Legal Questions to Ask When Hiring A Tax Attorney

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Taxes in general are stressful, and even the most well-intentioned among us can make mistakes, and, when it comes to the IRS, even a small mistake can come back to haunt you. The tax law experts in our network of dedicated, experienced law firms through our Small Business Legal Protection Subscription Plans can help you deal with all sorts of tax issues when it comes to running your small business, including navigating or avoiding audits or securing business assets. It's important to choose a tax attorney who can help you negotiate the ever-changing landscape of tax laws. Here are a few areas where you will want to ask questions of any potential tax attorney:

Credentials

The first question you should ask a potential tax attorney is if they are admitted to the state bar and what their credentials are. Make sure to ask for proof of those credentials: your lawyer should be licensed to practice law in your state, and, at the minimum, have a Master of Law degree. Less qualified lawyers may have lower fees, but they may end up costing you more in the long run. You can ask for referrals from small business groups, and check online reviews, as well. Attorneys who are registered with organizations will be included on public lists, such as the Tax Law Association.

Specialization

Tax attorneys tend to specialize in different areas of tax law, so make sure to choose an attorney who specializes in the area where you need help. Tax attorneys are experts at the intersection of accounting and law, so make sure to pick a lawyer uniquely suited for your needs. Ask if they have handled cases like yours.

Costs

Budgets vary, and you will want to make sure that the legal fees are within yours. Tax attorneys can be more expensive than other accounting or tax professionals, so the fees charged may be a deciding factor for you. Ask for an estimate so that you can budget and avoid any billing problems. Ask whether the lawyer you're considering charges by the hour or a flat rate, and get that agreement in writing. The more complex the case, the fees may be worth the cost. It's sad, but many people who need a lawyer the most are least able to afford it, and that's where our Legal Subscription Plans come in! You, too, can get legal help for your small business starting at just $49 per month.

If Things Don't Go Your Way

You will probably still have to pay legal fees even if you lose your case, but some attorneys work on a contingency fee arrangement, which means that your lawyer's fees will come out of any settlement you might receive as a percentage. If you're just looking to negotiate a payment plan with the IRS or CRA, it is unlikely that you will find a lawyer willing to work on a contingency fee arrangement, as most lawyers only take on these kinds of cases if there is the possibility of a large settlement and a good chance of the case working in their client's favor.

Most attorneys offer a free consultation so that you can ask questions and make sure that the attorney is a good fit for you and your case. With our Small Business Legal Protection Plans, you can get the legal help you need for tax issues for just one low, monthly fee. Plus, you will be able to get advice and ask questions of your attorney at any time without any additional cost. Have your lawyer look over contracts and agreements, help you compile an employee handbook, make phone calls and write letters on your behalf, and much more, all for one monthly subscription fee, starting at just $49. Learn more about our Small Business Legal Protection Plans or sign up your small business today!

2022 Small Business Tax Deduction Checklist

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Small business owners are already busy people, but that workload goes way up at tax time. Making sure that you're getting every tax deduction available to you is important, and tax laws and regulations are changing all the time. If you need some help navigating the new tax laws, our network of qualified, dedicated small business tax attorneys through our Small Business Legal Protection Plans can be a life saver that's within budget. Read on for a 2022 checklist for small business taxes:

Reducing Taxable Income

Tax deductions for businesses must be "ordinary and necessary," according to the IRS, which means that these are things that are common expenses for your industry and needed for you to do business. These include:

Health Care Tax Credits for Small Businesses

If you provide health insurance for fewer than 25 employees, you can deduct 50% of the costs of premiums, and smaller employers get a bigger credit than larger businesses.

Rent

You can deduct the entire cost of your rent for business use so long as you are not receiving title or equity to the property.

Depreciation

Equipment that you use day-to-day to run your business will lose value over its lifespan, and you can deduct that depreciation. You may need assistance from a CPA or tax lawyer to determine the rate of depreciation.

Insurance

Business insurance is 100% deductible.

Home Office

If you have a space in your home where you conduct business, you may be able to take a tax deduction for this square footage.

Transportation

Some professions require travel, and this includes driving time in your local area. The standard federal deduction for mileage is .58 cents per mile. You can also itemize these costs, and that requires keeping, recording, and tracking receipts of fuel, mileage (both personal and business related, if you're using your own vehicle), maintenance, parking, tolls, and more.

Advertising

Any costs related to advertising to attract business can be deducted, including marketing efforts for gaining or retaining clients. You cannot deduct the costs of lobbying.

Education

If you have paid for employee training or training for yourself, you can deduct those costs.

Office Supplies

Provided that you do not take inventory of office supplies at the beginning and end of the year, and that you do not keep records of when office supplies were used, and that taking the deduction doesn't make a huge change to your business income, you can deduct office supplies, such as printer inks and papers, writing utensils, software, cleaning supplies, and more.

