Category: SMALL BUSINESSES

July 2nd, 2020 by Oscar

As part of its response to COVID-19, the IRS has postponed several tax deadlines until Wednesday, July 15, 2020. These postponements generally apply to all taxpayers with a filing or payment deadline between April 1 and July 15, 2020.

This relief includes individual and corporate quarterly estimated tax payments. Any taxpayer making payments received by July 15, 2020 will not be charged late-filing, late-payment or interest fees. 

What taxpayers need to know

  • The due date for filing estimated tax forms and paying estimated taxes has been automatically postponed to July 15, 2020.
  • Taxpayers who still owe 2019 income tax, as well as estimated tax for 2020, must make two separate payments on or by July 15, 2020: One for their 2019 income tax owed and one for their 2020 estimated tax payments. The two estimated tax payments can be combined into a single payment. The IRS offers several convenient ways to make electronic tax payments.
  • Taxpayers do not need contact the IRS or file any forms to receive this relief.
  • This relief applies to individuals, trusts, estates, corporations and other non-corporate tax filers.

Taxpayers needing more time to file their return should request an extension by July 15, 2020. A taxpayer’s requests for an extension to file gives them until October 15, 2020 to file. Exceptions may apply for military personnel serving overseas.

For example, a Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns, would normally provide an additional six-month extension until October 15, 2020. However, this year, a Form 7004 filed by July 15, 2020, will extend the time to file by three months, not six. The extended filing deadline is still October 15, 2020.

The tax filing deadline has been postponed to Wednesday, July 15, 2020. The IRS is processing tax returns, issuing refunds and accepting payments. Taxpayers who mailed a tax return will experience a longer wait. There is no need to mail a second tax return or call the IRS.

Posted in INDIVIDUALS, SMALL BUSINESSES

June 18th, 2020 by Oscar

Para la mayoría de los contribuyentes, la fecha límite de presentación y pago se pospuso para el 15 de julio. Aquellos que necesitan más tiempo para presentar más allá de esta fecha, pueden solicitar una prórroga de tiempo para presentar. Los contribuyentes deben solicitar una prórroga para presentar antes del 15 de julio. Esto les da hasta el 15 de octubre para presentar su declaración de impuestos. Una prórroga de tiempo para presentar no es una prórroga de tiempo para pagar. Los impuestos deben pagarse no más tardar del 15 de julio.

Cómo solicitar una prórroga de tiempo para presentar

Para obtener una prórroga para presentar, los contribuyentes deben hacer una de las siguientes acciones: 

  1. Presentar el Formulario 4868 a través de su profesional de impuestos, software de impuestos o el uso de Free File en IRS.gov.
  2. Enviar un pago electrónico con Pago Directo, el Sistema de Pago Electrónico de Impuestos Federales (EFTPS) o con tarjeta de débito o crédito o su dispositivo móvil y seleccionar el Formulario 4868 o prórroga como tipo de pago.

Una prórroga automática de tiempo para presentar se procesará cuando los contribuyentes paguen la totalidad o parte de sus impuestos electrónicamente antes de la fecha de vencimiento del miércoles, 15 de julio.

Aunque la fecha límite de presentación de impuestos se pospuso al 15 de julio de 2020, el IRS continúa procesando declaraciones de impuestos electrónicas, emitiendo reembolsos de depósitos directos y aceptando pagos electrónicos.

La agencia está de vuelta procesando declaraciones de impuestos en papel enviadas por correo. Sin embargo, los contribuyentes que enviaron por correo una declaración de impuestos en papel probablemente experimentarán un tiempo de espera más largo. Aquellos que ya enviaron una declaración de impuestos en papel que aún no se ha procesado, no deben presentar una segunda declaración de impuestos o escribir al IRS para verificar el estado de su declaración de impuestos o pago de impacto económico.

Posted in INDIVIDUALS, SMALL BUSINESSES

April 9th, 2020 by Oscar

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.

SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.

