Katz, Khayut & Stroll LLP

California’s new Assembly Bill 5 now requires companies to take a closer look at their workers to determine whether they are employees or contractors.

As employees, they may be subject to different rights. These include worker’s compensation, minimum wage requirements, and adequate rest breaks.

Determining whether your workers are properly classified as employees or independent contractors is complicated. Sometimes it is not always black and white, so having a trusted advisor to help you differentiate the two can be helpful.

To begin working with an advisor to help you properly classify your workers, send us a message via our website.
www.kksllp.com

With how complicated tax preparation can be, those who DIY their returns or use a tax preparation application may find themselves more prone to errors.

These can range from the relatively mundane, such as a typo, or the more serious errors such as an incorrect Social Security Number, math mistake, or name misspelling.

Here are a couple of areas you should double check before sending in your return:

Forgotten Income: Adding your W-2 is easy to remember, but did you include 1099-NEC income from smaller projects, gambling income, investment income, or unemployment income? Remember, all income must be reported!

Poor Documentation: This is an area that can be particularly error-prone when calculating your available deductions and credits. Receipts of medical payments, unreimbursed expenses related to work, tuition payments, and charitable deductions are all areas that you should strive to keep meticulous records.

If you find yourself looking for assistance with areas of tax preparation or tax planning, send us a message and schedule a consultation at:
www.kksllp.com.

You may have noticed that the tax deadline was extended this year from the usual date of April 15th to the actual deadline date of April 18th, 2022.

This was due to Emancipation Day, a federal holiday, falling on April 15th, 2022.

What if you filed for an extension? The six-month extension deadline was also pushed back by a few days, and is now October 17th, 2022.

Keep in mind that this only applies to income tax extensions, and not to the quarterly tax payment deadline schedule.

Still have questions? Send us a message at www.kksllp.com and let us help you sort through the different deadlines and tax questions you may have.

Not only is saving for retirement a great idea for your financial future, but is an amazing tax planning tool.

Taxpayers under the age of 50 can contribute up to $6,000 to a retirement account, and up to $7,000 if you are 50 or older.

Depending on the type of retirement account you are utilizing, you may also be able to deduct all or some of the amount on your upcoming tax return.

One more important note, you can contribute to your retirement account up until the tax deadline and potentially take the corresponding tax deduction for the previous tax year.

For example, if you still have $2,000 to contribute when the 2023 tax deadline rolls around, you have until April 15th, 2023 to take advantage of this powerful tax planning technique.

Questions? Feel free to contact us for a consultation!
www.kksllp.com

If you or your business received PPP loans, federal guidance shared at the end of 2020 indicated that forgiven PPP loans will likely not be considered taxable income. Further, expenses these loans paid for may be tax deductible.

California follows federal law and per California Assembly Bill 80, both forgiven PPP loans and EIDL grants are likely not taxable income.

Questions? Contact us at 323.936.2777 for a consultation.

The last couple of years have been difficult for many, and the IRS is no exception.

If you are expecting a refund due to unemployment taxes you paid before the IRS granted their exemption, the IRS is still working to correct these errors.

By the end of 2021, the IRS had issued 11.7 million refunds, and it is still climbing.

Although it is tempting to contact the IRS hoping your refund will be issued more quickly, the IRS is requesting patience at this time.

If you have further concerns about your refund and this delay, please reach out. We are happy to help ease any confusion you may have.
www.kksllp.com

One of the most powerful tools available to real estate investors who are looking to reduce their tax bill is the 1031 like kind exchange.

The 1031 exchange is a way for savvy investors to defer capital gains tax that they would otherwise pay when selling an investment property.

Here are the 1031 requirements:

- The property has the same nature and character. For example, real property is like-kind to real property, and office buildings are like-kind to other office buildings.
- The replacement property has at least the same value.
- Proceeds from the property sold must be 100% invested in the like-kind property.
- The new property must be identified within 45 days of the original property’s sale, and purchased within 180 days.

1031 exchanges can be complicated, and it is always helpful to consult a tax professional if you have questions. For your 1031 exchange questions, visit our website to send us a message:
www.kksllp.com

Owning a property as part of a business activity rather than just as an investment comes with significant tax breaks.

To help determine if your property qualifies, you need to answer two questions:

First, is the property being rented for profit?

If so, are you actively and continuously involved in the day to day activities of the business?

Determining the first answer is straightforward, but the second may need a bit more explanation. In general, being involved in the day to day activities of the rental means taking an active role in managing the property, rather than simply collecting profit shares.

Once you have answered yes to both questions, you now may be eligible to take advantage of the tax benefits these properties offer.

To get tailored advisory on your property, send us a message via our website at:
www.kksllp.com

1031 Like Kind Exchanges can be a powerful way to defer capital gains tax, especially for real estate investors, but can be complicated.

The basics of a 1031 exchange are that you want to sell a piece of investment property and reinvest the proceeds into a similar investment property.

If you sell the property only to reinvest the proceeds in a similar property, the capital gains taxes could be deferred.

One thing to remember: You likely cannot take control of the proceeds from your sale. Instead, you should use a qualified intermediary to hold the funds in escrow to apply to the property you wish to buy.

If you are a real estate investor looking to take advantage of more tax planning strategies to help build your business, contact us via our website:

www.kksllp.com

Budgets are exceptionally useful tools to help keep track of both personal and business finances.

One way to leverage the full use of a budget is to continuously compare the budget with actual results.

For example, if you add in your discretionary expenses in the middle of the month (such as eating out, entertainment, etc) and find that you have already exceeded your budget, you will know right away that you need to curtail entertainment as much as possible the rest of the month.

If you are a real estate agent with some busier seasons, you can also implement flexible budgets. This is a bit more complicated and takes a bit of time to explain.

To learn more about implementing a flexible budget for your business, consider scheduling a consultation with us at:

www.kksllp.com

Consistent cash flow is essential to the success of any business. Let’s talk about a couple of ways to keep your cash flow engine humming.

First, it’s important to have a robust accounts-receivable process. This includes sending invoice reminders and making the occasional collection call to remind clients that payment is due.

Streamlining all parts of the order-to-cash process can save time and money.

Another tip is to regularly update your bookkeeping. If your bookkeeping is accurate and up to date, chances are you will identify any cash flow issues well before they become a problem.

To have tailored cash flow practices implemented into your business, visit our website at:

www.kksllp.com

Estimated tax payments is one area of taxes that often confuses people.

For example, what if you don’t know what your income will be to make the necessary tax payments?

One solution to this is to simply use your previous year’s tax bill. This is especially effective if you do not anticipate significant changes to your income year-to-year.

For example, if your estimated tax payment for the first quarter was $2,000 the previous year, using $2,000 for the current tax year should be sufficient to meet IRS requirements.

To get more specific advice on making your next estimated tax payment, visit our website at:

www.kksllp.com