The IRS Employment Taxes – How it all works – What you need to know
Fresh Start Tax is asked over and over about the requirements for business start up, hope this helps. Question: We are about to hire employees and need to know how much tax to take out and where to send this money.
You will need to secure a completed Form W-4 (PDF), Employee’s Withholding Allowance Certificate, from each employee.
This is a helpful, Publication 15, Circular E, Employer’s Tax Guide, and Publication 15-A (PDF), Employer’s Supplemental Tax Guide, to determine the amount of withholding and for directions on depositing the withholding amounts and other employment taxes. This is the most helpful guide. Generally, employers are required to quarterly file Form 941 (PDF), Employer’s Quarterly Federal Tax Return, and annually file Form 940 (PDF), Employer’s Annual Federal Unemployment Tax Return (FUTA), and Form W-2 (PDF), Wage and Tax Statement, with Form W-3 (PDF), Transmittal of Wage and Tax Statements. Some small employers (those whose annual liability for social security, Medicare, and withheld Federal income taxes is $1,000 or less) may file Form 944-SS (PDF), Employer’s Annual Federal Tax Return, instead of Form 941, if the IRS has notified them to Form 944 instead of Form 941. New employers are also eligible to file Form 944, if they will meet the eligibility requirements. New employers filing Form SS-4 Form SS-4(PDF), Application for Employer Identification Number, must check the “Yes” box or “No” box on line 14 to indicate whether they expect to have $1,000 or less in employment tax liability for the calendar year.
The Employment Tax e-file System offers an improved way to file Forms 940,941, and 944 electronically. Prospective participants must first complete and submit an IRS e-file application. You can complete the IRS e-file application online after registering for e-services. You should contact a local professional to help you through the process.
Fresh Start Tax is one of the premier tax resolution firms in the country. We deal with all types of cases, individuals, business and high dollar corporate entities. We have a staff that specializes in every type of case. Some of our specialties include the following:
Immediate Tax Resolution and Representation
Offers in Compromise and Settlement
Back Taxes/ Unfiled or Never filed tax returns
Bank or Wage Levy Garnishments
Letters of Intent of Notice to Levy
IRS Tax Audits
Hardship, part pay agreements
State Sales Tax problems and Resolution
Our company resume:
Our staff has over 140 years of professional tax representation experience
On staff are Board Certified Tax Attorney’s, CPA’s, former IRS Agents, Managers and Instructors
Former State Department of Revenue Manager and Instructor
We are extremely moral and ethical in all our business dealings
We have the highest rating by the Better business Bureau
These are questions that come up on a routine basis, but are they deductible? Question: Are business gifts deductible and how much? Answer: If you give business gifts in the course of your trade or business you can deduct all or part of the costs subject to the following limitation: You can deduct no more than $25 for business gifts you give directly or indirectly to any one person during your tax year.
1. If you and your spouse both give gifts to the same person, both of you are treated as one taxpayer.
2. Incidental costs such as engraving, packing or shipping do not have to be included in the $25 limit.
3. Gifts costing $4.00 or less that have your business name permanently engraved on the item, and which you distribute on a regular basis is excluded from $25 per person limit.
You need to have records that prove the business purpose of the gift as well as the details of the amount spent.
Fresh Start Tax is one of the premier tax resolution firms in the country. We deal with all types of cases, individuals, business and high dollar corporate entities. We have a staff that specializes in every type of case. Some of our specialties include the following:
Immediate Tax Resolution and Representation
Offers in Compromise and Settlement
Back Taxes/ Unfiled or Never filed tax returns
Bank or Wage Levy Garnishments
Letters of Intent of Notice to Levy
IRS Tax Audits
Hardship, part pay agreements
State Sales Tax problems and Resolution
Our company resume:
Our staff has over 140 years of professional tax representation experience
On staff are Board Certified Tax Attorney’s, CPA’s, former IRS Agents, Managers and Instructors
Former State Department of Revenue Manager and Instructor
We are extremely moral and ethical in all of our business dealings
We have the highest rating by the Better Business Bureau
Signing the Return of a Deceased Spouse Question: My husband passed away last year, and I will be filing a joint return. Are there any special return notations required to indicate my husband is deceased? Answer: If you are a surviving spouse filing a joint return and no personal representative has been appointed, you should sign the return and write in the signature area, “filing as surviving spouse.”
The final return should have the word “Deceased,” the decedent’s name, and the date of death written across the top of the return.