Who Can Apply

The following entities affected by Coronavirus (COVID-19) may be eligible:

  1. Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
  2. Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of 500 employees, or that meets the SBA industry size standard if more than 500
  3. Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  4. Sole proprietors, independent contractors, and self-employed persons

Loan Details and Forgiveness

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

This loan has a maturity of 2 years and an interest rate of 1%.

The Paycheck Protection Program will be available through June 30, 2020.

Posted in NONPROFIT ORGANIZATIONS, SMALL BUSINESSES

March 26th, 2020 by Oscar

The Treasury Department and Internal Revenue Service announced that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief.  Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868. Businesses who need additional time must file Form 7004.

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days. 

This announcement comes following the President’s emergency declaration last week pursuant to the Stafford Act. The Stafford Act is a federal law designed to bring an orderly and systematic means of federal natural disaster and emergency assistance for state and local governments in carrying out their responsibilities to aid citizens. It was enacted in 1988.

Treasury and IRS will issue additional guidance as needed and continue working with Congress, on a bipartisan basis, on legislation to provide further relief to the American people.

Posted in INDIVIDUALS, SMALL BUSINESSES

January 30th, 2020 by Oscar

Some businesses and other payers take out backup withholding from payments they make to certain people. These entities should remember their upcoming filing deadlines.

Description of backup withholding
The person or business paying the taxpayer doesn’t generally withhold taxes from certain payments. They don’t do this because it’s assumed the taxpayer will report and pay taxes on this income when they file their federal tax return. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is what’s known as backup withholding. If a payer does backup withholding, they are required to deposit that withholding on those payments with the IRS.

Form 945, Annual Return of Withheld Federal Income Tax
Businesses and other payers must report backup withholding and any other federal income tax withheld from nonpayroll payments on Form 945. The deadline for filing Form 945 for tax year 2019 is Friday, January 31, 2020. However, if the payer made deposits on time and in full, the deadline is Monday, February 10, 2020.  

Information Returns
The information returns listed below are used to report backup withholding for tax year 2019. They’re generally due to the IRS on Friday, February 28, 2020, for paper filers and Tuesday, March 31, 2020, for electronic filers. 

These information returns are 
Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.
Form 1099-DIV, Dividends and Distributions
Form 1099-G, Certain Government Payment
Form 1099-INT, Interest Income
Form 1099-K, Payment Card and Third-Party Network Transactions
Form 1099-MISC, Miscellaneous Income
Form 1099-OID, Original Issue Discount
Form 1099-PATR, Taxable Distributions Received from Cooperatives
Form W-2G, Certain Gambling Winnings

1099-MISC and nonemployee compensation
There’s a different filing due date for Form 1099-MISC when reporting nonemployee compensation. When this form is used to report this in box 7 of the 1099-MISC, it’s due to the IRS by January 31. This due date applies whether the payer is submitting the form on paper or electronically.

Because of this, it’s important for people to remember a Form 1099-MISC has two possible due dates when filed electronically:

Friday, January 31 to report nonemployee compensation payments
Tuesday, March 31 to report all other payments

When filing 1099-MISC, the payer should separate the transmission of nonemployee compensation from other payments.

Information return filing extensions
A payer can request a 30-day extension to file any of the information returns listed above by filing Form 8809, Application for Extension of Time to File Information Returns. An extension is usually granted automatically.

However, the IRS does not automatically grant an extension for someone filing Form 1099-MISC reporting nonemployee compensation payments. Payers who need a 30-day extension to file this form must meet one of the criteria listed on line 7 of Form 8809.

Posted in INDIVIDUALS, NEWS, SMALL BUSINESSES

December 26th, 2019 by Oscar

Small business owners should review the rules for filing two commonly-used employment tax returns. The two forms are: Form 944 Employer’s Annual Federal Tax Return and Form 941 Employer’s Quarterly Federal Tax Return

Small business owners should remember these two forms are not interchangeable. A small business files one or the other. The employer should never flip-flop between the two forms on their own, and should always file in accordance with their designated filing requirement.

