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Tax Blog

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Independent Contractor (Self-Employed) or Employee?

Published August 24, 2015 | By Theresa

Businesses must be certain to correctly determining whether a worker is am employee rather than an independent contractor.

Generally, the term “employee” includes any individual who, under the common law rules for determining the employer/employee relationship, has the status of… Continue reading →

1099 REPORTING REQUIREMENTS

Published January 26, 2015 | By Theresa

Every business, person conducting business and nonprofit organizations have 1099 reporting requirements and must file informational returns (Federal Forms 1099) with the Internal Revenue Service for certain payments made during the course of the calendar year.

These payments include, but are not limited to:

  •  Payments to persons, including partnerships and limited liability companies (excluding corporations and S-Corps) of at least $600 for services (i.e. casual labor) in the course of a trade or business.
  •  Payments to persons, including partnerships and limited liability companies (excluding corporations and S-Corps) of at least $600 for rents in the course of a trade or business.
  •  Payments to persons including partnerships and limited liability companies (excluding corporations and S-Corps) of at least $10 for interest (i.e. interest on officer’s loans) in the course of a trade or business.
  • Gross proceeds of $600 or more paid to attorneys, including corporations, for services in the course of a trade or business.

These informational returns generally must be provided to the recipients or postmarked by January 31st.  Since the 31st is a Saturday this year (2015) you have until  February 2nd.  The Federal filing generally must be postmarked for filing with the IRS by February 28th but since that also lands on a Saturday this year (2015) you have until  March 2nd.

Failure to file these returns can result in a penalty for each 1099 return not filed. 

To properly report the information required on Form 1099, you need to have the provider’s taxpayer identification number (TIN). It is best to require the provider to fill out and give you a Form W-9, Request for Taxpayer Identification Number and Certification, before work is done or paying for the services.  Trying to get this information after the fact can be difficult especially if there is no-longer a business relationship. W9

The following payments are NOT REQUIRED to be reported on 1099’s, although they are taxable to the recipient: Continue reading →

Do I need to file a tax return?

Published January 22, 2015 | By Theresa

This time of year I get many calls asking simply “Do I need to file a tax return?”

There is far more to this questions than a simple look at a chart (as provided below) and determining yes or no.

Depending on your unique tax situation, the source of your income and your filing status you may not be required to file but you may want to file for several reasons.

  1. File to get a refund of tax withheld by your employer or other sources.
  2. File to determine if you qualify for a refundable credit and therefore a refund greater than taxes withheld. Even if you didn’t have tax withheld you may still be entitled to a refund.
  3. File to determine and pay self-employment tax.
    1. If your gross earnings from self employment were $400 or more you must file.
    2. If you have church employee income of $108.28 or more you must file.
  4. File so the three year statute of limitations to audit is set. Generally the IRS has 3 years from the later of the due date or the date the return is filed to audit. If no return is filed the 3 year rule is not set and there is no time limit for an audit.
  5. Any many other possible reasons….

 

For tax year ending 12/31/2014 (return you file in 2015) IF NO OTHER PERSON CAN CLAIM YOU AS A DEPENDENT you are not required to file a return unless your income is above the Gross income a threshold:

FILING STATUS & AGE                                            GROSS INCOME

  • Single and under 65                                                            $10,150
  • Single and 65 or older                                                         $11,700
  • Married filing jointly, under 65 (both spouses)                  $20,300
  • Married filing jointly, 65 or older (one spouse)                  $21,500
  • Married filing jointly, 65 or older (both spouses)               $22,700
  • Married filing separately, any age                                         $3,950
  • Head of household, under 65                                              $13,050
  • Head of household, 65 or older                                           $14,600
  • Qualifying Widow(er) with dependent child, under 65      $16,350
  • Qualifying widow(er) with dependent child, 65 or older    $17,550

 

For tax year ending 12/31/2014 (return you file in 2015) IF ANOTHER PERSON CAN CLAIM YOU AS A DEPENDENT you are required to file a return if:

Continue reading →

What Charitable Contributions are Tax Deductible?

Published December 15, 2014 | By Theresa

This is a generous time of year when I am often asked what charitable contributions are tax deductible.  Even if not a qualified donation for a tax deduction giving is a wonderful thing for the giver and the receiver 🙂

A charitable contribution is a donation or gift to, or for the use of a qualified organization.  To be a donation it must be a true gift.  That is a voluntary transfer of money or property without receiving anything in return or expecting to receive anything in return (accept that tax deduction you may receive).

Generally donations to qualified tax exempt organizations are deductible by individuals and businesses as charitable donations. As an individual if you itemize deductions (on Schedule A) you can deduct donations to charity. If you don’t itemize there is no tax benefit.  For businesses often payments to qualified organizations may actually be qualified business expenses fully deductible and not subject to limitations.

Donations can be made by cash, check, debit card, credit card or giving of any item (household items, clothing, car, boats, stocks or bonds etc.) to a qualified organization. The donations is considered made when delivery occurs. This means when a check is mailed, a credit card is charged or an item is sent, transferred or delivered to the qualified organization.  Regardless of how the donations is made Continue reading →

MEALS AND ENTERTAINMENT ARE THEY DEDUCTIBLE ?

Published December 13, 2014 | By Theresa

MEALS AND ENTERTAINMENT ARE THEY DEDUCTIBLE ?

Many food, beverage or entertainment expenses that are directly related or associated with the active conduct of a trade or business are allowed to be deducted as business meal and entertainment expenses to the extent that they are not lavish and extravagant.  You must document details of these meals and entertainment meetings to comply with IRS rules.  Most qualified meals and entertainment are 50% deductible however some are 100% deductible.  The fully deductible benefits are often missed.

Generally only 50% of these meal expenses are deductible. A few examples that are generally 50% deductible are:

  1. Meals with current or perspective clients, customers, and vendors that will benefit the business.
  2. Meals directly related to business meetings of employees, stockholders, agents, and directors.
  3. Meals while on business travel status.
  4. Meals while attending a business seminar, convention, networking or any other form of meeting.

There are certain meal expenses that are 100% deductible.  A few examples that are generally 100% deductible are: Continue reading →

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