The 2022 Tax Filing Season: What You Need to Know

Monday, January 24, 2022, was the official start to this year's tax season. By now, everyone should have received most of the information they need to make sure they file a complete and accurate return.

The start date for individual tax return filers is determined by how much time the IRS needs to perform programming and testing critical to ensuring IRS systems run smoothly. Updated programming helps ensure that eligible people can claim the proper amount of the Child Tax Credit after comparing their 2021 advance credits and claim any remaining stimulus money as a Recovery Rebate Credit when they file their 2021 tax return.

Some returns, filed electronically or on paper, may need manual review, which delays the processing if IRS systems detect a possible error or missing information, or there is suspected identity theft or fraud. Some of these situations require the IRS to correspond with taxpayers, but some do not. This work does require special handling by an IRS employee, so, in these instances, it may take the IRS more than the normal 21 days to issue any related refund. In those cases where the IRS is able to correct the return without corresponding, the IRS will send an explanation to the taxpayer.

By law, the IRS cannot issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. However, eligible people may file their returns beginning on January 24. The law provides this additional time to help the IRS stop fraudulent refunds from being issued.

April 18 Tax Filing Deadline for Most Taxpayers

The filing deadline for most taxpayers to submit 2021 tax returns or an extension to file and pay any tax owed is Monday, April 18, 2022. Some taxpayers may have a different deadline, however.

By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way federal holidays do. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots' Day holiday in those states. Taxpayers requesting an extension will have until Monday, October 17, 2022, to file.

No Need to Wait for 2020 Returns to Be Processed

As of December 3, 2021, the IRS has processed nearly 169 million tax returns. All paper and electronic individual 2020 refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review. There is, however, a backlog of prior-year individual tax returns that have not been fully processed. As such, taxpayers generally will not need to wait for their 2020 return to be fully processed to file their 2021 tax returns and can file when they are ready.

Key Items to Know Before Filing 2021 Tax Returns

Before filing a tax return, taxpayers should know about three key items:

Changes to the charitable contribution deduction. Taxpayers who don't itemize deductions may qualify to take a deduction of up to $600 for married taxpayers filing joint returns and up to $300 for all other filers for cash contributions made in 2021 to qualifying organizations.

Check on advance child tax credit payments. Families who received advance payments will need to compare the advance child tax credit payments they received in 2021 with the amount of the child tax credit that they can properly claim on their 2021 tax return.

• Taxpayers who received less than the amount for which they're eligible will claim a credit for the remaining amount of child tax credit on their 2021 tax return.
• Eligible families who did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the child tax credit when they file a 2021 federal income tax return next year. This includes families who don't normally need to file a return.

In January 2022, the IRS began sending Letter 6419 (see What is IRS Letter 6419?, below) with the total amount of advance child tax credit payments taxpayers received in 2021. People should keep this and other IRS letters about advance child tax credit payments with their tax records. Individuals can also create or log in to IRS.gov Online Account to securely access their child tax credit payment amounts.

Economic impact payments and claiming the recovery rebate credit. Individuals who didn't qualify for the third economic impact payment or did not receive the full amount may be eligible for the recovery rebate credit based on their 2021 tax information. They'll need to file a 2021 tax return, even if they don't usually file, to claim the credit.

Individuals will need the amount of their third economic impact payment and any plus-up payments received to calculate their correct 2021 recovery rebate credit amount when they file their tax return.

In early 2022, the IRS sent Letter 6475, Your Third Economic Impact Payment, that contains the total amount of the third economic impact payment and any plus-up payments received. People should keep this and other IRS letters about their stimulus payments with other tax records. Individuals can also create or log in to IRS.gov Online Account to securely access their economic impact payment amounts.

Important Filing Season Dates for Taxpayers

Important dates taxpayers should keep in mind for this year's filing season are listed below:

January 14 - IRS Free File opens. Taxpayers can begin filing returns through IRS Free File partners; tax returns will be transmitted to the IRS starting January 24. Tax software companies also are accepting tax filings in advance.

January 18 - Due date for tax year 2021 fourth quarter estimated tax payment.

January 24 - IRS begins 2022 tax season. Individual 2021 tax returns begin being accepted and processing begins.

January 28 - Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.

April 18 - Due date to file 2021 tax return or request extension and pay tax owed due to Emancipation Day holiday in Washington, D.C., even for those who live outside the area.