IRS Nanny Requirements- Do I need to File tax forms?
Forms 941, 940, Employment Taxes
Question: We hired a nanny to look after our baby while we work. How do we pay her social security taxes and properly report her income?
Answer: A nanny is considered a household employee:
A household employer only has to pay social security and Medicare taxes only on cash wages paid to an employee that exceed the threshold amount for the year.
If the amount paid is less than the threshold, no social security or Medicare taxes are owed.
If social security and Medicare taxes must be paid, you will need to file Form 1040, Schedule H (PDF), Household Employment Taxes.
You must withhold the employee’s portion of the social security and Medicare taxes unless you choose to pay both the employee’s share and the employers share. The taxes are 15.3% of cash wages. Your share is 7.65% and the employee’s share is 7.65%.
You may also be responsible for paying federal unemployment taxes, reported on Form 1040, Schedule H.
You and your employee may agree for you to voluntary withhold income tax from wages paid to the employee, reported on From 1040, Schedule H.
Be careful to claim the Nanny. IRS always keeps a watch for this especially on higher dollar cases. They can easily find out by the reviewing of business or personal checks
Fresh Start Tax is one of the premier tax resolution firms in the country. We deal with all types of cases, individuals, business and high dollar corporate entities. We have a staff that specializes in every type of case. Some of our specialties include the following:
Immediate Tax Resolution and Representation
Offers in Compromise and Settlement
Back Taxes/ Unfiled or Never filed tax returns
Bank or Wage Levy Garnishments
Letters of Intent of Notice to Levy
IRS Tax Audits
Hardship, part pay agreements
State Sales Tax problems and Resolution
Our company resume:
Our staff has over 140 years of professional tax representation experience
On staff are Board Certified Tax Attorney’s, CPA’S, former IRS Agents, Managers and Instructors.
Former STATE Department of Revenue Manager and Instructor.
We are extremely moral and ethical in ALL our business dealings
We have the highest rating by the Better business Bureau
How many times have we heard this one!!! What is the answer, read on.
W-4 – Allowances, Excess FICA, Students, Withholding Question: What can be done if an employer will not withhold income taxes, social security, and Medicare from my pay? Answer: Generally, if an employer does not withhold income taxes, social security, and Medicare from your pay, you are being treated as an independent contractor (self-employed person). If you believe an employee relationship exists and you cannot resolve this matter with your employer, you should submit a Form SS-8 (PDF), Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding. The factors used to determine if an employer-employee relationship exists are covered in Chapter 2 of Publication 15-A (PDF), Employer’s Supplemental Tax Guide.
If your status as an employee is not at issue, it may be that you are in a category of employment whose earnings are not wages for federal employment tax purposes. Find out from your employer the reason that social security and Medicare taxes and income taxes are not being withheld from your pay. If you have further questions, contact the IRS toll-free at 800-829-1040 or visit an IRS walk-in office for assistance.
There is much confusion about the different types of corporate vehicles.This is a basic summary of three different types of corporations. Entities: Sole Proprietor, Partnership, Limited Liability Company/Partnership (LLC/LLP), Corporation, Sub-chapter S Corporation Question: Can you give me plain English definitions for the following: (1) a closely held corporation, (2) a personal holding corporation, and (3) a personal service corporation? Answer is: Generally, a closely held corporation is a corporation that:
Has more than 50% of the value of its outstanding stock owned (directly or indirectly) by 5 or fewer individuals in the last half of the tax year.
Are subject to additional limitations in the tax treatment of items such as passive activity losses, at-risk rules, and compensation paid to corporate officers.
The definitions for the terms “directly or indirectly” and “individual” are in Publication 542, Corporations. A personal holding company is:
Defined in Internal Revenue Code section 542.
A personal holding company if both the Income Test and the Stock Ownership Test are met.
The Income Test states that at least 60% of the corporation’s adjusted ordinary gross income for the tax year is from dividends, interest, rent, and royalties.
The Stock Ownership Test states that at any time during the last half of the tax year, more than 50% in value of the corporation’s outstanding stock is owned, directly or indirectly, by 5 or fewer individuals.
Refer to the Form 1120, Schedule PH Instructions for more information and a list of exceptions. A personal service corporation:
The main work of the company is to perform services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, the performing arts, or consulting.
Substantially all of the stock is owned by employees, retired employees, or their estates.
Examples may be law firms and medical clinics.
