by Fresh Start Tax | May 22, 2014 | Tax Help
We are comprised of tax attorneys, tax lawyers, certified public accountant, and former IRS agents, managers and tax instructors.
We handle all IRS tax issues, matters and problems.
We have over 60 years of direct IRS work experience in the local, district, and regional tax offices of the Internal Revenue Service.
We can handle anything from a simple IRS notice her letter to going to tax court.
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Fresh start tax puts out a series of blogs regarding different tax issues.
This blog , Employment Tax. Lucky us!!
Federal Employment Tax in Puerto Rico
Employers in Puerto Rico are subject to the taxes imposed by the Federal Insurance Contribution Act (FICA) (Social Security and Medicare taxes) and the Federal Unemployment Tax Act (FUTA).
An employer is a person or organization for whom a worker performs services as an employee.
As an employer you are required to withhold, report and pay employment taxes on wages paid.
To file the various employment tax returns, you need an employer identification number (EIN). If you do not have an EIN, you may apply for one online at the IRS.gov website link, Apply for an Employer Identification Number (EIN) Online.
You may also apply for an EIN by fax or mail, use Form SS-4PR (PDF). (Use only one method for each entity so you do not receive more than one EIN for an entity.) For more information about EINs, see Topic 755.
FICA taxes are used to finance the Social Security and Medicare systems. FICA taxes consist of two components:
- the social security tax and the Medicare tax. You must withhold the employee portion of FICA taxes from your employees’ wages and contribute the employer portion of FICA tax.
The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.
Beginning January 1, 2013, Additional Medicare Tax applies to an individual’s Medicare wages that exceed a threshold amount based on the taxpayer’s filing status. Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual’s wages paid in excess of $200,000 in a calendar year, without regard to filing status.
An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year.
There is no employer match for Additional Medicare Tax.
The forms used by employers in Puerto Rico to report the social security and Medicare taxes are: Form 941-PR (PDF), Form 943-PR (PDF), Form 944 (PDF) or Form 944(SP) (PDF), and Anexo H-PR (Formulario 1040-PR) (PDF) for household employers.
In addition, the forms used by employers in Puerto Rico to make corrections to employment taxes are: Form 941-X (PR) (PDF), Form 943-X (PR) (PDF), Form 944-X (PDF), Form 944-X (SP) (PDF), Form 944-X (PR) (PDF), and amended Anexo H-PR (Formulario 1040-PR) (PDF).
Employers who filed Form 944-PR prior to tax year 2012 will continue to file annually on Form 944 (or Form 944(SP), Declaración Federal ANUAL de Impuestos del Patrono o Empleador, the Spanish language equivalent of Form 944). Employers may request to file Form 941-PR, Planilla para la Declaración Federal TRIMESTRAL del Patrono, instead of Form 944.
If you are not an agricultural employer and all of your employees are bona fide residents of Puerto Rico, file Form 941-PR to report all wages paid, tips your employees reported to you, and other compensation, and social security and Medicare taxes.
Form 941-PR is filed quarterly and is due the last day of the month following the end of the quarter. For example, for wages you paid January through March (the first quarter of the year) Form 941-PR is due April 30.
If the due date for filing a return falls on a Saturday, Sunday or legal holiday, you may file the return on the next business day.
The term “legal holiday” means any legal holiday in the District of Columbia. For a list of legal holidays, see Publication 15, (Circular E), Employer’s Tax Guide, or visit IRS.gov and enter the words “legal holidays” in the search box.
If you are not an agricultural employer, you may be eligible to file annual Form 944 (or Form 944(SP), the Spanish language equivalent of Form 944). The Form 944 is filed annually and is due by January 31 after the end of the calendar year.
Employers that have an estimated employment tax liability of $1,000 or less for the entire calendar year are eligible to file an annual Form 944.
Employers are not permitted to file Form 944 unless they are notified by the IRS that they qualify to file this form. Employers who may be eligible to file Form 944, because their estimated annual employment tax liability is $1,000 or less, have to contact the IRS to elect to file annually (Form 944).
