range of eligible expenses they could use… there is one shot left at a final report to the SBA, or they risk having to pay back the funds.
This blog post (with a 20-min video walking you through the process) is our suggestion of how to translate the info you already have in your bookkeeping software into a format that will easily conform to the Restaurant Revitalization Award Portal requirements.
Sample email from SBA regarding the initial RRF year-end reporting
Spoiler alert: the process takes more than 5 minutes. It can easily take an hour or more. The actual entering of data into the SBA RRF portal is the part that only takes 5 or so minutes.
Our recommendation is to download the free Restaurant Revitalization Fund Tracker from the American Institute of CPAs (AICPA) website (as with their PPP Forgiveness Calculator, you do have to register for an account, but there’s no charge). However, instead of entering each individual transaction on the form (as it’s designed for you to do), our suggested shortcut is to take the information you already have in your bookkeeping file and enter each category as one line — then subtract all the non-RRF grants and assistance received, so that you’re not double-dipping.
As mentioned earlier, the RRF period runs from February 15, 2020 — the very beginning of the pandemic — to March 11, 2023. So we suggest you run a Profit & Loss for your company for the period of February 15, 2020 all the way through March 11, 2023 (or February 28, 2023 if you’re doing this before March 2023 is reconciled), and use those numbers to report what has been spent so far. Then enter the non-RRF grant funds as negative numbers on the same Expense Tracker tab, so that they net against each other. The result will be the data you submit to the SBA at restaurants.sba.gov once you log in to your portal.
Step 1 – download the AICPA RRF Tracking Tool Step 2 – enter the name of your company in the Summary tab, cell A9 Step 3 – enter the RRF amount in the Expense Tracker tab, cell C6 Step 4 – run your Profit & Loss from 2/15/2020-2/28/2023 (or 3/11/23 if you’re doing this in April 2023) Step 5 – export to Excel and save to your RRF file folder Step 6 – on the Expense Tracker tab, enter summary amounts from the Profit & Loss for Payroll, Rent, Utilities, Food & Beverage, Maintenance, Supplies, Covered Supplier Costs, and Business Operations Expenses
Tip: skip Mortgage Payments, Debt Service, Outdoor Seating Construction, and Depreciation, or ask your accountant for help with these, as they are usually on the Balance Sheet or in the Non-Operating Expense section of the Profit & Loss, and are therefore harder to DIY.
Tip: Business Operations Expenses are all operating expenses that are not already accounted for in one of the other categories.
Step 7 – IMPORTANT: enter all the non-RRF grants and financial assistance as negative amounts on the Expense Tracker tab — this is to prevent any double-dipping Step 8 – go to restaurants.sba.gov and log in Step 9 – enter your name, address, EIN, phone, and email (if this information is not already there) Step 10 – enter the amounts from the Summary tab — Note: you cannot enter more than the total RRF grant, so you may need to reduce one or more of the categories so that you don’t exceed the total. Step 11 – if you have allocated all the RRF funds, certify as such — you will not be required to repeat this progress report next year; if you have not allocated all the RRF funds, you will be able to “Save” but not “Submit”.
You have until March 11, 2023 to allocate all the funds (aka spend them on eligible expenses), and until April 30, 2023 for final reporting. If it turns out you didn’t have enough eligible expenses from 2/15/20-3/11/23 using Profit & Loss Operating Expenses, then take some time to work with your accountant to determine if you have debt service, mortgage payments, capital expenses for outdoor seating, or depreciation that counts toward allowable costs.
In all cases: make sure to subtract all other grant income from expenses so you are not double-dipping!
23-minute video walking you through the whole process in Dec 2021
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The past three years have been challenging in so many ways, to so many people — but as a tax preparer, I can confidently say that the inability for the IRS to provide its usual level of customer service has been among the most impactful. Luckily, recent Congressional funding to make up for years of inadequate budgets, combined with Treasury Secretary Yellen’s direction that IRS priorities should include clearing the backlog of unprocessed tax returns and improving customer service, seem to be making a difference.
Pre-pandemic, the IRS offered all sorts of taxpayer assistance options, but the inability to offer in-person services, as well as the intense strain that government financial relief programs placed on the already-stretched agency, made it impossible to offer even the most basic of support programs. The good news is that some of the Taxpayer Assistance Centers are reopening to the public, one Saturday each month for walk-in help without an appointment.
On March 11, April 8 and May 13, from 9 am to 4 pm, certain IRS Taxpayer Assistance Centers will offer in-person service and assistance to meet taxpayers’ needs. The IRS recommends that you come prepared and bring documents such as photo ID, Social Security cards, IRS notices received, proof of bank account information, and so on. Professional foreign language interpretation will be available through an over-the-phone translation service. For a list of addresses, visit the IRS’s website announcement and then click the plus-sign to the left of your date of choice. Scroll down to your state, and all the addresses of the participating offices will be listed.
