Padgett San Mateo

The ability to write off large parts of asset purchases in the current year is often referred to as Section 179 Election. To qualify for the election, the property is usually tangible property. This means real estate and intangibles don't qualify. Some computer software available to the general public may qualify. The annual deduction limit is $1,040,000 for tax years beginning in 2020, and subject to a phaseout rule. You can make the election for all or part of the costs of an unlimited number of assets as long as the total cost covered by the election doesn't exceed the dollar limit for the year as modified by the phaseout rule. The amount of your deduction is limited to current year taxable income. Any unused deductions related to this item can be carried forward to the next tax year. To find out if this makes sense for your business, please contact our office to discuss your situation.

The type of entity you have selected for your business will determine how you pay yourself and how it is reported on your income tax return. Businesses in the simplest form are sole proprietors. As a sole proprietor you can write yourself a check, which is a nondeductible expense. At the end of the year, you will be taxed on the income of your business and need to also pay self-employment tax. If you have formed a corporation, you may be required to pay yourself through payroll, file quarterly payroll tax returns, and issue yourself a W2 at year end. The wages you have paid yourself in a corporation become deductible for the entity. If you have questions, feel free to contact my office for a free consult.

No, you do not need QuickBooks specifically, but you will need an accounting system for your business. First, the IRS requires you to maintain books and records to support the income and deductions in your tax return. If you are ever selected for an audit you will be glad you setup an accounting system from the start. Second, accounting systems provide you information to make data driven business decisions. If increasing your profitability is important to you, having accounting reports will be needed to make business decisions.

The short answer is no, but there are a couple of reasons you may want to start making estimated payments. If you do not have enough income tax withholding made throughout the year, you may be subject to underpayment penalties and interest. In addition to costing you more on tax day, in penalties and interest, you could be looking at a very large lump sum payment. To help avoid excessive expenses and even out your cash flows; schedule an appointment with us for tax consultation. We can provide an estimated tax liability and let you know if estimated payments will appropriate for you this year.

The IRS issues 9 out of 10 refunds within 21 days. If you have not received your money within three weeks you should start with the IRS self-service tool, "Where's My Refund?" Your refund status should available 24 hours after being e-filed, or 6 weeks if filed on paper. Go to www.irs.gov/refunds to check the status of your refund. Before you go, make sure you have the following items available: Social Security Number, your filing status, and your exact refund amount.

The San Mateo office of Padgett Business Services is owned by Chris DeLong.