Time for a Tax Strategy-During Covid-19

Time for a Tax Strategy – During Covid-19 Pandemic?

By Jason Arsenault

Could your tax burden be the best way to defend this (temporary) new way of business?

Even before Covid-19, your business was probably already paying TOO MUCH in TAXES. Even the Government Accountability Office (GAO) thinks you are overpaying. It is estimated that almost ONE BILLION dollars every year is overpaid in taxes due to mistakes, either by you or your tax preparer.

The common way we do our taxes is to get through our year of business and then fill out the return and see what we owe. What you should be doing, along with your Certified Public Accountant (CPA), is planning how much you’re going to pay and when you are going to be paying it. You definitely want to legally keep more of your hard-earned money by PAYING LESS TAX. You have seen your tax return, and you know that this is one of your biggest business expenses.

The goal for your business and CPA is to keep more of your money by using legal tax deductions along with loopholes. It is time you take control of your taxes in face of the pandemic and going forward.

A well-designed TAX STRATEGY is going to look at each aspect of your business. That means identifying your different money streams. You might think of your business as one unit, but maybe you are a business that generates revenues from different sources like a retail/wholesale company. You are going to want to look at your investments and the strategies those provide as well as asset protection. Then after you have identified these areas, you continue coming back to grow your wealth. If you are in business, you understand how rapidly things can change and it is very important to find the correct partner who continues to consult you on ways you can save money through eliminating a high tax burden.

Every business owner wants to pay less taxes. The majority of businesses are also going to be using someone to prepare their tax returns. It is highly recommended that if you are a business and prepare you own taxes that you stop. Both CPAs and Enrolled Agents can represent you before the Internal Revenue Service (IRS) if you ever have to be audited or explain a tax position you took on your return. This is a road that you don’t want to go down by yourself and you will definitely want someone who understands what information the IRS wants and how they want that information

presented. What you will want to do next is find the right tax preparer.

Not every CPA or Enrolled Agent is going to offer a tax planning strategy. If you only talk to your tax preparer once a year before your taxes are due, this would be a good indication that they are not looking to do anything beyond basic tax compliance. You want your accountant/tax preparer to be in contact with you during the year and interested in your business. A good indicator would be if your CPA is asking a lot of questions and offering advice on how you could be doing things differently. Are you getting financial statements on a regular basis? Just like a doctor uses your medical history by looking at your chart, an accountant uses those financial statements to understand your business’s health.

Once you are ready to invest in a tax plan and have found the right CPA, you are going to be on the road to saving thousands if not tens of thousands of dollars each year and every year going forward. Remember that this is going to be a strategic plan and you will need to be answering a lot of questions, as well as providing documents and previous year tax returns. Your accountant is going to be interested in where every dollar is being spent, what type of entity your business is, and a number of other relevant questions. Due to the Covid 19 pandemic, the tax return date has been extended to July 15th. That means that if you haven’t filed your return for 2019, you might still have time to start this journey of huge tax savings.

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What Are the Symptoms of COVID-19? Early symptoms include:

• Fever • Dry Cough • Fatigue

The virus can lead to pneumonia, respiratory failure, septic shock, and death. If you notice these severe symptoms in yourself or a loved one, get medical attention right away:

• Trouble breathing or shortness of breath • Ongoing chest pain or pressure • New confusion • Can’t wake up • Bluish lips or face

Prevention Tips: You can help reduce your risk of getting respiratory illnesses:

• Wash your hands often with soap and water for at least 20 seconds, and help young children do the same. If soap and water are not available, use an alcoholbased hand sanitizer. • Cover your nose and mouth with a tissue when you cough or sneeze, then throw the tissue in the trash. • Avoid touching your eyes, nose, and mouth with unwashed hands. • Avoid personal contact, such as kissing, or sharing cups or eating utensils, with sick people. • Clean and disinfect frequently touched surfaces and objects, such as doorknobs. • Practice social distancing.

An Interview with Jvanna Hanks: GMCS Assistant Superintendent IMPACT AID

A historic win for GMCS

“This is not the road we wanted to take, but this is the road it has taken to get someone to listen to us,” Gallup McKinley County Schools Assistant Superintendent of Business Services Jvanna Hanks said. And listen, they did. The U.S. Department of Education ordered New Mexico to stop redirecting federal money designated for specific school districts – namely those districts that serve a majority Native American student body within our state, including Gallup McKinley County Schools.

Impact Aid is a program designed to help equalize tax-based disparities by providing funding to school districts that experience tax losses from tribal lands, military bases, national forests, and other taxexempt federal lands within their boundaries. Impact Aid aims to level the playing field, and it was the same motivation for equality that moved GMCS to ask the U.S. Department of Education to review New Mexico’s school funding formula.

As part of its formula, the state of New Mexico takes credit for 75% of each school district’s Impact Aid appropriation, which allowed a redistribution of funds of over $63 million last year alone. “These are not perceived disparities; these disparities are a reality,” Hanks said. “I am overwhelmingly saddened by what’s happened here, for decades.” What has happened here is unconstitutional, and has resulted in years of lost funding. Funding meant to close the gap of education inequality across New Mexico.

“After this ruling, I hope the State of New Mexico realizes how much they have wronged our students. For many years Native American communities have had their students’ money stolen from their education. Because our district is not as fortunate as other districts in their ability to fund their education needs and school buildings, our students have been left behind,” said Charles Long, GMCS School board president.

Along with GMCS, this is a historic win for Zuni Public School District and Central Consolidated School District who also argued that the formula the state uses to distribute Impact Aid funding was inequitable. The state of New Mexico cannot take credit for Impact Aid this fiscal year, and in order to take credit of Impact Aid funding in the future, it will have to pass a disparity test, a measure to determine whether disbursements are equalized across districts. Hanks expresses her determination to keep the state accountable and not this type of inequity happen again, “Even though this is something we have to do every year, for as long as I’m here, it will be done.”

GMCS cares about our Students, staff, and community members. We will continue to provide resources and information as it becomes available. Please follow all regularly updated information on the GMCS homepage, Facebook, and Instagram

By: GMCS Community Engagement Journalist

gmcs.org