June 2022 E-Newsletter

JUNE 2022 E-NEWSLETTER

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June Featured News

Start Your Tax Planning Now!

Keeping your taxes as low as possible requires paying attention to your financial situation throughout the year. Here are some tips for getting a head start on tax planning for your 2022 return:

Hustling for Extra Income

From supplementing their current income to replacing income that was lost because of layoffs, the pandemic, or other reasons, many people have started side hustles over the past 2 years to help make ends meet.

Money Management Tips for Couples

Couples consistently report finances as the leading cause of stress in their relationship. Here are a few tips to avoid conflict with your long-term partner or spouse.

Make Your Child's Summer Break a Tax Break

As a busy working parent, you may be on the lookout for activities available for your kids this summer. There may be a solution that’s also a tax break: Summer camp!

June 2022 Q & A

Q: Do my volunteer hours at the local food pantry count as a charitable contribution?

A: Unfortunately, your good deed won't come with a tax break. Hours spent volunteering for a qualified charity aren't a tax deduction. But there is some good news. The miles you drive to get to and from the food pantry are tax-deductible. For 2022, you can deduct 14 cents per mile if you itemize deductions. And if you make donations of food or other staple items to the pantry, those costs are deductible too.

SHORT BITS

Sales Tax Basics for

Small Businesses

Sales tax can be intimidating for entrepreneurs. Rules differ in each state, county, and city, but some basics are universal.

WHAT’S TAXABLE

Generally, if you sell a tangible product, you’ll be required to collect sales tax from buyers. But some states also impose sales tax on services.

PERMIT REQUIRED

If you’re required to collect sales tax in your state, you’ll need a sales tax permit. Once you receive the permit, the state will assign a filing due date and frequency, which is generally determined by your annual revenue and can be monthly, quarterly, or annually. Keep in mind that if your company operates in more than one state, you may need to apply for multiple state sales tax permits.

COLLECTION

Be sure to collect tax on all sales, regardless of the source. You’ll need to collect tax on sales in brick-and-mortar stores, online, or through Amazon’s marketplace. And in most states, even if you had no sales for a period, you’ll still need to file a sales tax report for the period or risk paying a fine or having your sales tax permit revoked.

Working for Tips

Whether as an employee or an employer, you should know the laws governing tipped employment.

PAY RATE

Under federal law, employers must pay at least $2.13 per hour, as long as the hourly wage combined with the tips received equals the federal minimum wage of $7.25 per hour or more. If not, employers must make up the difference.

Keep in mind that many states require a higher hourly wage for tipped workers. In Oregon, it’s $12.75 per hour, and in Colorado, it’s $9.54 per hour.

COMMUNITY TIP POOL

Employees must retain all of their tips unless they participate in a valid tip pool or sharing agreement. Tip pooling is when the tips collected are put into a large “pool” and redistributed among a larger group of employees. An example is at a coffee shop where one employee may take orders, and a few others make the drinks, and another busses and cleans tables after customers leave. Tip pooling ensures all workers receive their fair share of the tips.

Tip sharing doesn’t require an equal distribution of tips among employees. Usually, the employer sets a distribution rate and includes employees who don’t customarily receive tips like dishwashers, chefs, and cooks. Employers, managers, and supervisors are prohibited from keeping employees’ tips, including those through a tip pool. Like pay rates, states have their own rules for tip pooling that may go beyond the federal requirements.

REPORTING

All cash tips are subject to Social Security, Medicare, and income tax. Employees must report monthly tip totals for tax reporting and withholding to the employer.

Employers must retain tip reports, withhold taxes on the hourly wage and tip income, and deposit the tax with the IRS. In addition, employers are also responsible for paying the employer’s share of Social Security and Medicare taxes.