April 19 - Due date to file 2021 tax return or request extension and pay tax owed for those who live in MA or ME due to Patriots' Day holiday.

October 17 - Due date to file for those requesting an extension on their 2021 tax returns

Don't Wait to Get Started on Your Tax Return

Taxes are more complicated than ever, so it's important to work with a tax professional you can trust. If you're ready to get started on your tax return, call the office today and set up a consultation with a tax professional who can help.

What's New for IRS Form 1040 This Year

If you've gathered your tax documents and are ready to tackle your tax return, there's one more step you should take: becoming familiar with what's new on the 2021 Form 1040. While the format of Form 1040 and its schedules remain similar to 2020, there are several changes. Many of these changes can be attributed to the American Rescue Plan Act of 2021 (ARP).

Some are more familiar to taxpayers, including charitable contributions, advance child tax credits, and economic impact payments (mentioned above). Others might not be as well-known. Let's take a look at nine of them:

1. Virtual Currency Question

If you engaged in a transaction involving virtual currency during 2021, you will need to answer "Yes" to the question on page 1 of Form 1040 or 1040-SR. The question, At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?, must be answered by all taxpayers - not just taxpayers who engaged in a transaction involving virtual currency. Do not leave this field blank.

Taxpayers who filed a 2020 return may remember answering this question last year; however, the wording for 2020 was different in that it used "acquire" instead of "dispose of."

2. Premium Tax Credit Expanded (PTC)

ARP expanded the PTC by eliminating the limitation that a taxpayer's household income may not exceed 400% of the Federal Poverty Line and generally increases the credit amounts. In addition, in 2021, if you receive unemployment compensation, you are generally eligible to claim the PTC if you meet the other requirements.

3. Changes to Schedule 8812, Credits for Qualifying Children and Other Dependents

Because of the changes made by ARP, a detailed discussion of the child tax credit and how to figure your child tax credit and credit for other dependents (previously part of these instructions) has been moved to the Instructions for Schedule 8812 (Form 1040). Also, instead of one page, Schedule 8812 is now three pages long. Part III now includes calculations for any additional tax due because of excess advance child tax credit payments.

Complete Schedule 8812 if you are claiming the nonrefundable child tax credit, refundable child tax credit, additional child tax credit, or credit for other dependents, and attach it to your Form 1040 or 1040-SR.

4. EIC: Special Rules for Taxpayers Without a Qualified Child

Special rules apply if you claim the EIC (Earned Income Credit) without a qualifying child. In these cases, the minimum age has been lowered to age 19 except for specified students who must be at least 24 years old at the end of the year. However, the applicable minimum age is lowered further (to age 18) for former foster youth and qualified homeless youth. Additionally, you no longer need to be under age 65 to claim the EIC without a qualifying child.

5. Forgiveness of Paycheck Protection (PPP) Loans

The forgiveness of a PPP Loan creates tax-exempt income, so you don't need to report the income on Form 1040 or 1040-SR. You do, however, need to report certain information related to your PPP Loan. Please call if you need more information about how to report information related to your PPP Loan.

6. Direct Deposit Now Available for Late Filed Tax Returns

Even if you file your 2021 return after November 30, 2022, you are still able to receive a direct deposit of your refund.

7. Alternative Media Preference, Form 9000

Beginning in 2021, taxpayers with print disabilities can use Form 9000, Alternative Media Preference, to elect to receive notices from the IRS in an alternative format, including Braille, large print, audio, and electronic. You can attach Form 9000 to your Form 1040 or 1040-SR, or you can mail it separately.

8. Extension and Expansion of Sick and Family Leave Credits

Under ARP, certain self-employed individuals can claim credits for up to 10 days of "paid sick leave" and up to 60 days of "paid family leave" if they are unable to work or telework due to circumstances related to coronavirus. Self-employed individuals may claim these credits for the period beginning on April 1, 2021, and ending September 30, 2021.

9. Tuition and Fees Deduction No Longer Available

Finally, as a reminder, the tuition, and fees deduction, which was worth up to $4,000, is no longer available starting in 2021. Instead, the income limitations for the lifetime learning credit have been increased. Please call if you need more information about this valuable education-related tax credit.

It Pays To Be Prepared

Don't hesitate to call if you have questions about these and other tax law changes affecting individual taxpayers.

