Category: NEWS

July 11th, 2018 by Oscar

Contractor or employee? The difference matters – a lot. Be sure you’re using the correct classifications for your staff.

Employees. Contractors. They both create and support products or provide services for your customers. They’re your company’s most valuable assets.

But the IRS looks at each very differently. And when you hire people and start dealing with their compensation, you, too, need to be very sure that you classify them correctly for income tax purposes.

You probably already know the primary difference between them. You only pay contractors or freelancers a fee for their contributions. With employees, you’re also responsible for employment taxes and often other benefits.

Control and Independence

The IRS itself states that “…there is no ‘magic’ or set number of factors that ‘makes’ the worker an employee or an independent contractor.” And you can’t use just one factor to make the determination. For example, you can’t call an individual an independent contractor simply because he or she works out of a home office instead of yours. Rather, you have to look closely at the whole relationship between your company and them. You need facts. You need to consider the “…degree of control and independence” involved, in three different categories.

Behavioral

Do you as the employer have the right to control how the individual works? There are four ways to measure here:

  • Type of instructions given. Do you tell the individual how, when, and where to work? What equipment to use? Where to buy supplies and services? What sequence to follow?
  • Degree of instruction. How detailed are the instructions?
  • Evaluation system. Is the employee evaluated on how the work is done or just the end result?
  • Training. Do you offer initial and periodic training, or is the individual responsible for his or her own?

Financial

There are several questions to consider here. Does the individual:

  • Pay for a significant percentage of the equipment used?
  • Have a lot of unreimbursed expenses?
  • Have the opportunity to make a profit or loss?
  • Feel free to work for other businesses?
  • Generally receive consistent wages for each pay period?

Type of Relationship

  • How would you and the individual characterize your relationship with each other?
  • Is there a written contract?
  • Employee benefits?
  • Did you hire him or her expecting that the relationship would go on indefinitely?
  • Are the individual’s contributions to the company a “key activity” of the business?

As you can see, it’s more complicated than you might think. The IRS takes this issue very seriously, and has been known to follow up with companies where at least some of the classifications were suspected to be in error.

Posted in NEWS

June 27th, 2018 by Oscar

While we’re all hopefully aware that any phone purporting to be from the IRS is, in all likelihood, actually a scam, the same cannot be said for any letter a taxpayer may receive.

The IRS sends out millions of letters every year (many of them automated), and most of them don’t need to be the subject of fear. In fact, to help ease taxpayers’ minds on the subject, the service put together the following list of do’s and don’ts to help relieve some of the fear and uncertainty.

  • Do not ignore it
  • Do not panic
  • Do act on the letter in a timely way
  • Do review the information
  • Do not reply unless instructed to do so
  • Do respond to a disputed notice
  • Do remember that there is usually no need to call the IRS
  • Do avoid scams

Posted in NEWS

June 18th, 2018 by Oscar

Even if you’ve been using QuickBooks Online for a long time, it’s good to step back and evaluate your actions.

“Best practices” aren’t enforceable rules. They’re simply guidelines businesses commonly follow in one area or another. If you’re in retail, for example, one best practice might be to always ask customers checking out if they found everything they were looking for. This serves two purposes: It conveys a feeling of concern for the customer’s shopping experience, and it may also lead to increased sales.

QuickBooks Online has many best practices, some of which may serve multiple purposes, including keeping your company data safe and clean; providing insight on your financial status; saving time and leading you to better relationships with customers and vendors.

Are any or all the following common practices for your business?

  • Reconcile accounts regularly
  • Clean up your lists
  • Never leave QuickBooks Online open when you leave your work area
  • Keep track of 1099 vendors
  • Classify everything with care
  • View reports on a regular basis

Posted in NEWS

January 8th, 2018 by Oscar

Choosing e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund. The IRS expects more than four out of five tax returns will be prepared electronically using tax software.

The IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days, but there are some important factors to keep in mind for taxpayers.

By law, the IRS cannot issue refunds on tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February. This applies to the entire refund — even the portion not associated with the EITC and ACTC.

IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if those taxpayers chose direct deposit and there are no other issues with the tax return. This additional period is due to several factors, including banking and financial systems needing time to process deposits.

After refunds leave the IRS, it takes additional time for them to be processed and for financial institutions to accept and deposit the refunds to bank accounts and products. The IRS reminds taxpayers many financial institutions do not process payments on weekends or holidays, which can affect when refunds reach taxpayers. For EITC and ACTC filers, the three-day holiday weekend involving Presidents’ Day may affect their refund timing.

 

Posted in NEWS

November 16th, 2017 by Oscar

With the holidays around the corner, many people will be making donations to benefit charitable organizations. However, come tax time, the person who made the donation might also benefit. That’s because taxpayers who donate to a charity may be able to claim a deduction for the donation on their federal tax return.

Here are five facts about charitable donations:

Qualified Charities. A taxpayer must donate to a qualified charity to deduct their contributions. Gifts to individuals, political organizations, or candidates are not deductible. To check the status of a charity, taxpayers can use Exempt Organizations Select Check on IRS.gov.

Itemize Deductions. To deduct charitable contributions, taxpayers must file Form 1040 and itemize their deductions. To do this, taxpayers complete Schedule A, Itemized Deductions. They file this form with their tax return.

Getting Something in Return. Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets. Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation.

Type of Donation. For donations of property instead of cash, a taxpayer can only deduct the fair market value of the donated item. Fair market value is generally the price they would get if they sold the item on the open market. If they donate used clothing and household items, those items generally must be in good condition. Special rules apply to certain types of property donations, such as cars and boats.

Donations of $250 or More. If a taxpayer donates $250 or more in cash or goods, they must have a written receipt from the charity. The statement must show: • The amount of the donation. • A description of any property given. • Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.

Posted in NEWS

October 5th, 2017 by Oscar

Taxpayers who get an unexpected or unsolicited phone call from the IRS should be wary – it’s probably a scam. Phone calls continue to be one of the most common ways that thieves try to get taxpayers to provide personal information. These scammers then use that information to gain access to the victim’s bank or other account.

When a taxpayer answers the phone, it might be a recording or an actual person claiming to be from the IRS. Sometimes the scammer tells the taxpayer they owe money and must pay right away. They might also say the person has a refund waiting, and then they ask for bank account information over the phone.

Taxpayers should not take the bait and fall for this trick. Here are several tips that will help taxpayers avoid becoming a scam victim.

The real IRS will not:

  • Call to demand immediate payment
  • Call someone if they owe taxes without first sending a bill in the mail
  • Demand tax payment and not allow the taxpayer to question or appeal the amount owed
  • Require that someone pay their taxes a certain way, such as with a prepaid debit card
  • Ask for credit or debit card numbers over the phone
  • Threaten to bring in local police or other agencies to arrest a taxpayer who doesn’t pay
  • Threaten a lawsuit

Taxpayers who don’t owe taxes or who have no reason to think they do should follow these steps:

  • Use the Treasury Inspector General for Tax Administration’s IRS Impersonation Scam Reporting web page to report the incident.
  • Report it to the Federal Trade Commission with the FTC Complaint Assistant on FTC.gov.
  • Taxpayers who think they might actually owe taxes should follow these steps:
  • Ask for a call back number and an employee badge number.
  • Call the IRS at 1-800-829-1040.

Posted in NEWS

August 17th, 2017 by Oscar

El Servicio de impuestos Internos (IRS) les recordó hoy a choferes de camiones de carga y otros propietarios de vehículos pesados de carretera que generalmente, su próxima declaración de impuestos por uso de carretera federal vence el jueves, 31 de agosto de 2017.

La fecha límite generalmente corresponde al Formulario-2290 y al pago de impuestos para el año tributario que comenzó el 1ro de julio de 2017 y termina el 30 de junio de 2018. Las declaraciones y el pago de impuestos deben presentarse para el 31 de agosto, para vehículos que transitaron por las carreteras en julio. Para los vehículos que usaron las carreteras por primera vez después de julio, la fecha límite es el último día del siguiente mes de uso.