Travel

Leaving town probably means additional costs, and these are calculated separately on your taxes. Fares for planes, trains, subways, rental cars, ride sharing services, taxis, hotels, food, and more are tax deductible so long as they are "ordinary and necessary," but you'll need to keep all your receipts.

Utilities

So long as you can prove that they were for business use, you can deduct the costs of your electricity, gas, heating, telephone, and more.

Costs of Startups

Some of the costs of starting your business may be tax deductible. There are additional deductions if you start an employee retirement plan.

Salaries and Benefits

You can deduct the costs of employee salaries, commissions, and bonuses.

Charitable Donations

Any cash donation made to a qualified organization can be deducted.

Business Meals

You can deduct 50% of the costs of business-related meals, both in and out of town. Employee parties and the costs involved can be deducted at 100%. Meeting or entertaining clients where you don't discuss business cannot be deducted.

Bad Debt

Any outstanding customer debt you have been unable to collect can be deducted.

Retirement

You can deduct the cost of your own retirement plan if it is qualified.

Taxes are complicated and complex, particularly when you run a small business. You have enough to worry about without adding the stress of a possible audit to it. Our Small Business Legal Protection Plans give you access to our network of qualified, dedicated small business attorneys who specialize in tax services for small businesses. Our experienced lawyers can make sure your tax documents are correct and help you avoid audits and other nasty tax surprises. Learn more about the benefits of our Small Business Legal Protection Subscription Plans or Sign Up Your Small Business Today!

It's Tax Time Again: Are You Ready?

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The 2022 tax season in the United States officially began at the end of January, but the IRS is saying that this year's taxes will be challenging due to a variety of factors. If you need assistance with new tax laws or IRS audits, our network of dedicated, experienced attorneys will be able to help you 24 hours a day, 7 days per week through our Legal Protection Plans for Individuals and Families. Learn more about the benefits of our subscription plans and read on for a some basic 2022 tax tips:

Will there be COVID-related tax delays?

The IRS is warning that COVID-19 and funding issues are going to make this tax season a challenge for the agency. The IRS is recommending that you file as early in the tax season as you can and to avoid submitting paper returns if at all possible. You can also speed up your refund by choosing to have your refund direct deposited. The IRS says that most returns filed electronically have refunds deposited within 21 days.

Are W-2s Delayed?

The deadline for mailing W-2s is January 31, 2022, so if you are a W-2 employee, you should have received your tax documents at the end of January or beginning of February. If you didn't receive these documents yet, contact your employer and/or your HR department as soon as possible.

What Is The Recovery Rebate Credit?

Recovery Rebate Credits let you lower your taxes or get a credit for your Economic Impact Payment if you didn't get one last year. If you received less than the full amount or didn't qualify for the third Economic Impact Payment, you may be able to claim the Recovery Rebate Credit. All taxpayers will receive a letter from the IRS (Letter 6475) detailing the total amount of Economic Impact Payment you received in 2021.

Are There Tax Breaks for Unemployment Payments This Year?

Unfortunately, no. The temporary tax break for unemployment benefits that was available in 2020 was not renewed for the 2021 tax year. For 2020 taxes, the tax break applied to those with an Adjusted Gross Income less than $150,000 who got unemployment benefits in 2020.

What About Child Tax Credit Payments?

If you received advance Child Tax Credit payments in 2021, watch your mail for IRS Letter 6419 which details the amount of Child Tax Credits sent to you in 2021. The IRS began mailing these letters in December of 2021. You can also access this information at the IRS web site.

Are There Any Changes to Filing Deadlines?

The deadline to file your tax return is April 18, 2022, giving tax filers an additional three days to prepare tax return documents and mail them to the IRS. Tax filers impacted by tornadoes in Illinois, Tennessee, and Kentucky in December 2021 or by the wildfires in Colorado in 2021 have until May 16, 2022 to file their returns.

Taxes are tedious and can be complicated, but if you are a business owner, have an unusual financial situation or just have questions about taxes, a dedicated, experienced attorney through our legal subscription plans can address your questions and concerns about your taxes so you can scratch your taxes off your to-do list with peace of mind. Learn more about our legal subscription plans for individuals and families or for small businesses, or sign up today!

Tax Deductions for Small Businesses

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When tax time comes around, business owners should be on the lookout for potential tax deductions. While businesses of all sizes have expenses, knowing which ones are legitimate write offs can be confusing, especially if you're not a pro with the tax codes in your state or the IRS. Members of our Small Business Legal Subscription Plans have access to qualified tax attorneys, and you can ask questions and get advice at tax time, or any time! While the following information shouldn’t be considered tax or legal advice, this blog post will cover some of the most common small business expenses that can be deducted on your yearly taxes.