Three Tips for Getting an Accurate Business Valuation

If you're conscientious about financial reporting, you may already have a sense of your company's worth, but in some instances, you might need a formal business valuation, such as:

• Certain transactions: Are you selling your business? Planning an IPO? Need financing?
• Tax purposes: This includes estate planning, stock option distribution, and S Corporation conversions.
• Litigation: Often needed in cases like bankruptcy, divorce, and damage determinations.

While there isn't a single formula for valuing a business, there are generally accepted measures that will give you a valid assessment of your company's worth. Here are three tips that you can use to give your business a more accurate valuation:

1. Take a Close Look at How Your Business Operates

Does it incorporate the most tax-efficient structure? Have sales been lagging, or are you selling most of your merchandise to only a few customers? If so, consider jump-starting your sales effort by bringing in an experienced consultant who can help.

Do you have several products that are not selling well? Maybe it's time to remove them from your inventory. Redesign your catalog to give it a fresh new look and make a point of discussing any new and exciting product lines with your existing customer base.

It might also be time to give your physical properties a spring cleaning. Even minor upgrades such as a new coat of paint will increase your business valuation.

2. Tangible and Intangible Assets

Keep in mind that business valuation is not just an exercise in numbers where you subtract your liabilities from your assets. It's also based on the value of your intangible assets.

It's easy to figure out the numbers for the value of your real estate and fixtures, but what is your intellectual property worth? Do you hold any patents or trademarks? And what about your business relationships or the reputation you've established with existing clients and in the community? Don't forget about key long-term employees whose in-depth knowledge about your business also adds value to its net worth.

3. Choose Your Appraisal Team Carefully

Don't try to do it yourself by turning to the Internet or reading a few books. You may eventually need to bring in experts like a business broker and an attorney, but your first step should be to contact an experienced tax professional with the expertise you need to arrive at a fair valuation of your business.

If you need a business valuation for whatever reason, please don't hesitate to call and speak to a tax and accounting professional who can help.

Working Remotely Could Affect Your Taxes

When COVID-19 struck, many employers quickly switched to a work-from-home model for their employees. Many of them began working in a state other than where their office was located. While some workers have returned to their offices, as the pandemic drags on, more offices continue to work remotely with no back-to-office dates in sight.

If you're working remotely from a location in a different state (or country) from that of your office, then you may be wondering if you will have to pay income tax in multiple jurisdictions or whether you will need to file income tax returns in both states. Here's what you should know:

Generally, states can tax income whether you live there or work there. Whether a taxpayer must include taxable income while living or working in a particular jurisdiction depends on several factors, including nexus, domicile, and residency.

Many states - especially those with large metro areas where much of the workforce resides in surrounding states - have agreements in place that allow credits for tax due in another state so that you aren't taxed twice. For example, in metro Washington, DC, payroll tax withholding is based on the state of residency, allowing people to work in another state without causing a tax headache. Other states such as Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, New York, and Pennsylvania tax workers based on job location even if they reside (and pay tax in) a different state.

Remote Working in Multiple Locations

Let's say you live in Florida. During the pandemic, a mandatory office closure allows you to work remotely from your vacation home in North Carolina - a state that is not your domicile (i.e., your home). Next spring, you will need to file a nonresident income tax return on income earned in North Carolina (your remote work location, but not your domicile) in addition to your usual tax returns.

However, in all the pandemic confusion, your employer may not have known you were working remotely from NC and did not withhold tax from your pay (income earned). If that's the case, then you may owe money.

Here's why:

If the tax rate in the remote location is higher than the taxpayer's home state or the home state doesn't impose an income tax, but the state they are working from does, the tax credit in the worker's home state may not be enough to offset all - or any - tax owed. Ideally, employers should establish a bona fide office at the teleworking locations of their remote employees and elect the proper state withholding of said employees, so they do not have to pay additional taxes.

Necessity or Convenience

Another important factor to consider is whether a worker's remote work location is due to necessity or convenience. If there is a mandatory government shutdown, then it is a necessity. If the option to go back to the office exists, but the worker chooses not to because of health concerns, then the state could view it as convenience.

Tax Deductions Not Allowed for Employees Who Are Remote Workers

Prior to the Tax Cuts and Jobs Act of 2018, taxpayers who were employees were able to deduct job-related expenses such as a desk and monitor used for work purposes or other miscellaneous itemized deductions that exceeded 2 percent of their adjusted gross income. Under tax reform, however, this is suspended for tax years 2018-2025.

