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Toledo-area businesses in Lucas County and the city of Rossford need to be ready for a sales & use tax increase that takes effect on April 1, 2022. According to the Ohio Department of Taxation, the .5% increase enacted by the Toledo Area Regional Transit Authority (TARTA) will raise the sales tax rate in Lucas County from 7.25% to 7.75%, and in the city of Rossford from 6.75% to 7.25%. The increase does not apply to all of Wood County.

While such increases aren’t uncommon, we are sharing this as an important reminder, as the rate change will likely impact many GJM clients, and it’s important that the appropriate members of your team are aware of the need to charge a different rate effective April 1, 2022.

“Sales tax is one of those taxes small businesses can struggle with,” says GJM Tax Manager Matt Alic, who specializes in state and local tax. “It can be a complicated area for tax, though this is a fairly straightforward change. Businesses will want to be sure to make the necessary changes moving forward.”

Should you have any questions or concerns about the rate change and how it impacts your business, please reach out to your GJM team for guidance. You can also learn more at the Ohio Department of Taxation website.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business & transaction advisory, healthcare management & advisory, outsourced accounting, and risk advisory. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution, nonprofit, private equity and utilities.

Did you wait until the last minute to get to work on your 2021 tax return? Well, you’re in good company. Statistics show many Americans put off completing their return until just days before the deadline. If you’re among the procrastinators and will be tackling your 2021 return this week, we have some last-minute advice to share. We also have information on some of the most common mistakes the IRS is seeing as people file this year.

Deadline date

As you surely know by now, the tax filing deadline was pushed back a little bit again this year because of the Emancipation Day holiday in the District of Columbia. This year’s tax deadline is Monday, April 18, 2022. That goes for your state tax return as well, and your local tax return.  

Unemployment Compensation 

The IRS says there’s some confusion this year on whether unemployment benefits should be included on 2021 tax returns as income. GJM tax experts say any unemployment compensation you received in 2021 is considered income and should be included on your 2021 tax return. The reason for the confusion is that there was a special law that you didn’t have to include unemployment payments on your 2020 tax return. That special law was just for one year and only applied to 2020 tax returns. It isn’t the case anymore, so be sure to include any unemployment benefits as income on your 2021 tax return.

COVID-Related Tax Breaks 

Make sure you include any COVID-related tax breaks you got in 2021: Advance Child Tax Credit payments and that third Economic Impact Payment. The IRS says it is seeing some taxpayers claim the wrong amounts on their 2021 tax returns. Make sure you reference the IRS letters you received regarding these payments: IRS Letter 6419 for the Advance Child Tax Credit payments and IRS Letter 6475 for your third Economic Impact Payment. That way you will be sure to get the correct amounts on your return.

Charitable Donations 

You can claim a deduction up to $300 for cash contributions to qualifying charitable organizations, even if you claim the standard deduction on your 2021 tax return. Married couples filing joint tax returns can claim up to $600.

Virtual Currency

Be sure to check either yes or no in the box on your 1040 Form that asks about virtual currency. The IRS says some people are forgetting to do so.

Set Up a Payment Plan

Failing to file your tax return because you know you owe and don’t have the money to pay is a big no no. It could cost you a great deal in penalties. If you owe money you need to pay by the April 18 deadline or set up a payment plan.

File Electronically

The IRS says a good way to cut down on mistakes is to file your tax return electronically and do direct deposit to your bank account. Electronic platforms require you to fill out all the necessary fields and that could help you avoid making a simple mistake, like forgetting your SSN.

Avoid Common Mistakes

Often people’s tax returns get held up, red flagged or delayed because of simple errors, according to the IRS. Be sure to review all your information for accuracy and doublecheck your final steps before hitting “submit” or mailing your tax return.

Here are some other important steps to avoid simple mistakes:

• Make sure you use correct filing status
• Report all your taxable income
• Doublecheck your name, birth date and Social Security Number
• Doublecheck your routing and bank account numbers
• Sign and date your tax return
• Keep a copy of your tax return
• If mailing a paper tax return, make sure you mail it to the right address and have the correct postage on it
• Take a deep breath and don’t rush. As a last-minute filer, if you hurry through filling out your return, you’re increasing your chances of making a simple mistake

Can’t get your return done in time? File for an extension. That gives you six more months to file, with the extended deadline for individuals on October 17, 2022. If you need some help, you’ll find all kinds of helpful tools from the IRS, including how to track your refund once you’ve filed.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business & transaction advisory, healthcare management advisory, outsourced accounting, and risk advisory. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution, nonprofit, private equity and utilities.  

