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06/05/2023

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02/16/2023

Tax Season is in full swing! We are still accepting new clients

09/22/2021

What employers need to know when classifying workers as employees or independent contractors
It is critical for business owners to correctly determine whether the individuals providing services are employees or independent contractors.
An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker’s services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public. Doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers are generally independent contractors.
Independent contractor vs. employee
Whether a worker is an independent contractor, or an employee depends on the relationship between the worker and the business. Generally, there are three categories to consider.
• Behavioral control − Does the company control or have the right to control what the worker does and how the worker does the job?
• Financial control − Does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker’s job controlled by the payer? Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.
• Relationship of the parties − Are there written contracts or employee type benefits such as pension plan, insurance, vacation pay? Will the relationship continue and is the work performed a key aspect of the business?
Misclassified worker
Misclassifying workers as independent contractors adversely affects employees because the employer’s share of taxes is not paid, and the employee’s share is not withheld. If a business misclassified an employee without a reasonable basis, the business can be held liable for employment taxes for that worker. Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes. Workers who believe they have been improperly classified as independent contractors can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report their share of uncollected Social Security and Medicare taxes due on their compensation.
Voluntary Classification Settlement Program
The Voluntary Classification Settlement Program is an optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future employment tax purposes. This program offers partial relief from federal employment taxes for eligible taxpayers who agree to prospectively treat their workers as employees. Taxpayers must meet certain eligibility requirements and apply by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.
Who is self-employed?
Generally, someone is self-employed if any of the following apply to them.
• They carry on a trade or business as a sole proprietor or an independent contractor.
• They are a member of a partnership that carries on a trade or business.
• They are otherwise in business for themselves, including a part-time business.
Self-employed individuals, including those who earn money from gig economy work, are generally required to file an tax return and make estimated quarterly tax payments. They also generally must pay self-employment tax which is Social Security and Medicare tax as well as income tax. These taxpayers qualify for the home office deduction if they use part of a home for business.

