Tax Season Q&A with Miguel Williams
With Tax Season quickly approaching in the US, we reached out to our friend Miguel Williams of Williams & Associates, a tax preparer who specializes in taxes for live event professionals. Miguel filled us in on some changes to be aware of for this year and answered some of our questions about working from home, grant and stimulus money, and side hustles.
Born and raised in New Orleans, Miguel has always been around the entertainment industry and started his accounting career working under the Live Nation umbrella at the House of Blues New Orleans. He’s been preparing taxes since 2010 while attending Xavier University of Louisiana as an undergrad accounting student. Miguel has since started his own accounting firm, Williams & Associates, where he has worked with numerous individuals and small businesses around the country with tax planning, tax preparation, business consulting, payroll, and bookkeeping. Miguel has continued knowledge of the sports and entertainment industry as well as other business industries throughout the country which makes Williams & Associates well versed in the business world.
What's new this year? Any changes to filing taxes from last year?
What’s new for the 2022 tax season (2021 tax year) is mainly the Advance Child Tax Credit, Cryptocurrency taxation, and unemployment.
Advance Child Tax Credit: If any taxpayer received payments throughout 2021, they should have received a 6419 letter from the IRS stating how much was given to them. The IRS is also sending 6475 to detail what has been given to taxpayers in Stimulus funds and will help qualify for Recovery Rebate Credit (if applicable). These are similar to tax forms such as W2s, 1099s, etc. except these letters are from the IRS, not an employer and are for informational purposes only. These letters will be useful when filing your 2021 taxes accurately and timely.
Cryptocurrency (and stocks) were hot in 2021 and the government knows this so they are working with companies to make sure that they provide 1099s (and other forms) to taxpayers who traded throughout 2021. Be aware that you may or may not receive any tax forms for 2021 depending on the trading site. It has gone into law for 2022 that they must provide this information going forward and some companies have already began doing so.
Unemployment will be taxable on both the federal and state levels, unlike last year where up to $10k wasn’t taxed if you made less than $150k income.
I received stimulus, grant, or PPP money. Do I pay taxes on any of those?
No, No, No!! (But yes to unemployment, see above.)
I have a full-time job and work 100% remotely. Can I deduct home office expenses? How much?
This is tricky and a great question for today’s times. The short answer to this (which is long) is that as an independent contractor (entrepreneur) yes! As long as the home office is a certain square footage of the home and is used strictly for business purposes. If you are an employee of a company, unfortunately the answer is no. There used to be an itemized deduction where you could write off business expenses that weren’t reimbursed by your employer but that is no longer available. Maybe with the new WFH policies in workplaces, this can come back around.
I'm not 100% remote, but have a hybrid work schedule where I'm in the office a few days a week and work from home the rest of the week. Can I deduct home office expenses? How much?
Same situation as above; it depends on your employment structure (independent contractor or W2 employee).
2021 was crazy and the first half of the year I received unemployment, but (thankfully!) the second half was full of gigs with a combination of W2s and 1099s. What do I do?
Yes, 2021 was just as wild of a ride as 2020 and the roller coaster is still moving. In this particular situation, it is important that you save your unemployment documents sent to you from the State. You will need that information to accurately file your return. Same goes for your W2 and 1099s, keep everything and let your tax preparer review them. One thing to be aware of is the tax withholding on all of these items. You will owe taxes (especially 1099 contractors) if you did not have any taxes withheld from your payments/checks. Usually W2 employees get taxes withheld from their checks and paid to the State and the IRS on your behalf by your employer. 1099’d employees are special cases as their employer may not elect to pay on their behalf leaving the payment of the tax liability to the independent contractor. Any unemployment payments will need to be reported, and in most cases, will be taxed on the Federal level.
I have a side hustle that generates some revenue separate from my full time job. How does that affect my taxes?
This revenue will need to be reported to the IRS especially if you received a 1099 for it. It affects your taxes because this revenue will be taxed (Uncle Sam wants a cut of everything!). Also if you want your side hustle to become your main hustle (or big chunk of your overall hustle), you would definitely want to report the income so you can write off some of the expenses associated with it. If it is a hobby, you will only be able to write off up to the amount that you received in revenue.
What are the tax deadlines this year? Important tax deadlines for 2022 are as follows:
March 15, 2022: Form 1120S (S Corporations) and Form 1065 (Partnerships) returns
April 18, 2022: Form 1120 (C Corporations) and Form 1040 (Individual Return) returns
May 16, 2022: Form 990 (NonProfit Organizations)
These returns can be extended if you do not meet the deadline. As always, I suggest that you reach out to us or to your tax professional if you need a deeper dive into your tax situation. We are definitely here to help!