Keeping Good Records

Keeping good records is always important when it comes to your taxes, but even more so when there are so many unknowns. As such, it's a good idea to keep track of how many days were worked in each state and how much money was earned.

Help is Just a Phone Call Away

Tax laws are complex even during the best of times. If you've been working remotely during the pandemic in a different location than your office, then it pays to consult with a tax and accounting professional to figure out your tax liability and recommend a course of action to lower your tax bill, such as changing your withholding.

Tax Breaks for Older Adults and Retirees

Everyone wants to save money on their taxes, and retirees and older adults are no exception. If you're 50 or older, here are six tax tips that could help you do just that.

1. Standard Deduction for Seniors

If you and your spouse are 65 years old or older and you do not itemize your deductions, you can take advantage of a higher standard deduction amount. There is an additional increase in the standard deduction if you (or your spouse) are blind.

2. Credit for the Elderly or Disabled

If you and your spouse are either 65 years or older - or under age 65 years old and are permanently and totally disabled - you may be able to take the Credit for Elderly or Disabled. The credit is based on your age, filing status, and income.

You may only take the credit if you meet the following requirements:

The amount on Form 1040 or 1040-SR, line 11 is less than $17,500 ($20,000 if married filing jointly and only one spouse qualifies), $25,000 (married filing jointly and both qualify), or $12,500 (married filing separately and lived apart from your spouse for the entire year).

and

The nontaxable part of your Social Security or other nontaxable pensions, annuities, or disability income is:

• Less than $5,000 (single, head of household, or qualifying widow/er with dependent child);
• $5,000 (married filing jointly and only one spouse qualifies);
• $7,500 (married filing jointly and both qualify); or
• $3,750 (married filing separately and lived apart from your spouse the entire year).

3. Retirement Account Limits Increase

Once you reach age 50, you are eligible to contribute (and defer paying tax on) up to $26,000 in 2021 ($27,000 in 2022). The amount includes the additional $6,500 "catch up" contribution for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan.

4. Early Withdrawal Penalty Eliminated

If you withdraw money from an IRA account before age 59 1/2, you generally must pay a 10 percent penalty; however, once you reach age 59 1/2, there is no longer a penalty for early withdrawal. Furthermore, if you leave or are terminated from your job at age 55 or older (age 50 for public safety employees), you may withdraw money from a 401(k) without penalty. However, you still have to pay tax on the additional income. To complicate matters, money withdrawn from an IRA is not exempt from the penalty.

5. Social Security Benefits Generally Not Taxable

Americans can sign up for social security benefits as early as age 62 or wait to receive full benefits at age 66 or 67 (depending on your full retirement age). Generally, you pay federal income taxes on your Social Security income only if you have other substantial income in addition to your benefits.

Most retirees do not pay income tax on their social security benefits. Some, however, do. The more income you have coming in, the more likely it is that a portion of your social security benefits will be taxed. Therefore, when preparing your return, it is advisable to be especially careful when calculating the taxable amount of your Social Security.

6. Higher Income Tax Filing Threshold

Taxpayers who are 65 and older are allowed an income of $1,700 more ($2,700 married filing jointly and both spouses are 65 or older) before they need to file an income tax return. In other words, older taxpayers age 65 and older with an income of $14,250 ($27,800 married filing jointly - both spouses over age 65) or less may not need to file a tax return.

Don't Miss Out

If you have any questions about these and other tax deductions and credits available for older Americans, please call.

What is IRS Letter 6419?

Taxpayers should have started receiving IRS Letter 6419, 2021 advance CTC, in January. The advance child tax credit payments letter helps taxpayers get the remainder of their 2021 tax credit. It includes the total amount of advance child tax credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments.

Do not throw this letter away. The letter will help taxpayers and their tax preparers reconcile and receive all the 2021 child tax credits to which they are entitled on your 2021 tax return. Families who received advance payments need to file a 2021 tax return and compare the advance payments they received in 2021 with the amount of the child tax credit they can properly claim on their 2021 tax return.

Eligible families who did not receive any advance child tax credit payments can claim the full amount of the child tax credit on their 2021 federal tax return. This includes families who don't normally need to file a tax return.

Taxpayers who received the advance payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov. If you have any questions about this and other COVID-19-related tax relief, help is just a phone call away.