Writing Off Expenses

The IRS says that business expenses must be "ordinary and necessary" in order to claim them on your tax return. This means that your expenses must be common for your industry and relate to the operation of your business and work performance. Once you determine which expenses you can deduct, you'll need to know which forms to use to report your expenses, and this depends on your business entity type. For instance, a sole proprietor or an LLC with a single member would report these expenses on a Schedule C form, where you report your business' profits and losses. The figure will be subtracted from your gross profits and the final amount is then transferred to your personal 1040 as business income. If you are a C Corp, you file an 1120 with the same expenses and revenues, but you also provide a balance sheet.

This process can get complicated the more expenses you have to deduct, determining which expenses qualify for deduction, and to what category they belong. Members of our legal subscription plans can get the help they need at tax time; one of our network tax attorneys is always available to answer questions.

Common Business Tax Deductions

Industries differ on which expenses can be deducted, but there are some common deductions so long as you keep good records and save receipts:

Start-Up Costs

New businesses may be able to deduct up to $5,000 of start-up costs, provided that they are related to research into creating a business, preparing for the business' launch, or creating a business entity. Start-ups can also deduct up to $5,000 each year for the first three years for costs incurred while creating an employee retirement plan.

Transportation

Some professions require some amount of driving and travel as part of the job, and these expenses can be deducted under certain circumstances. You must keep records of mileage, gas receipts, maintenance bills, license and registration fees, parking fees, and the costs of tolls. You can deduct a standard mileage rate of .58 cents per mile for business use, according to the IRS. The trick is in separating your business use from your personal use. If your vehicle is also used for personal uses as well as for your business, you will need to keep meticulous records of work use versus personal use in order to deduct these costs.

Travel and Meals

Some jobs require you to travel out of your home area, and you may be able to deduct those expenses, provided they meet certain criteria. For travel expenses, these must be:

• Necessary for work

• For the purpose of business activities

• Outside of your "tax home"

• Planned in advance

For meals, the rules are a bit more complicated. As an example, if you take a potential customer out to lunch to discuss your work, you usually can deduct 50% of the cost of the meal. Additionally, meals purchased on a business trip are usually deductible.

Rent

If your business requires a physical location, you should be able to deduct the cost of your rental space on your taxes, so long as you are not receiving equity or title to the property.

Business Insurance Costs

Most businesses have some kind of business insurance, and in almost all cases, the cost of business insurance can be deducted from your tax bill.

Advertising

Any expenses related to advertising and marketing can usually be written off, with the exception of expenses related to lobbying to influence legislation.

Education

Paying for training for employees or yourself can usually be deducted, including travel expenses related to the education.

Depreciation

Business equipment loses value over time, and you can write off the lost value of that equipment on your taxes over the life of the equipment. The IRS has some rules for this, including how you depreciate the equipment: you can choose to depreciate at a steady rate over time or take a bigger deduction within the first few years and smaller deductions later.

Office Supplies

Most consumable office goods are tax deductible so long as you haven't deducted them in a previous year.

Utilities

Costs of electricity, heating and cooling, telephones and other communication devices, water costs, and sewage costs are all eligible for deduction from your taxes so long as they are strictly used for your business and not personal use.

Health Care Tax Credits for Small Businesses

If you have fewer than 25 full-time employees, you may be able to get a tax credit if you provide health insurance benefits. This credit can be up to 50% of the premiums paid, and smaller employers get a bigger credit.

Self-Employment Tax Deduction

Working for yourself means that you are responsible for both the employer and employee contributions to Social Security and Medicare/Medicaid. This self-employed tax rate is 15.3% for incomes up to $142,800. You may be able to deduct the portion that would be the employer's portion from your net income on your income taxes.

Home Business Tax Deductions

Working from home is more common today than ever before and you may be able to deduct the costs of working from home. Sole proprietors, freelancers, contractors and others may be able to deduct the costs of a home office on their tax returns, but there are certain stipulations that must be met in order to claim them.

Home Office Deduction

While it's not as simple as just writing off the cost of your rent or mortgage, you can get a tax deduction for the space you use for work. The IRS stipulates that the space must be used exclusively and regularly to conduct business, so if you use a spare bedroom as your home office, you can deduct $5 per square foot of space or total the cost of your mortgage or rent, utilities, and other expenses and calculate the percentage of your deduction based on the percentage of your home is being used to conduct business.

Small businesses shouldn’t have to worry about IRS audits, and working with a professional tax attorney can alleviate those worries, making sure that you get every deduction and credit you're entitled to and avoiding claiming ones that you're not. Our legal subscription plans for small businesses is a great investment at tax time, and you're sure to find many reasons to use your subscription and discuss business issues with your provider attorney all year long. You can speak with a dedicated, qualified, small business tax attorney about your small business taxes and make sure that all your filings, paperwork, and documents are correct, accurate, and complete before you file. Plus, you can talk to your provider law firm about many other topics, as well, such as contracts, agreements, employment issues, and much, much more! Learn more about the many benefits of being a subscriber to our legal subscription plans for small businesses or sign up today!

Tax Deductions For Small Businesses