Ohio Governor Mike DeWine is poised to sign two new tax bills into law that will come as very welcome news to small businesses operating as S-corporations, partnerships, and LLCs in the state. The pieces of legislation clarify the business income deduction (BID) as it relates to gains recognized on the sale of a business and offer relief from the current cap on deducting state and local tax on individual returns.

Ohio Senate Bill 246 authorizes an individual owner of a pass-through entity (PTE) to claim a refundable credit on their individual return equal to the owner’s proportionate share of the tax paid by the PTE. The taxes paid by the PTE do not count towards the cap of $10,000 that currently limits an individual’s ability to deduct taxes on their individual return (Schedule A- Itemized deductions).  

Ohio will become the 29^th state to pass such legislation. The law will address the tax burdens brought about by the $10,000 cap on state and local tax deductions included in the Tax Cuts and Jobs Act of 2017.

Ohio House Bill 515 addresses the business income deduction and makes clear that any gains from selling ownership interest in a pass-through entity (PTE) in Ohio would be considered business income and thus, eligible for the business income deduction (BID). The BID enables an individual to reduce the business income that flows through to their return by up to $250,000.  

Some requirements to benefit from HB 515:

• The sale must be considered the sale of assets for federal tax purposes
• The business seller must have had day-to-day management involvement during the taxable year in which the sale happened, or during the five years leading up to the sale

As noted above, both bills are expected to be signed by Governor Mike DeWine. GJM tax experts are watching the developments and will provide further guidance as needed. As always, should you have any questions or concerns about the impact for your business, your GJM team is here to advise.

**Update: Ohio Governor Mike DeWine's office says both HB 515 and Senate Bill 246 have now been signed into law.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business & transaction advisory, healthcare management advisory, outsourced accounting, and risk advisory. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution, nonprofit, private equity and utilities.  

Do you have stacks of old tax returns, receipts, and documents that you think you might need some day, but aren’t sure? You can probably throw out more than you think. Here’s a refresher on what you need to know:

Income tax returns:

The general rule, according to the IRS, is to keep your tax return for three years from the date of filing (or two years from the date you paid your tax bill). The IRS says be sure to also keep the supporting documents, like your W-2s and 1099s. The reason for the three years: that’s how much time you have to amend that tax return and how much time the IRS has to impose further tax.

Exceptions:

Of course, there are always some exceptions:

• You need to keep personal tax records for six years if you’re not reporting income that you should be, and that income is over 25 percent of the gross income reported on your return.
• You need to keep records for seven years if you file a claim for a loss from worthless securities.
• You need to keep records indefinitely if you don’t file a tax return or if you file a fraudulent return  

What to pitch and what to keep:

It’s hard to know when you open that jam-packed filing cabinet at home what you can ditch and what you can’t. Just remember, not all documents are created equal. For example, any documents related to property. The IRS says you should hang onto records related to property until the period of limitations expires for the year you sell or dispose of the property.

Something else to keep in mind: 

Just because you don’t need supporting documents for tax purposes anymore doesn’t necessarily mean you can pitch them. Some insurance companies and creditors may ask that you hold onto them longer than the IRS. 

State returns:

Double check with your state department of taxation or your tax preparer regarding how long you should keep a copy of your state tax return. This will obviously vary from state to state. The Ohio Department of Taxation says to keep copies of your state tax returns for at least 4 years from the deadline or the date you filed.

A couple of other thoughts:

• Keep a copy. If you file your taxes online, you need to remember to always print out a copy of your return (and keep supporting documents) before you hit send to electronically submit your return. Don’t assume that there’s an online copy somewhere you’ll have access to. Be sure to print a copy for yourself if you file a paper return as well. 
• If you’re moving away from paper files at home to an electronic filing system, it goes without saying that you should finely shred the paper documents once the information is safely stored (and backed up) electronically.  

GJM Tax partner Kathi Iott contributed this blog. With over 20 years in public accounting, Kathy helps both individuals and businesses with tax strategy. She works across many industries, including construction and real estate.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business & transaction advisory, healthcare management advisory, outsourced accounting, and risk advisory. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution, nonprofit, private equity and utilities.