Here are some more details about these two forms. This will help business owners understand the differences between them:

Form 944, Employer’s Annual Federal Tax Return

  1. This form is for our smallest employers to file and pay the abovementioned taxes only once a year, instead of quarterly. 
  2. While this form is intended for employers who owe $1,000 or less, employers can’t file Form 944 unless they receive official IRS notification that they are eligible to do so.
  3. Once the employer receives notice they can file Form 944, they must file this form every year. They must continue to file Form 944, regardless of the tax they owe, unless the IRS notifies them differently.

Form 941, Employer’s Quarterly Federal Tax Return

  1. Employers use Form 941 to report income taxes withheld from employee’s paychecks and to pay the employer’s portion of Social Security or Medicare tax.
  2. If the IRS advises the employer to file Form 941 quarterly return, they must do so.

Posted in SMALL BUSINESSES

December 12th, 2019 by Oscar

The Internal Revenue Service remind employers and other businesses that wage statements and independent contractor forms still have a Jan. 31 filing deadline.

Before the Protecting Americans from Tax Hikes (PATH) Act, employers generally had a longer period of time to file these forms. But the 2015 law made a permanent requirement for employers to file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31.

Certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors are also due at this time. Such payments are reported in box 7 of this form.

The early filing date means that the IRS can more easily detect refund fraud by verifying income that individuals report on their tax returns. Employers can avoid penalties by filing the forms on time and without errors. The IRS recommends e-file as the quickest, most accurate and convenient way to file these forms.

Get a jump on the due date

Employers should verify employees’ information. This includes names, addresses, and Social Security or individual taxpayer identification numbers. They should also ensure their company’s account information is current and active with the Social Security Administration before January.  If paper Forms W-2 are needed, they should be ordered early.

Automatic extensions of time to file Forms W-2 are not available. The IRS will only grant extensions for very specific reasons. Details can be found on the instructions for Form 8809, Application for Time to File Information Returns.

Posted in SMALL BUSINESSES

December 5th, 2019 by Oscar

A small business owner often wears many different hats. They might have to wear their boss hat one day, and the employee hat the next. When tax season comes around, it might be their tax hat.

They may think of doing their taxes as just another item to quickly cross off their to-do list. However, this approach could leave taxpayers open to mistakes when filing and paying taxes.

Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. Using professional guidance is the easiest ways to avoid these kinds of errors.

Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:

Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.

Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers.  If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.

Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.

Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.       

Posted in SMALL BUSINESSES

November 21st, 2019 by Oscar

With health care open season now under way at many workplaces, the Internal Revenue Service today reminded workers they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans.

Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take
advantage of an FSA during 2020. Self-employed individuals are not eligible.

An employee who chooses to participate can contribute up to $2,750 through payroll deductions during the 2020 plan year. Amounts contributed
are not subject to federal income tax, Social Security tax or Medicare tax.
If the plan allows, the employer may also contribute to an employee’s FSA.

Throughout the year, employees can use FSA funds for qualified medical expenses not covered by their health plan. These can include co-pays, deductibles and a variety of medical products. Also covered are services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Under the FSA use-or-lose provision, participating employees normally must incur eligible expenses by the end of the plan year or forfeit any unspent amounts. However, employers can, if they choose to, offer an option for participating employees to have more time to use FSA money.

  1. Under the carryover option, an employee can carry over up to $500 of unused funds to the following plan year. For example, an employee with unspent funds at the end of 2019 would still have those funds available to use in 2020.
  2. Under the grace period option, an employee has until two and a half months after the end of the plan year to incur eligible expenses. For example, March 15, 2020, for a plan year ending on Dec. 31, 2019.
  3. Employers can offer either option (not both) or no option.

Employers are not required to offer FSAs. Interested employees should check with their employer to see if they offer an FSA.

Posted in INDIVIDUALS, SMALL BUSINESSES

October 31st, 2019 by Oscar

Una de las ventajas de alguien que maneja su propio negocio es la contratación de miembros de la familia. Pero cuando se incluyen a miembros de la familia en las operaciones comerciales, se aplican ciertos tratamientos tributarios y reglas de impuestos laborales. Aquí hay algunos datos que debe saber cuando trabaja con un cónyuge, padre o hijo.

