In this whacky time, everything is changing. This includes your taxes. If you are a contract worker we’ve got some great resources brought to you by accountants Terra Job Vigil and T.J. Massingill with tax advisor Laura Ring.
In this video we cover:
- Basic tax information
- When and what you have to file and pay (auto extension to July 15)
- Tips for keeping cash on hand
- Local taxes and what to know
- Details about taxes and your new home office
- Doing your own taxes
- How donations of goods and services affect your taxes
If you haven’t yet filed your personal taxes or for a C corp, the IRS is giving you 90 extra days to both pay and file your taxes.
- You can file an extension by July 15. Details on how to file are here: https://www.irs.gov/forms-pubs/about-form-4868
Keeping Cash on Hand
In addition to pushing out the tax due date to July 15, the IRS has also extended Q1 payment until July 15. As many of us don’t know how our industry is going to fare in the coming months so it might be wise to hold off paying your remaining quarterly taxes and just accept the small interest penalty in exchange for keeping some of your money during these times. This is considered an underpayment penalty and is less than 5% to the IRS and a good way to converse cash. There are some tax planning ideas with this, so be sure to talk to your tax advisor.
Don’t forget about local taxes
While the IRS and many states (including Colorado) are giving extensions, some county or city taxes might still be due on April 15. For instance, Denver has an OPT tax that will be due.
Now that many of us are working from home it’s a good time to review how to write off your home office on your taxes. There is a standard deduction based on the square footage but here’s the rub; your office must have four walls and a door. If there’s a bed in there then it’s not an office according to the IRS. Something to consider while setting up your new home workspace.
Doing your own taxes
The consensus was that it’s just too easy to miss something when you do your own taxes. It’s best to hire someone. Laura has offered to be available if you have questions.
The TJ’s are creating an offering for Better Together members to help with their accounting at a reduced rate. This is something I’m excited for Better Together to provide to its members.
In these times of crisis, it’s so important to find ways to offer your help. Better Together is supporting mutual aid groups along the Front Range but the time we spend providing a service isn’t deductible. Only donations that are given to 501(c)3 organizations can be written off. If you are a business and are donating goods–like leftover food–you can write donated goods off on your taxes.
So keep track of what you give to nonprofit organizations and any goods you give to your community.
Stay safe, and stay sane out there folks. Also don’t neglect your taxes!