Aunque algunos contribuyentes tienen la opción de presentar el Formulario 2290 en papel, el IRS exhorta a todos los contribuyentes a tomar ventaja de la rapidez y conveniencia de presentar el formulario electrónicamente y pagar cualquier impuesto electrónicamente. Los contribuyentes que reporten 25 vehículos o más deben presentar electrónicamente. Los vehículos suspendidos por razones de impuestos no cuentan hacia el umbral de 25 o más vehículos reportados.

El impuesto por uso de carretera se aplica a vehículos de motor usados en carretera con un peso bruto tributable de 55,000 libras o más. Esto generalmente incluye camiones, camiones tractores y autobuses. Generalmente, camionetas, pick-ups y camiones de panel no están sujetos a impuestos porque caen por debajo del umbral de 55,000 libras. El impuesto de hasta $550 por vehículo se basa en el peso, y se aplican una variedad de reglas especiales, explicadas en las instrucciones del Formulario 2290.

Los camioneros no necesitan visitar una oficina del IRS para presentar electrónicamente el Formulario 2290 ya que puede presentarse en línea y cualquier pago requerido también puede hacerse en línea.

Generalmente, los que presentan electrónicamente reciben su Anexo-1 estampado por el IRS, minutos después de la presentación. Luego pueden imprimirlo y proporcionarlo al departamento estatal de vehículos de motor, sin visitar una oficina del IRS. Para aquellos que opten por visitar, tenga en cuenta que los centros de asistencia al contribuyente del IRS ahora operan con cita previa.

Posted in NEWS

August 3rd, 2017 by Oscar

Los contribuyentes deben guardar copias de sus declaraciones de impuestos durante un mínimo de tres años. Aquellos que necesitan una copia de su declaración de impuestos deben consultar con su proveedor de software o su preparador de impuestos. Las declaraciones de impuestos de años anteriores están disponibles del IRS, por una tarifa.

Sin embargo, para aquellos que necesitan transcripciones de impuestos, el IRS puede ayudarles. Las transcripciones son gratis.

Transcripciones de impuestos

Una transcripción resume la información de la declaración de impuestos e incluye el ingreso bruto ajustado (AGI, por sus siglas en inglés). Están disponibles para el año tributario en curso, una vez que el IRS ha tramitado la declaración. Las personas también pueden obtenerlas para los tres años anteriores.

Al solicitar hipotecas o ayuda financiera para la universidad, las transcripciones frecuentemente son necesarias. Sin embargo, las compañías hipotecarias suelen arreglar para conseguir una transcripción para un dueño o posible propietario.

Los contribuyentes pueden obtener dos tipos de transcripciones del IRS:

Transcripción de declaración de impuestos.  Una transcripción muestra la mayoría de las partidas, incluyendo el AGI de una declaración de impuestos original (Formularios 1040, 1040A o 1040EZ), según se presentó, junto con cualquier formulario y anexo. No muestra los cambios realizados después de la presentación de la declaración original. Esta transcripción está disponible únicamente para el año tributario en curso y las declaraciones tramitadas durante los tres años anteriores. Una transcripción de la declaración de impuestos generalmente cumple las necesidades de las instituciones crediticias que ofrecen hipotecas y préstamos estudiantiles.

Transcripción de la cuenta tributaria.  Una transcripción de la cuenta tributaria muestra datos básicos, tales como el tipo de declaración, estado civil, ingreso bruto ajustado, ingreso tributable y toda clase de pago. También muestra los cambios realizados después de la presentación de la declaración original.

Para obtener una transcripción, las personas pueden:

Ordenarla en línea. Utilice la herramienta ‘Obtener Transcripción’, disponible en IRS.gov. Hay un enlace debajo de la barra roja titulada TOOLS (Herramientas) en la página principal en inglés. Los que la utilizan, deberán verificar su identidad mediante el proceso de Secure Access (en inglés) (Acceso seguro).

Ordenarla por teléfono. El número para llamar es 800-908-9946.

Ordenarla por correo. Complete y envíe al IRS el Formulario 4506-T o el Formulario 4506T-EZ(SP), para recibir una por correo. Utilice el Formulario 4506-T para solicitar otros archivos tributarios: transcripciones de la cuenta tributaria, registros de cuentas, los salarios e ingresos y la verificación de la no presentación.

