What documents do I need to give my tax preparer?

• All W-2s and 1099s
• The amount of any other income not reported on a W-2 or 1099
  • You may list this on the same page as your business expenses
• 1095-A if you had health insurance through the Affordable Care Act (Obamacare)
• Investment statements and bank interest statements
• Student loan interest statements or name of payee and amount
• Mortgage interest statement or amount
• Property tax amount (may be on the mortgage interest statement)
• Child care expenses (day care, after school care, summer day camp)
  • Include name, address, and EIN/SS of provider
  • If you don't have the EIN/SS of provider, just make a note that you don't have it
• If you received the Advance Child Tax Credit, Letter 6419 (Click here for more info)
• Confirmation of your 3rd stimulus payment - check your bank account and confirm verbally during your meeting or upload Letter 6475 from the IRS
• A list of any charitable donations to 501(c)3 nonprofits up to $300 ($600 if Married Filing Jointly)
  • For the 2021 tax year, taxpayers will be able to deduct $300/$600 of charitable donations (Click here for more info)
• Our Business Expenses Worksheet, or some comparable compilations of your business expenses
• If you had income from a rental property or hosted on AirBnB, our Schedle E Worksheet
• Your tax returns for the past two years (unless we prepared them)
• A voided check or bank routing and account numbers for direct deposit of refunds and possible direct debit of payments.

How do I get my documents to my preparer?

Your preparer will send you a link to a secure folder, and you can upload scans or photos of your documents to the folder. Please make sure that photos of your documents are well-lit and not blurry! We need to be able to read the teeny-tiny numbers. We use Citrix ShareFile for secure document transfer. This is a highly regarded and highly encryped system. However, if you prefer not to upload your documents, let your preparer know and make arrangements for a drop-off or mail them.

What if I didn’t get last spring's $1400 Economic Impact Payment (i.e. the stimulus)? What if I'm not sure if I got the third stimulus payment? What if my income changed or I had a kid?

If you did not receive your third stimulus payment, you will be able to claim it as a credit on your 2021 tax return. If your 2020 income level disqualified you from or decreased your payment, but your 2021 income qualifies you, you will get the credit when you file your 2021 taxes. If a child joned your household after you filed your 2020 tax return, you will be able to get a credit for the child on your 2021 return. If a new child was listed on your 2020 return, youi should have received a direct deposit of $1400 in 2021, even if you filed your taxes after the stimulus was distributed.
You should receive Letter 6475 from the IRS detailing how much money you received. Please upload this letter with your documents or have it handy when you meet with your preparer. If you don't receive the letter or if you misplace it, please check your bank records to confirm how much you received.

What if my preparer from last year isn’t available to work with me this year?

Please feel free to schedule an appointment with whomever suits you best. It’s great to keep continuity with your previous preparer, but we are all qualified tax preparers and share client files.

Do I still get a deduction for charitable contributions, like I did for 2020?

For 2021, you will be able to deduct up to $300 ($600 if Married Filing Jointly) in cash contributions, even if you do not itemize your deductions (i.e. file a Schedule A). Contributions of goods (such as donating household items to Goodwill) do not give you this tax benefit (unless you itemize on Schedule A). When you prepare your documents before your appointment, please include a list with the names of the organizations and the amounts donated. We do not need receipt letters from the organizations - just a list. Donations made through crowdfunding sites like GoFundMe may not be deductible - only donations to a 501(c)3 nonprofit are deductible.

Do you give discounts to clients who are low income? What about payment plans?

We have always kept our prices much lower than most tax preparation services as a way of demonstrating our commitment to serving our arts community. But if your income falls below a certain level (for example if you are on Medicaid), we are able to offer additional discounts. Please don’t hesitate to discuss your situation with your preparer. You are always welcome to offer a barter or pay in installments. Just ask your preparer. And if your taxes are simple, another option is to file them yourself. The IRS has a free online filing service that is relatively easy to use.

I'm confused about deductions. What’s a standard deduction versus itemized deductions? Are business deductions the same as itemized deductions?

If you are self-employed or an independent contractor, you file a Schedule C in addition to the 1040 that everyone files. You deduct the expenses associated with your self-employment on this Schedule C. These are often referred to as your “business deductions.” Accurately calculating these deductions is one of the main services that we provide - we will work with you to find every possible legitimate expense to help reduce your tax burden. The “standard deduction” and “itemized deductions” are what most folks think of when they hear “deductions” and “taxes.” These are separate from your business deductions. Every taxpayer can take the standard deduction from their income. This deduction is now $12,550 for a single person or $25,100 for a married couple filing jointly.
Because the standard deduction is now so high, “itemized deductions” are becoming more rare. However, if the sum of your medical expenses (exceeding 7.5% of your adjusted gross income), state, local and property taxes (up to $10,000), mortgage interest, and charitable contributions exceeds the standard deduction, you can itemize these deductions on a Schedule A and get a tax benefit. Unreimbursed employee expenses are no longer deductible on Schedule A, so all business deductions should go on your Schedule C.

I received a forgivable Paycheck Protection Program loan. Do I need to pay taxes on that?

No. A PPP loan/grant is not taxable income.

Do I have to pay taxes on my unemployment compensation?

For the 2020 tax year, the American Rescue Plan waived federal tax on up to $10,200 of unemployment benefits. This is not the case for 2021. You must pay federal taxes on all of your unemployment benefits; however, you don't have to pay Social Security and Medicare taxes on this income as you do on wages. In PA and NJ, you do not need to pay state taxes on your unemployment benefits. In some other states, you may.

I received the additional Advance Child Tax Credit this year. Do you need information from me?

Yes! You will receive Letter 6419 from the IRS, which will list the amount of ACTC you received. Please upload this letter with your documents; we will need it to correctly calculating any remaining credit. You can also use the Child Tax Credit Update Portal to track your credit.

I received an email from the City of Philadelphia about a new tax website. What's up with that?

This fall, the City of Philadelphia revamped its tax website and launched the Philadelphia Tax Center. It sent emails to everyone who had existing accounts, with instructions on how to access the new system. The good news is that the new website is much easier to navigate and to understand! The bad news is that getting registered in the system takes a little bit of effort. So - if you have paid Philadelphia City taxes in the past, please do the following before your tax prep meeting:

• Visit the Philadelphia Tax Center.

I heard something about Venmo, PayPal, and 1099-Ks. What’s up with that?

For tax year 2021, you won’t receive a 1099-K information form from Venmo or Paypal unless you had over $20,000 in transactions. But starting with tax year 2022, you may receive a 1099-K from Venmo or Paypal if you had more than $600 in business transactions. This is a brand-new, evolving situation. The most important thing you can do this coming year is to keep good records of all income you receive, including payments made through apps like Venmo, so that you can report your income accurately on your Schedule C. If you were paid via Venmo or Paypal in 2021, you may or may not receive a 1099-NEC from the payer. However - to repeat - all self-employment income should be reported on your Schedule C whether or not you received a 1099-NEC or 1099-K.