Non-Profits: Electronic Filing of Form 1024

Starting January 3, 2022, nonprofit organizations applying for recognition of exemption must submit Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, electronically online at Pay.gov. Form 1024, which was previously filed using a paper version, has been revised by the IRS to allow electronic filing. There is, however, a 90-day grace period during which the IRS will continue to accept paper versions of Form 1024 (Rev. 01-2018) and letter applications.

The revised Form 1024 is part of the IRS’s ongoing efforts to improve service for the tax-exempt community and make it easier to complete an application for tax-exempt status while reducing errors and reducing processing time. Electronic filing will also shorten the time it takes the IRS to process these forms.

Organizations requesting determinations under Section 521 are now also able to use the electronic Form 1024 instead of Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code.

The required user fee for Form 1024 remains $600 for 2022. Applicants must pay the fee through Pay.gov when submitting the form, and payment can be made directly from a bank account or by credit or debit card.

In addition, applications for recognition of exemption under Sections 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), (29) and 501(d) can no longer be submitted as letter applications. Instead, these requests must be made on the electronic Form 1024.

Accordingly, organizations that are described in Section 501(c) (other than 501(c)(3) and (c)(4)) and 501(d) applying for tax-exempt status must now use the electronic Form 1024. Section 501(c)(3) organizations must continue to use Form 1023 or Form 1023-EZ, and Section 501(c)(4) organizations must continue to use Form 1024-A. Those forms also must be filed electronically.

Please contact the office if you need assistance applying for IRS recognition of tax-exempt status or have any other questions about applying for tax-exempt status.

Important Information About Economic Impact Letters

The IRS began issuing Letter 6475, Your Third Economic Impact Payment, to EIP recipients in late January. This letter helps Economic Impact Payment recipients determine if they are entitled to and should claim the recovery rebate credit on their 2021 tax returns when they file in 2022. It contains information that can reduce errors and delays and help taxpayers or tax professionals prepare their 2021 federal tax returns.

Anyone who receives this letter should keep it. Do not throw it away.

Letter 6475 only applies to the third round of Economic Impact Payments issued in March through December of 2021. The third round of Economic Impact Payments, including "plus-up" payments, were advance payments of the 2021 recovery rebate credit claimed on a 2021 tax return.

Plus-up payments were additional payments the IRS sent to people who received a third Economic Impact Payment based on a 2019 tax return or information received from the Social Security Administration, Railroad Retirement Board, or Veterans Affairs. Plus-up payments were also sent to people who were eligible for a larger amount based on their 2020 tax return.

Most eligible people have already received the payments. However, some people could be missing their stimulus payments and be able to claim a recovery rebate credit for 2020 or 2021, if eligible. This includes people who don't normally need to file a tax return.

As a reminder, never throw away any letters you receive from the IRS, including those related to Economic Impact Payments. Keep these letters with your tax records because they include important information that can help you quickly and accurately file your tax return or resolve a tax dispute.

If you think you are missing an economic impact payment, please call the office to find out if you are eligible to claim a recovery rebate credit for 2020 or 2021.

Standard vs. Itemized Deductions

When completing a tax return, taxpayers have two options: take the standard deduction or itemize their deductions. Most taxpayers use the option that gives them the lowest overall tax. Due to all the tax law changes in recent years, including increases to the standard deduction, that means taking the standard deduction - but not always. Let's look at a few details about these two options.

Standard deduction

The standard deduction amount increases slightly every year, and it varies by filing status. Factors that affect the standard deduction amount include the taxpayer's filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don't itemize deductions are entitled to a higher standard deduction.

Most filers who use Form 1040, U.S. Individual Income Tax Return, can find their standard deduction on the first page of the form. For most filers of Form 1040-SR, U.S. Tax Return for Seniors, the standard deduction, is on page 4 of that form.

Not all taxpayers can take a standard deduction. Those taxpayers include:

• A married individual filing as married filing separately whose spouse itemizes deductions - if one spouse itemizes on a separate return, both must itemize.
• An individual who files a tax return for a period of less than 12 months. This is uncommon and could be due to a change in their annual accounting period.
• An individual who was a nonresident alien or a dual-status alien during the year. However, nonresident aliens who are married to a U.S. citizen or resident alien can take the standard deduction in certain situations.