Employers who are required to file Form 944 and want to file Forms 941-PR instead, must notify the IRS they are electing to file quarterly Forms 941-PR and opting out of filing Form 944. For further information, see Revenue Procedure 2009-51 and the Form 944 Instructions (PDF).
Employers notified to file Form 944, whose businesses grow during the year and exceed the $1,000 eligibility threshold must still file Form 944 for the year.
Employers who exceed the eligibility threshold will be notified by the IRS that their filing requirement has been changed to Form 941-PR for a particular year.
Most employers are required to deposit their FICA taxes before filing Form 941-PR. If you are filing Form 944, you may be able to pay your FICA taxes with your return. For additional information about the Form 941-PR (PDF), refer to Topic 758, in English, or see the Form 941-PR Instructions (PDF) in Spanish.
For more information about the Form 944 (PDF), refer to Topic 758 or see the Form 944 Instructions (PDF) in English. For information about the rules to make deposits, refer to Topic 757, in English.
If you have deposited all your tax on time, you have 10 additional days to file.
Household Employees
If you pay a household employee cash wages, you may be required to withhold and pay FICA taxes on all wages you pay to that employee. To see if you are required to withhold and pay these taxes, see Publication 926 (PDF), Household Employer’s Tax Guide, in English. File Anexo H-PR (Formulario 1040-PR) (PDF) to report and pay social security and Medicare taxes corresponding to the employer and the employee for all household employees.
Household employees include housekeepers, maids, babysitters, gardeners, and others who work in or around your residence as your employee. Repairmen, plumbers, contractors, and other business people who are self-employed and own their equipment and control how the work is performed, normally are not considered household employees.
Agricultural Employees
If you are an agricultural employer in Puerto Rico, you must file Form 943-PR (PDF) to report the employer’s and the employee’s share of the FICA taxes for agricultural employees.
To see if you are required to withhold and pay FICA taxes on your agricultural employees, refer to Publication 51, (Circular A), Agricultural Employer’s Tax Guide, in English. Form 943-PR is filed annually and is due by January 31 after the end of the calendar year.
Most employers are required to deposit both the employer and employee portions of FICA taxes before the Form 943-PR is filed.
Publication 15 in English and Publication 179 (PDF) in Spanish, explain the requirements for deposits.
Federal Unemployment Taxes (FUTA)
If you are an employer in Puerto Rico, you might have to file a Federal Unemployment Tax Return. To see if you are required to pay FUTA taxes, refer to Publication 51 if you are an agricultural employer or Publication 926 (PDF) if you are a household employer.
All other employers should refer to Publication 15 or Publication 179 (Spanish version). With the exception of those who use Anexo H-PR (Formulario 1040-PR) for household employees, employers in Puerto Rico who are subject to FUTA are required to file Form 940-PR (PDF) to report and pay FUTA taxes.
Form 940-PR is filed annually and is due by January 31 after the end of the calendar year. Most employers are required to deposit FUTA taxes. FUTA taxes are not withheld from the employees’ wages.
The FUTA tax rate is 6.0%.
by Fresh Start Tax | May 22, 2014 | Tax Help
Have Former IRS agents who know the system get your money back TODAY!
IRS sends out close to 2 million bank and wage garnishment levy’s each and every year to individuals and businesses.
If you have received an IRS levy contact us today and we can go ahead and get your money back usually within a 24-hour period of time after receiving your documented financial statement required by the Internal Revenue Service.
Before IRS releases a levy, they want to take a financial snapshot of your ability to pay the tax back.
IRS does that by securing a 433F or a 433A a to find out exactly what your current finances are.
IRS will expect this financial statement to be fully documented along with bank statements, pay stubs, and verifiable monthly expenses.
Once IRS receives your current financial statement, the Internal Revenue Service will issue a release of Levy and place you in one of three programs.
IRS after reviewing your financial statement IRS may determine that you are currently uncollectible in place you want hardship for a couple years, IRS may determine you are a monthly payment candidate or the IRS may determine you should send in an offer in compromise because you appear to be a qualified candidate.
