Once a quarter, you will be asked to confirm information that is necessary for your tax projections and quarterly payment estimates. You can confirm the information Formations has for you or update it if anything changed.
1. Home address
Your home address is important for filing, mailing purposes and claiming business use of home credits. If your home address has changed, you can update it in the survey and it will update your profile information. Additionally, you should update your business use of home information.
2. Filing status
The IRS allows for certain filing statuses that determine your tax bracket. You can locate this on your last year's tax return, or if your marital status has changed, you can update it in the survey and include the reason for the change.
Choices
Single
Married filing jointly
Married filing separately
Head of Household
Qualifying widow(er) with dependent child
3. Dependents status
The IRS defines a dependent as a qualifying child (under age 19 or 24 if a full-time student, or any age if permanently and totally disabled) or a qualifying relative.
4. Health insurance plan
Your health insurance premium is tax deductible in case you pay for your own health insurance.
5. Retirement plan
Retirement plans are important for your financial longevity as well as for your tax optimization. If you don't have one yet, let us know if you're interested in having a conversation about setting one up.
6. Projected gross business income
How much money your business will generate this year? This figure helps Formations provides you with a more reliable projection of your tax liability and quarterly tax estimates, as well as inform your payroll plan.
7. Additional income
If you have income sources outside of your business, Formations will include them in your household income to determine your tax bracket. This allows Formations to estimate the total federal (and state if applicable) in taxes you will owe on your business-related income. Examples of income outside of the business are: w2 from another job or spouse, rental property profit (after all expenses including deprecation), investment income such as dividends/capital gains/interest, distributions from retirement, etc. Do not include any income that is going to your business. This should be provided in an annual amount.
Providing as much detail on other sources of income will allow Formations to provide the most reliable projection for your tax liability as well as recommend additional tax-saving strategies.
8. Payments to vendors
Every year as a business owner, you may have to file 1099s for vendors. Payments by credit card or to corporations do not need 1099s. Also any goods you buy are not needing 1099s. This is for services (staging for selling homes, legal services, contractors, landscapers, etc.). You can find much more detailed information about if you may need 1099s for vendors here: https://learn.formationscorp.com/everything-you-need-to-know-about-1099 . We will file 1099s for all your vendors in January, but will need to ensure we have w9s and help you reconcile this in Q4 and January of every year.
9. Tax payments outside Formations
Some customers pay quarterly payments in addition to payroll withholding. If you sent the IRS or state a payment online or in the mail, you should let Formations know that amount in the survey. This will reduce your taxes owed. Be sure to NOT include any payments you made during the current year for the previous tax year (e.g. extension payments, or tax due when completing personal return). These transactions do not come from your business account so we can not see them in your books. If you paid both to the IRS and the State, please indicate by separating and identifying the figures.