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.
General Information:
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. This is where you need to confirm your health insurance plan status
5. Retirement plan
Retirement plans are important for your financial longevity as well as for your tax optimization. We would like you to confirm the retirement plan you have (Solo 401(k), SEP, SIMPLE IRA). If you don't have one yet, let us know if you're interested in having a conversation about setting one up. We need to confirm your retirement plan information each year to optimize your contributions and planning.
Tax Liability Status:
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. Any additional Items:
Your tax liability is determined by a variety of factors, including your income level, filing status, deductions, credits and more. This survey reviewed accuracy of the information we have. In this final question, you can include any additional details that weren't covered in the previous questions.