Ambos cónyuges que llevan a cabo el comercio o el negocio

Si los cónyuges llevan a cabo un negocio juntos y comparten las ganancias y pérdidas, pueden ser socios, esto aplica sin o con un acuerdo formal de sociedad colectiva. Si es así, deben reportar ingreso o pérdida del negocio en el Formulario 1065. No deben reportar los ingresos en un Anexo C (Formulario 1040) a nombre de un cónyuge como propietario único. Sin embargo, los cónyuges pueden optar por tratar el negocio en participación como una sociedad colectiva al hacer una elección para negocio en participación calificada.

Negocio en participación calificada

Los cónyuges pueden elegir el tratamiento como un negocio en participación calificada en lugar de una sociedad colectiva. Un negocio en participación calificada lleva a cabo un comercio o negocio donde:

  1. Los únicos miembros son una pareja casada que presenta una declaración conjunta,
  2. Ambos cónyuges participan materialmente en el comercio o negocio, y
  3. Ambos cónyuges eligen no ser tratados como una sociedad colectiva.

Solo las empresas propiedad y operadas por cónyuges como copropietarios y no en nombre de una entidad de derecho estatal, como una sociedad colectiva limitada o una compañía de responsabilidad limitada, son elegibles para la elección de negocio en participación calificada.

Los cónyuges que eligen el estado de negocio en participación calificada son propietarios únicos para fines de impuestos federales. No se necesita un EIN a menos que el propietario único deba presentar declaraciones de impuestos del uso o consumo, nómina, alcohol, tabaco o armas de fuego. Un cónyuge no puede continuar usando el EIN de una sociedad colectiva para el negocio en participación calificada. El EIN debe permanecer con la sociedad colectiva; es usada por la sociedad colectiva para cualquier año en el que la empresa no cumple con los requisitos de un negocio en participación calificada.

Impuestos sobre nómina

Si el negocio tiene empleados, cualquiera de los cónyuges como propietarios únicos puede reportar y pagar los impuestos sobre nómina. Usan el EIN de la propiedad única de ese cónyuge. Si el negocio presentó o pagó impuestos sobre la nómina durante parte del año bajo el EIN de la sociedad colectiva, el cónyuge puede considerarse el “empleador sucesor” del empleado para determinar si los salarios alcanzaron los límites de base salarial de Seguro Social y de desempleo federal.

Un cónyuge empleado por otro. Los salarios de los servicios de una persona que trabaja para su cónyuge están sujetos a retención del impuesto sobre el ingreso e impuestos del Seguro Social y Medicare, pero no a la Ley Federal de Contribución para el Desempleo (FUTA, por sus siglas en inglés).

Niño empleado por padres. Los pagos por los servicios de un niño menor de 18 años no están sujetos a los impuestos del Seguro Social y Medicare, si el negocio es una propiedad única o una sociedad colectiva en la que cada socio es padre del niño. Los pagos a un niño menor de 21 años no están sujetos a FUTA. Los pagos están sujetos a retención del impuesto sobre el ingreso, independientemente de la edad del niño.

Pagos por los servicios de un niño están sujetos a retención de impuestos sobre el ingreso, así como impuestos del Seguro Social, Medicare y FUTA si trabajan para:

  1. Una sociedad anónima, incluso si está controlada por el padre del niño, o
  2. Una sociedad colectiva, incluso si el padre del niño es un socio, a menos que cada socio sea padre del niño.

Padre empleado por su hijo. Los salarios de los servicios de un padre empleado por su hijo están sujetos a retención del impuesto sobre el ingreso y a los impuestos del Seguro Social y Medicare. No están sujetos a impuestos FUTA.

Los empleados completan el Formulario W-4 para que su empleador pueda retener el impuesto sobre el ingreso federal correcto de su salario. El IRS alienta a todos a usar el Estimador de Retención de Impuestos para ayudarlos a asegurarse de que se les retiene la cantidad correcta de impuestos de su cheque de pago. El estimador se enlaza automáticamente al Formulario W-4, Certificado de Retención de Empleado, que luego pueden llenar y enviar a su empleador.

Posted in INDIVIDUALS, SMALL BUSINESSES