Special Note:
If you have received an IRS bank levy please know that the bank has 21 days to hold your money before it sends it to IRS.
It is the hope of the IRS that you call them and get your levy released in your money back
A wage levy is an immediate seizure of funds and approximately 80 to 90% of your next paycheck will go to the Internal Revenue Service.
Call us today for immediate help for an IRS tax bank or wage garnishment Levy.
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by Fresh Start Tax | May 22, 2014 | Tax Help
We are former IRS agents and managers who know the system.
We have a combined 60 years of direct IRS work experience in the local, district, and regional tax offices of the Internal Revenue Service.
Our firm knows exactly what it takes because we understand the systems and know the protocols to get you immediate and permanent IRS tax relief.
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IRS Tax Levy
The Internal Revenue Service levies close to 2 million taxpayers, individuals and businesses each and every year.
A IRS tax levy usually effects bank account, your wages and possibly your Accounts Receivable.
After receiving your current financial statement, as a general rule we can get an IRS levy released within 24 hours and settle your case at the same time.
IRS Tax Audit
IRS audits less than 1% of all tax returns in the United States.
If you have received an IRS nasty gram and need solid tax representation call our office and speak directly to a former IRS audit manager who can offer you the best possible tax defense for IRS tax audit.
Do not fear the tax audit nor the reaper
IRS Debt Settlement.
IRS settlements comes in the way of an offer in compromise. I
RS accepts 38% of all offers in compromise file.
Before you go off running to file for offer in compromise you want to make sure you are a qualified and suitable candidate for IRS tax debt settlement.
Call us today and we can walk you to the process to see if it is possible to settle your case and with the lowest available dollar amount.
Filing back tax returns.
Most taxpayers stop filing after one year and that just seems to roll one year after another. Do not be afraid to file all your back tax returns at one time.
If you have little or no tax records we can prepare all your tax returns under reconstructive methods.
We cannot only file your back tax returns but settle your case at one time.
Call us today for free initial tax consultation and you can speak directly to a tax expert who either be a tax attorney, CPA, or former IRS agent.
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by Fresh Start Tax | May 22, 2014 | Tax Help
The FBAR must be filed electronically through FinCEN’s Bank Secrecy Act E-Filing System on or before June 30, 2014.
There is no longer a paper filing option.
IRS is now tracking everything.
Every U.S. person that had a financial interest in, or signature or other authority over, a foreign financial account during 2013 must electronically file with the U.S. Treasury Department a Financial Crimes Enforcement Network (“FinCEN”) Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”), if the aggregate value of such foreign financial account(s) exceeded USD $10,000 at any time during 2013.
This form replaces the U.S. Treasury Form TD F 90-22.1 that was required in years past. If an FBAR for 2013 is required, it must be filed electronically with the Treasury Department on or before June 30, 2014.
This deadline cannot be extended.
In your determination of whether you have an FBAR filing obligation, you should consider the following definitions, which apply to both individuals and entities for FBAR purposes:
A “U.S. person” means any:
1. U.S. citizen or resident (including resident aliens),
2. entity (including, but not limited to, a corporation, partnership or limited liability company) created or organized in the United States, and
3.trust or estate formed under the laws of the United States. Entities and trusts that are disregarded for federal income tax purposes are not disregarded for FBAR purposes and, therefore, may be required to file an FBAR.
Financial Accounts
A “financial account” generally includes any savings deposit, demand deposit, checking, securities, security derivatives, debit card, prepaid credit card, and any other financial instrument account, including certain insurance or annuity policies and pension funds.
An account with a mutual fund or similar pooled fund which issues shares available to the general public that have a regular net asset value determination and regular redemption’s is a financial account.
However, an equity interest in a hedge fund, private equity fund or other private investment fund is not currently considered to be a financial account.
If you are not sure that this applies to you can contact us for free initial tax consultation
Foreign Financial Account
Only “foreign financial accounts” are reportable on the FBAR.
A foreign financial account is a financial account that is maintained outside the United States.