Itemized deductions

Taxpayers choose to itemize deductions should file Schedule A, Form 1040, Itemized Deductions. Itemized deductions that taxpayers may claim include:

• State and local income or sales taxes
• Real estate and personal property taxes
• Home mortgage interest
• Mortgage insurance premiums on a home mortgage
• Personal casualty and theft losses from a federally declared disaster
• Gifts to a qualified charity
• Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income

Some itemized deductions, such as the deduction for taxes, may be limited. For more information on these limitations or any other questions, don't hesitate to contact the office.

Eight Facts About the Adoption Credit

Taxpayers who adopted or started the adoption process in 2021 may qualify for the adoption credit. This credit can be applied to international, domestic private, and public foster care adoption; however, taxpayers who adopt their spouse's child cannot claim this credit.

Here are eight facts to help people understand the adoption tax credit and whether they can claim it when filing their taxes:

1. The maximum adoption credit taxpayers can claim on their 2021 tax return is $14,440 per eligible child.

2. There are income limits that could affect the amount of the credit. The income limit on the adoption credit or exclusion is based on your modified adjusted gross income (MAGI). If your MAGI amount for 2021 falls between certain dollar limits, your credit or exclusion is subject to a phaseout (is reduced or eliminated). For tax year 2021, the MAGI phaseout begins at $216,660 and ends at $256,660. In other words, if your MAGI amount is below $216,660 for 2021, you can take the full credit, but if your MAGI amount for 2021 is $256,660 or more, your credit will be zero.

3. Taxpayers should complete Form 8839, Qualified Adoption Expenses. This form is used to figure how much credit they can claim on their tax return.

4. An eligible child must be younger than 18. If the adopted person is older, they must be unable to take care of themselves physically.

5. This credit is non-refundable. This means the amount of the credit is limited to the taxpayer's taxes due for 2021. Any credit leftover from their owed 2021 taxes can be carried forward for up to five years.

6. Qualified expenses include:

• Reasonable and necessary adoption fees.
• Court costs and legal fees.
• Adoption related travel expenses like meals and lodging.
• Other expenses directly related to the legal adoption of an eligible child.

7. In some cases, a registered domestic partner may pay the adoption expenses. If they live in a state that allows a same-sex second parent or co-parent to adopt their partner's child, these may also be considered qualified expenses.

8. Expenses may also qualify even if the taxpayer pays them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.

Questions about whether you qualify for the adoption tax credit? Help is just a phone call away.

Should You Be Using Quickbooks' Custom Fields?

One of the reasons that QuickBooks is so popular is that it can be used by various business types, from pet stores to landscaping companies to coffee shops. Many companies are satisfied with the software and don't need to make any modifications.

But have you ever needed to include more information in your customer records? Do your transaction forms need an additional field or two? QuickBooks makes this possible by supporting custom fields that you can define for yourself. It's not difficult to do, and it can help you, for example:

• Generate more focused reports.
• Make customer and vendor records more detailed.
• Create records for similar-but-different inventory items.

Here's how it works:

Changing QuickBooks Forms

You may already know that you can change the structure and content of some QuickBooks forms, including invoices, estimates, sales receipts, statements, and purchase orders. To see what’s possible, open the Lists menu and select Templates. Right-click on the screen and select New. Choose the form you want to create and click OK. You can make changes in the window that opens and click Additional Customization to make more modifications.

Figure 1: You have tremendous control over the content and structure of your forms in QuickBooks.

Creating Custom Fields for Records

QuickBooks does not include custom field creation in the Basic Customization and Additional Customization windows, although your new fields will appear in the Additional Customization window. Rather, you go to the Customer Center, Vendor Center, or Employee Center, depending on what kind of records you want to change. You can add up to 15 custom fields for those three types of records (no more than seven per type).

Open the Customers menu and select Customer Center. Make sure the Customers & Jobs tab is highlighted. Double-click on any record to open its Edit Customer window and then click on Additional Info. In the lower right corner, click Define Fields. The window that opens displays four columns. In the first, Label, you'll enter the names of your new custom fields. Click in any or all of the next three columns to indicate which records should contain them: customer, vendor, or employee.

Figure 2: You can create up to 15 custom fields in QuickBooks Pro and Premier, but you're limited to seven per record type.

Think carefully about what custom fields you want to create before you start. Once you've defined them and started using them in records and transactions, you won't want to change them.

Adding Custom Fields to Items

You can also add up to five custom fields to your item records. Open the Lists menu and select Item List. Select an item and double-click it to open its Edit Item window, then click Custom Fields over to the right. In the window that opens, click Define Fields. This feature works like the one that was just explained for adding custom fields to contact records. You enter the Label name and click in the Use column to create a checkmark.