09/13/2021

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IRS recognizes Small Business Week: Resources available to help employers
WASHINGTON — During National Small Business Week, the Internal Revenue Service wants small business owners to know that information and resources to help them understand and meet their tax obligations are available free at IRS.gov.
Small businesses play a pivotal role in our nation’s economy. The IRS has a variety of resources available to help employers meet their tax responsibilities as well as help their employees.
IRS online resources can also help employers with things like how to determine if workers should be classified as employees or independent contractors, when employment taxes are due and what forms they need to file.
Employer Identification Number
An Employer Identification Number , also known as a Federal Tax Identification Number is a must-have for a business. Applying for an EIN can be done online for free using an interview style application offered by the IRS. Five Things to Know about the EIN is a video that helps explain why it is critical the IRS has accurate and current information related to EINs or business accounts.
Employment taxes
It's important a small business understand employment taxes such as federal income tax, Social Security and Medicare taxes as well as Federal Unemployment (FUTA) Tax. Employers must regularly report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS.
Most employers use Form 941, Employer's Quarterly Federal Tax Return to report federal income tax withheld and both the employer and employee Social Security and Medicare taxes. The smallest employers (those whose annual liability for Social Security, Medicare and withheld federal income taxes is $1,000 or less) file Form 944, Employer’s Annual Federal Tax Return, and agricultural employers file Form 943, Employer's Annual Federal Tax Return for Agricultural Employees. Only the employer pays FUTA tax; it is not withheld from the employee's wages. Employers report their FUTA taxes by filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
If businesses compensate non-employees for services, or pay rent, commissions, the fees of attorneys and other professionals, or make certain other payments, businesses must obtain the Taxpayer Identification Number (TIN) of the payee before making the payment. If businesses don’t have the payee’s TIN at the time payment is made, businesses must withhold 24% from the payment as backup withholding. A payer is liable for backup withholding even if the tax is not deducted from the payment. Payers may use Form W-9 to request the payee’s TIN. Payers use Form 945, Annual Return of Withheld Income Tax, to report backup withholding.
There are two deposit schedules for employment taxes withheld and the employer’s match − monthly and semi-weekly. Before the beginning of each calendar year, employers must determine which of the two deposit schedules they’re required to use. To determine the businesses’ payment schedule, review Publication 15 for Forms 941, 944 and 945, or Publication 51 for Form 943. Deposits for FUTA Tax (Form 940) are required for the quarter within which the tax due exceeds $500. The tax must be deposited by the end of the month following the end of the quarter. Small business taxpayers must use electronic funds transfer (EFTPS) to make all federal tax deposits. See the Employment Tax Due Dates page for information on when deposits are due.
Estimated tax payments
Taxes are pay-as-you-go. This means taxpayers need to pay most of their tax during the year, as they receive income, rather than paying at the end of the year.
Small business owners, sole proprietors, partners and S corporation shareholders who don’t have tax withheld from their earnings need to make estimated tax payments, usually quarterly. Anyone who pays too little tax (.pdf) or does not pay on-time, may owe a penalty.
Hiring others to prepare payroll
To meet payroll and employment tax responsibilities, many businesses hire a payroll and payroll tax company. Most of these businesses provide quality service, however, sometimes a payroll service provider doesn't submit their client's payroll taxes and closes abruptly. The client remains legally responsible for paying the taxes due even if they sent funds for deposits or payments to the payroll service provider. The IRS urges employers to choose carefully when selecting a payroll provider. The IRS also encourages employers to enroll in the Electronic Federal Tax Payment System (EFTPS). It's free and when deposits are made under their EIN, it lets them monitor that their payroll service provider is making their tax deposits.
Small businesses can share the word with employees about Child Tax Credit
Due to the COVID-19 pandemic, new legislation was enacted to aid not only struggling business owners, but also individuals. Employers have direct access to people who may be eligible for advance Child Tax Credit payments. As part of its ongoing effort to help eligible people access advance Child Tax Credit payments and the increased Child Tax Credit for the 2021 tax year; IRS will be encouraging employers to help spread the word during National Small Business Week 2021.
Materials for employers and others who can help are available on the IRS website at 2021 Child Tax Credit and Advance Child Tax Credit Payments: Resources and Guidance. This is part of a larger effort underway at the IRS to reach people eligible for the payments and other credits. Individuals can check their eligibility for the advance payments by using the Advance Child Tax Credit Eligibility Assistant.
More information
Online IRS resources available to small businesses to learn their employer tax responsibilities include:
• The Small Business and Self-Employed Tax Center features links to a variety of useful tools, a downloadable tax calendar and common forms with instructions.
• The IRS Tax Calendar for Businesses and Self-employed has important tax dates, including federal tax deposit due dates.
• The Self-Employed Individuals Tax Center is for sole proprietors and others who are in an independent trade, business or profession.
• The Gig Economy Tax Center can help people find answers to tax questions, as well as helpful tips and tax forms for business taxpayers.
• Information on IRS.gov may also be available in Spanish, Vietnamese, Chinese (Simplified and Traditional), Korean, Russian as well as Haitian Creole.
• IRS social media channels have helpful video and audio presentations.
• IRS2Go is a free mobile app to find free tax help, watch IRS YouTube videos and get IRS Tax Tips by email in English and Spanish.
• The IRS YouTube Video Channel has videos for small businesses on the small business playlist, with videos available in English, Spanish and American Sign Language.
• Small Business Taxes: The Virtual Workshop has interactive lessons designed to help new small business owners learn their tax rights and responsibilities.

09/09/2021

Reminder for extension filers: choose a tax preparer wisely
The filing extension deadline will be here soon. Taxpayers who requested an extension to file might be considering hiring a tax preparer. The IRS reminds these taxpayers to choose their tax return preparer wisely. Taxpayers are responsible for all the information on their return, no matter who prepares it for them or when it’s filed.
There are different kinds of tax return preparers, and a taxpayer's needs will determine which kind of preparer is best for them.
Here are some things taxpayers should do when choosing a tax return preparer:
• Check the IRS Directory of Federal Tax Return Preparers. This searchable and sortable public directory helps taxpayers find a tax return preparer with specific qualifications.
• Check the preparer's history with the Better Business Bureau. Taxpayers should check for any disciplinary actions for credentialed tax return preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For enrolled agents, verify the agent’s status on IRS.gov.
• Ask about fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. Be wary of tax return preparers who claim they can get larger refunds than their competitors.
• Ask if the preparer plans to use IRS e-file. Taxpayers should make sure their preparer offers IRS e-file.
• Make sure the preparer is available. Taxpayers should consider whether the tax return preparer will be around after the filing deadline has passed. Taxpayers should do this because they might need the preparer to answer questions about the preparation of the tax return.
• Ensure the preparer signs and includes their preparer tax identification number. Paid tax return preparers must have a PTIN to prepare tax returns Preparers must sign returns and include their PTIN.
• Understand the preparer's credentials. Enrolled agents, CPAs, and attorneys have unlimited practice rights and can represent taxpayers on any tax matter before the IRS. Tax return preparers who participate in the IRS Annual Filing Season Program have limited practice rights and may only represent taxpayers whose returns they prepared and signed, but only before exams, Taxpayer Advocate, and customer service.