Employee or Independent Contractor? Know the Rules

The IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor. An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors. Here are two key points for small business owners to keep in mind when it comes to classifying workers: 1. Control. The relationship between a worker and a business is important. If the business controls what work is accomplished and directs how it is done, it exerts behavioral control. If the business … [Read more...]

Hobby or Business? IRS Offers Tips to Decide

Millions of people enjoy hobbies that are also a source of income. From catering to cupcake baking, crafting homemade jewelry to glass blowing -- no matter what a person’s passion, the Internal Revenue Service offers some tips on hobbies. Taxpayers must report on their tax return the income earned from hobbies. The rules for how to report the income and expenses depend on whether the activity is a hobby or a business. There are special rules and limits for deductions taxpayers can claim for hobbies. Here are five tax tips to consider: Is it a Business or a Hobby? A key feature of a business is that people do it to make a profit. People engage in a hobby for sport or recreation, not … [Read more...]

Review Your Taxes in The Summer for Less Surprises Next Spring

Each year many people are surprised to find out they owe more money on their taxes than they originally thought. While others might be excited at the arrival of a larger refund check than they previously planned for. Has this happened to you? You might want to consider staying on top of your tax situation before next Spring arrives. A new job, change in marital status, new baby, new house are all things that can have an effect on your taxes. Visit the IRS.gov to learn how to properly report any change in circumstance you might have. … [Read more...]

How a Name Change Impacts Taxes

You’ve completed your taxes, and you have a nice healthy tax refund awaiting you. You’re just waiting on the IRS to put that check in the mail. But for some reason, your tax return isn’t coming as quickly as it normally does. Why? Did you change your name last year? Believe it or not, that can actually have an effect on how quickly you receive your tax return. If any of your forms have mismatched names, you might not get your tax return as quickly as you normally have in the past. So what should you do if you’ve changed your name? Check out this article on the IRS Website to find out! … [Read more...]

How to File an Amended Tax Return

We all know filing taxes is not the easiest job in the world (that’s why you hire us to help!) Mistakes do happen from time to time, so what do you do when you realize there is an error after you’ve already handed in your returns? Well, there are two options: The first option is plain and simple: do nothing. If it’s related to a mathematical error, the IRS will usually automatically fix it. If you forgot a certain form or schedule, the IRS will usually send you a request for them. The second option is to file an amended tax return if you made an error claiming your filing status, income, deductions or credits on your original return. An Amended U.S. Individual Income Tax Return, … [Read more...]

Affordable Care Act Premium Tax Credit

With the implementation of the Affordable Care Act, also known as “ObamaCare,” health care coverage is now required. This can be a heavy burden when you’re on a tight budget. Luckily, the IRS has allowed for a premium tax credit for those who have moderate incomes and need help paying for their health care coverage. According to the IRS, you generally have to meet these three rules to be eligible for the premium tax credit: Get health insurance coverage through the Health Insurance Marketplace Have a household income between one and four times the federal poverty line Not be eligible for other coverage, including Medicare, Medicaid, or sufficient employer-sponsored coverage Be … [Read more...]

Affordable Care Act Individual Shared Responsibility Payment

Health care coverage is now required under the Affordable Care Act, also known as “Obamacare.” If you do not have coverage, the IRS can charge you with an individual shared responsibility payment when you file your taxes in 2015. In their article on the subject, the IRS lists three reasons why you would have to make a payment: You have not signed up for a qualifying form of health insurance coverage. You had a gap in coverage in 2014. (If it was less than 3 consecutive months, you might qualify for an exemption.) You didn’t qualify for an exemption. The amount you owe will be based on the greater of: 1% of your household income that is above the tax return filing threshold … [Read more...]

Affordable Care Act Tax Exemptions

As of 2014, if you do not have health insurance coverage or have a gap in coverage, you will have to either pay an individual shared responsibility fee or file for an exemption when you file your taxes in 2015. Wondering how to make the right choices for your health care tax provisions? Here are some basics to help you determine if you qualify for an Affordable Care Act tax exemption. According to the IRS, people who qualify include those who: Do not have access to affordable coverage Have a gap of less than three consecutive months without coverage Qualify for one of several other exemptions, including: having a hardship that prevents you from obtaining coverage, … [Read more...]

Don’t Wave a Red Flag to the IRS

Tax time can be stressful: meeting deadlines, finding invoices and receipts, and figuring out how much to write off while avoiding an audit. An accountant can alleviate some of the stress, but not all of it! A colleague of mine published these tips in their newsletter, figured I’d share. Here’s a list of things to avoid if you would prefer NOT to undergo an IRS audit: Eleven Red Flags The IRS Looks For: 1.) Forgetting to claim income that is already being reported to the IRS. 2.) ROUND numbers are always a flag. 3.) Large deductions for travel & entertainment. Computer programs at the IRS establish norms. Taxpayers that are outliers are at a higher risk of audit. In … [Read more...]

Three Year-End Tax Tips from the IRS to Help You Save Money

Sure, the tax year is coming to an end, but there are still steps you can take to lower your 2014 taxes. I found an excellent article on year-end tax tips that can help you save time and tax dollars. They can even help you save for retirement. Who doesn’t love to save money? Here are 3 year-end tips from the IRS to help you save: Start a filing system. If you don’t have a filing system for your tax records, start one. It can be as simple as a shoebox, or more complex like folders and spreadsheets. Keeping things filed will save you much time and energy in the long run. Make Charitable Contributions. If you plan to give to charity, consider donating before the year ends. … [Read more...]