Using Custom Fields

It's easy to enter information in the custom fields you’ve created in your customer, vendor, and employee records. You go through the same process you did to create them. Open a record and click Additional Info. You'll see your new fields in the column to the right. Just enter the information in each record and click OK.

Figure 3: It's easy to find the custom fields you've created and enter the appropriate information in each record.

As was said earlier, the custom fields you've created will be available to add to the appropriate form templates when you customize them. You'll also be able to choose them as filters when you generate reports.

Dealing with Limitations

Obviously. QuickBooks' custom fields have some shortcomings. You can probably work within limits placed on contact records, but you may want to track more targeted information than the software's limits allow when you're dealing with items. If you sell t-shirts and you have a large inventory in different sizes and colors, for example, you'll have to create an item record for each configuration rather than using custom fields.

You chose - or may be planning to choose - QuickBooks because it can work for so many types of businesses. Custom fields are one way the software provides to personalize its features. But there may come a time when you outgrow its capabilities. You might need to install an add-on application to deepen specific functional areas like inventory, or you may need to upgrade your edition of QuickBooks entirely. If so, it may be time to contact a QuickBooks professional. If you need help with the program's custom fields, or it's time for you to expand your current accounting system, don't hesitate to call.

Tax Due Dates for February 2022

February 10

Employees - who work for tips. If you received $20 or more in tips during January, report them to your employer. You can use Form 4070.

Employers - Social Security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2021. This due date applies only if you deposited the tax for the quarter in full and on time.

Farm Employers - File Form 943 to report Social Security and Medicare taxes and withheld income tax for 2021. This due date applies only if you deposited the tax for the year in full and on time.

Certain Small Employers - File Form 944 to report Social Security and Medicare taxes and withheld income tax for 2021. This tax due date applies only if you deposited the tax for the year in full and on time.

Employers - Nonpayroll taxes. File Form 945 to report income tax withheld for 2021 on all nonpayroll items. This due date applies only if you deposited the tax for the year in full and on time.

Employers - Federal unemployment tax. File Form 940 for 2021. This due date applies only if you deposited the tax for the year in full and on time.

February 15

Individuals - If you claimed exemption from income tax withholding last year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.

Employers - Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in January.

Employers - Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in January.

All businesses. Give annual information statements to recipients of certain payments made during 2021. You can use the appropriate version of Form 1099 or other information return. This due date applies only to payments reported on Form 1099-B, Form 1099-S, and substitute payments reported in Box 8 or gross proceeds paid to an attorney reported in Box 10 of Form 1099-MISC.

February 16

Employers - Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2021, but did not give you a new Form W-4 to continue the exemption this year.

February 28

Businesses - File information returns (for example, certain Forms 1099) for certain payments you made during 2021. However, Form 1099-NEC reporting nonemployee compensation must be filed by January 31. There are different forms for different types of payments. Use a separate Form 1096 to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, what form to use, and extensions of time to file.

If you file Forms 1097, 1098, 1099 (except a Form 1099-NEC reporting nonemployee compensation), 3921, 3922 or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms generally remains January 31.

Payers of Gambling Winnings - File Form 1096, Annual Summary and Transmittal of U.S. Information Returns, along with Copy A of all the Forms W-2G you issued for 2021. If you file Forms W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms remains January 31.

Health Coverage Reporting - If you are an Applicable Large Employer, file paper Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C with the IRS. For all other providers of minimum essential coverage, file paper Forms 1094-B, Transmittal of Health Coverage Information Returns, and 1095-B with the IRS. If you are filing any of these forms with the IRS electronically, your due date for filing them will be extended to March 31.

Large Food and Beverage Establishment Employers - with employees who work for tips. File Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Use Form 8027-T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically your due date for filing them with the IRS will be extended to March 31.

March 1

Farmers and Fisherman - File your 2021 income tax return (Form 1040 or Form 1040-SR) and pay any tax due. However, you have until April 15 (April 19 if you live in Maine or Massachusetts) to file if you paid your 2021 estimated tax by January 18, 2021.

March 2

Health Coverage Reporting - If you are an Applicable Large Employer, provide Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to full-time employees. For all other providers of minimum essential coverage, provide Form 1095-B, Health Coverage, to responsible individuals.

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