The IRS also notes various options for obtaining free tax preparation services locally:
Any individual or family earning $73,000 or less in 2022 can use tax software through IRS Free File at no cost. There are products in English and Spanish.
MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members, and some veterans, with no income limit.
The IRS has also published a series of “Tax Time Guide” news releases designed as a resource to help taxpayers file an accurate tax return. And US News & World Report recently published a list of free and low-cost tax preparation resources. It’s not a magic wand, but after a few rough years, you’re no longer alone when it comes to navigating tax season.
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January 23, 2023 — Per IRS 2023-11, following a successful opening of its systems today, the IRS is now accepting and processing 2022 tax returns; taxpayers have until April 18 to file their taxes this year.
According to Acting Commissioner Doug O’Donnell, taxpayers can count on IRS delivering improved service this filing season. As part of the August passage of the Inflation Reduction Act, the IRS has more than 5,000 new telephone assistors and added more in-person staff to help taxpayers.
Taxpayers who electronically file a tax return with no issues and choose direct deposit should still receive their refund within 21 days of the date they file – similar to previous years. Due to tax law changes such as the expiration of the Advance Child Tax Credit and Recovery Rebate Credit this year to claim pandemic-related stimulus payments, many taxpayers may find their refunds somewhat lower this year.
The State of Illinois also opened its tax season today. In a press release, the IDOR Director, David Harris, highlighted the improved and enhanced MyTax Illinois system.
In addition to being able to file Form IL-1040 for free through MyTax Illinois, individuals may also use the site to make payments, respond to department inquiries, and check the status of their refunds using the Where’s My Refund? link.
MyTaxIllinois also allows taxpayers to look up Illinois-Personal Identification Numbers (IL-PINs), which are eight-digit numbers assigned by the department and used as signatures when e-filing returns. Amounts of any estimated tax payments can also be viewed and (when necessary), amounts reported on Forms 1099-G and 1098-F can also be found on the site.
Back to the IRS… in today’s news release, they also shared their tips for a smooth filing season:
Fastest refunds by e-filing, avoiding paper returns: To avoid refund delays, IRS encourages taxpayers to file their tax return electronically with direct deposit instead of submitting a paper tax return. Taxpayers may use IRS Free File on IRS.gov, other tax software or a trusted tax professional. Members of the armed forces and qualifying veterans can file their federal tax return and up to three state tax returns for free electronically using MilTax, a Department of Defense program.
Avoid delays; file an accurate tax return: Taxpayers should make sure they’re ready to file an accurate and complete tax return. This can help avoid processing delays, extensive refund delays and later IRS notices.
Earned Income Tax Credit or Additional Child Tax Credit refunds: Taxpayers may file their returns beginning Jan. 23, but the IRS cannot issue refunds involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. The law provides the extra time to help the IRS prevent fraudulent refunds. “Where’s My Refund?” on IRS.gov should show an updated status by Feb. 18 for most EITC and ACTC filers. The IRS expects most of these refunds to be available in taxpayer bank accounts or debit cards by Feb. 28 if people chose direct deposit and there are no other issues with their tax return.
Avoid phone delays; online resources best option for help: IRS.gov is the quickest and easiest option for help. IRS assisted phone lines continue to receive a high volume of calls. To avoid delays, check IRS.gov first for refund information and answers to tax questions. Setting up an Online Account on IRS.gov can also help taxpayers get information quickly. IRS Online Account was recently expanded to allow more people to gain access. The Interactive Tax Assistant can also help taxpayers get answers to many tax questions online at any time.
Other free options for help: IRS Free File is available to any person or family who earned $73,000 or less in 2022. For taxpayers who are comfortable completing their own tax forms, Free File Fillable Forms may be a good option. MilTax is a free tax resource available to the military community, and it’s offered through the Department of Defense. Qualified taxpayers can also find free one-on-one tax preparation help nationwide through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.
2021 tax returns still being processed: Taxpayers can check Where’s My Amended Return? to find out the status of their tax year 2021 Form 1040-X and can still file their 2022 tax returns even if their 2021 tax returns haven’t been processed. Visit the IRS Operations page for more information on what to expect.
April 18 tax deadline: This year, the filing deadline is April 18 for most taxpayers, but automatic six-month extensions of time to file are available for anyone for free. See Extension of Time to File Your Tax Return for instructions. Taxpayers should be aware that filing Form 4868 only extends the time to file tax returns. Those who owe taxes should still pay by April 18 to avoid late payment penalties.
Let the filings begin!
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