For this purpose, the United States includes the states, the District of Columbia, territories and possessions of the United States, and certain American Indian lands.
An account maintained with a foreign branch of a U.S. financial institution is a foreign financial account for FBAR purposes. In contrast, an account maintained with a U.S. branch of a foreign financial institution is not a foreign financial account for FBAR purposes.
Financial Interests
A U.S. person has a “financial interest” in every financial account for which such U.S. person is the owner of record or holds legal title, regardless of whether the account is for such U.S. person’s benefit or for the benefit of another.
In addition, a U.S. person is required to file FBARs with respect to foreign financial accounts owned by entities if such U.S. person has, directly or indirectly,:
(a) in the case of a corporation, more than 50% of the voting power or the total value of the shares of such corporation;
(b) in the case of a partnership, a more than 50% interest in the profits or capital of such partnership; or
(c) in the case of other types of entities, more than 50% of the voting power or the total value of the equity or assets, or a more than 50% interest in the profits of, such other entities.
Similarly, if a U.S. person holds a present beneficial interest in more than 50% of the current income or assets of a trust that holds a foreign financial account, such U.S. person is required to file an FBAR with respect to the foreign financial accounts of the trust, unless the trust, trustee or agent of the trust is a U.S. person and files an FBAR disclosing the trust’s foreign financial accounts.
A U.S. person with a remainder interest in a trust is not within the scope of the FBAR.
Signature or Other Authority
“Signature or other authority” is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the financial institution that maintains the foreign financial account.
If an FBAR is required, the following generally describes the procedural requirements and the consequences of non-compliance:
The spouse of an individual who files an FBAR is not required to file a separate FBAR if all the financial accounts that the non-filing spouse is required to report are jointly owned with the filing spouse and the filing spouse reports the jointly owned accounts on his or her FBAR. If jointly filing, both parties should complete and sign FinCEN Form 114a, Record of Authorization to Electronically File FBARs, which allows only one spouse to electronically sign a single FBAR for both parties.
This form is kept for the taxpayers’ records and is not sent to FinCEN.
If spouses file separately, then each spouse must report the entire value of the jointly owned accounts on his or her FBAR.
Penalties for Non-Compliance
Failure to timely and properly file an FBAR may expose a taxpayer to a civil penalty of up to USD $10,000.
Willful violations of FBAR filing obligations may expose a taxpayer to an increased civil penalty of up to the greater of USD $100,000 or 50% of the aggregate value of the taxpayer’s foreign financial accounts at the time of the violation.
In addition, willful violations may be subject to criminal penalties.
Offshore Voluntary Disclosure Program
A U.S. person who has failed to timely or properly file an FBAR in the past may be able to correct such failure and mitigate or eliminate any applicable penalties through special programs currently administered by the Treasury Department.
by Fresh Start Tax | May 21, 2014 | Tax Help
We are comprised of former IRS agents and managers who have over 60 years of combined IRS work experience. We know the system!
If you owe back tax debt to the Internal Revenue Service, and are experiencing current tax hardships, want to make monthly payments or want to settle your tax debt contact us today for a free initial tax consultation.
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We are comprised of tax attorneys, tax lawyers, certified public accountants and former IRS agents with a combined 206 years a professional tax experience.
We are A+ rated by the Better Business Bureau and have been in private practice since 1982.
IRS Tax Debt Relief.
If you will owe back taxes to the Internal Revenue Service you’ll need to provide a current financial statement and form 433F or 433A.
That financial statement will need to be completely documented and will need to be verified by Internal Revenue Service before IRS closes out your case off the IRS enforcement computer.
Our expertise is in negotiations.
IRS will require the last three months pay stubs, canceled checks, and a copy of all monthly expenditures to verify the standard in which you are living.
IRS has national, regional, and local standards that they will compare against your current lifestyle and a determination will be made based on those standards against your current financial statement.
As a result of that review by the IRS, they will place you either into an economic tax hardship, place you went to a monthly payment agreement or let you know you could be a suitable and qualified candidate for an offer in compromise/settlement of back taxes.
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