Aquellos que necesitan una copia real de la declaración de impuestos, pueden obtener una del año tributario en curso y de hasta los seis años anteriores. El precio por copia es $50. Complete y envíe por correo el Formulario 4506 para solicitar una copia de una declaración de impuestos. Envíe por correo la solicitud a la oficina del IRS, indicada en el formulario. Las personas que viven en una zona de desastre declarada por el gobierno federal, pueden obtener una copia gratuita.

Planifique. Los plazos de entrega para los pedidos en línea y por teléfono típicamente tardan de 5 a 10 días a partir del momento en que el IRS recibe la solicitud. Debe permitir pasar 30 días para recibir una transcripción ordenada por correo y 75 días para las copias de su declaración de impuestos.

Posted in NEWS, SMALL BUSINESSES

July 31st, 2017 by Oscar

During the summer, some taxpayers may travel because of their involvement with a qualified charity. These traveling taxpayers may be able to lower their taxes.

Here are some tax tips for taxpayers to use when deducting charity-related travel expenses:

Qualified Charities.  For a taxpayer to deduct costs, they must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. A taxpayer should ask the group about its status before they donate.

Out-of-Pocket Expenses.  A taxpayer may be able to deduct some of their costs including travel. These out-of-pocket expenses must be necessary while the taxpayer is away from home. All costs must be:

  • Unreimbursed,
  • Directly connected with the services,
  • Expenses the taxpayer had only because of the services the taxpayer gave, and
  • Not personal, living or family expenses.

Genuine and Substantial Duty.  The charity work the taxpayer is involved with has to be real and substantial throughout the trip. The taxpayer can’t deduct expenses if they only have nominal duties or do not have any duties for significant parts of the trip.

Value of Time or Service.  A taxpayer can’t deduct the value of their time or services that they give to charity. This includes income lost while the taxpayer serves as an unpaid volunteer for a qualified charity.

Travel Expenses a Taxpayer Can Deduct.  The types of expenses a taxpayer may be able to deduct include:

  • Air, rail and bus transportation,
  • Car expenses,
  • Lodging costs,
  • Cost of meals, and
  • Taxi or other transportation costs between the airport or station and their hotel.

Travel Expenses a Taxpayer Can’t Deduct. Some types of travel do not qualify for a tax deduction. For example, a taxpayer can’t deduct their costs if a significant part of the trip involves recreation or vacation.

Posted in NEWS

July 24th, 2017 by Oscar

Miscellaneous deductions are tax breaks that generally don’t fit into a particular tax category.  They can help reduce taxable income and the amount of taxes owed.  For example, some employees can deduct certain work expenses like uniforms as miscellaneous deductions.  To do that, they must itemize their deductions instead of taking the standard deduction on their tax return.

Here are several tips from the IRS about miscellaneous deductions:

The Two Percent Limit.  Most miscellaneous costs are deductible only if the sum exceeds 2% of the taxpayer’s adjusted gross income (AGI).  For example, before being able to deduct certain expenses, a taxpayer with $50,000 in AGI must come up with more than $1,000 in miscellaneous deductions.  Expenses may include:

  • Unreimbursed employee expenses.
  • Job search costs for a new job in the same line of work.
  • Job tools.
  • Union dues.
  • Work-related travel and transportation.
  • The cost paid to prepare a tax return. These fees include the cost paid for tax preparation software. They also include any fee paid for e-filing a return.

Deductions Not Subject to the Limit. Some deductions are not subject to the 2% limit. They include:

  • Certain casualty and theft losses. In most cases, this rule is for damaged or stolen property held for investment. This may include property such as stocks, bonds and works of art.
  • Gambling losses up to the total of gambling winnings.
  • Losses from Ponzi-type investment schemes.

Taxpayers can’t deduct some expenses. For example, personal living or family expenses are not deductible. To claim allowable miscellaneous deductions, taxpayers must use Schedule A, Itemized Deductions.

Posted in NEWS