by steve | Oct 19, 2011 | IRS Tax Advice, Tax Help, Uncategorized
IRS Withholding Calculator from your Friends at Fresh Start Tax LLC IRS Tax Experts
We are IRS Tax Specialists for IRS Tax Relief and Tax Problems! 1-866-700-1040
If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay.
You can use your results from the calculator to help fill out the form.
Who Can Benefit From The Withholding Calculator?
Employees who would like to change their withholding to reduce their tax refund or their balance due;
Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.
PLEASE USE CAUTION: If you will be subject to alternative minimum tax, self-employment tax, or other taxes; or if any of your current jobs will end before the end of the year, you will probably achieve more accurate withholding by following the instructions in Publication 919, How Do I Adjust My Tax Withholding?
Tips For Using This Program available at IRS.GOV
1.Have your most recent pay stubs handy.
2.Have your most recent income tax return handy.
3.Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.
4.To Change Your Withholding:
Use your results from this calculator to help you complete a new Form W-4, Employee’s Withholding Allowance Certificate.
Submit the completed Form to your employer.
Click here www.irs.gov/individuals/article/0,,id=96196,00.html
by steve | Oct 19, 2011 | IRS Tax Advice, Tax Help
How many times we are asked this question. The answer is different depending on your tax situation.
Call us if you have any questions. 1-866-700-1040.
By the way, we can audit proof your tax return. Have Fresh Start Tax LLC prepare your next Federal and State Tax Returns.
As a General Rule:
You must decide whether to itemize deductions or to use the standard deduction.
The standard deduction is a dollar amount that reduces the amount of income on which you are taxed.
You should itemize deductions if your allowable itemized deductions are greater than your standard deduction. Some taxpayers must itemize deductions because they cannot use the standard deduction.
You cannot use the standard deduction if:
1. You are married and filing a separate return, and your spouse itemizes deductions
2. You are a nonresident alien or a dual-status alien during the year, or
3. You are filing a tax return for a period of less than 12 months because of a change in your annual accounting method
In addition an estate or trust, common trust fund, or partnership cannot use the standard deduction.
For additional information, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.
You may benefit from itemizing your deductions on Schedule A if you:
1.Cannot use the standard deduction
2.Had large uninsured medical and dental expenses
3.Paid interest or taxes on your home
4.Had large unreimbursed employee business expenses
5.Had large uninsured casualty or theft losses, or
5.Made large charitable contributions
All of these larger deductions should be able to be easily proved because tax returns with real high deductions are more likely to be pulled for a tax audit.
You may be subject to limitations on some of your itemized deductions. Please refer to the Form 1040 Instructions or Form 1040, Schedule A Instructions for the limitation amounts.Note: For 2010, taxpayers with adjusted gross income above a certain amount will no longer lose part of their itemized deductions.
Call us today to have Former IRS Agents and Managers prepare your tax returns.
by steve | Oct 19, 2011 | IRS Tax Advice, Tax Help
Fresh Start Tax LLC IRS Tax Experts Former IRS Agents & Managers Since 1982
Question: How do you know if you have to file quarterly individual estimated tax payments? ( also called ES payments )
Answer: You must make estimated tax payments for the current tax year if both of the following apply:
1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
2. You expect your withholding and credits to be less than the smaller of:
3. 90% of the tax to be shown on your current year’s tax return, or
4. 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
There are special rules for:
1.Certain small business taxpayers for any tax year beginning in 2009
2. Certain taxpayers with higher adjusted gross income
3.Farmers and commercial fishermen
4.Aliens
5.Estates and Trusts
Contact us directly for more details.
by steve | Oct 17, 2011 | IRS Tax Advice, Tax Help
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by steve | Oct 13, 2011 | IRS Tax Advice, Tax Help, Uncategorized
Many question come up about the “Signing the of a Tax Return” for a decedent.
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.
by steve | Sep 26, 2011 | IRS Tax Advice
IRS has a new program out to help tax compliance on the employment tax front. The Program is called the Voluntary Classification Settlement Program.
The program is designed to help companies comply with their responsibilities for employer/ employee payroll taxes. It is likened to IRS tax amnesty.
The following is written from the IRS regarding the questions and answers about the new tax program.
Voluntary Classification Settlement Program (VCSP) Frequently Asked Questions
Q1. What is the Voluntary Classification Settlement Program (VCSP)?
A1. The VCSP is a new program developed by the IRS that allows taxpayers to voluntarily reclassify their workers as employees for future tax periods for employment tax purposes. Under the VCSP, a taxpayer will pay 10 percent of the amount of employment taxes calculated under the reduced rates of section 3509 of the Internal Revenue Code for the compensation paid for the most recent tax year to the workers being reclassified under the VCSP. In addition, the taxpayer will not be liable for any interest and penalties on the payment under the VCSP, and will not be audited for employment tax purposes for prior years with respect to the worker classification of the workers. Taxpayers may apply for the VCSP using Form 8952, Application for Voluntary Classification Settlement Program. For more information on the VCSP, see Announcement 2011-64 (PDF)
Q2. Do all workers have to be reclassified as employees?
A2. No. The VCSP permits taxpayers to reclassify some or all of their workers. However, once a taxpayer chooses to reclassify certain of its workers as employees, all workers in the same class must be treated as employees for employment tax purposes.
Example: ABC Company is a construction firm that currently contracts with its drywall installers, electricians and plumbers to perform services at housing construction sites. ABC Company determines it wants to voluntarily reclassify its drywall installers as employees. ABC Company submits an application, is accepted into the VCSP and enters into a closing agreement with the IRS. Once the VCSP closing agreement is executed, ABC Company must treat all drywall installers as employees for employment tax purposes.
Q3. Which taxpayers are eligible for the VCSP?
A3. Taxpayers who want to voluntarily change the classification of their workers going forward and who meet certain requirements are eligible for the VCSP. Specifically, a taxpayer must be treating the workers as independent contractors or other non employees and must have consistently treated the workers as non-employees, including having filed any required Forms 1099 with respect to each of the workers for the past 3 years. In addition, the taxpayer cannot be currently under audit by the IRS and cannot be under audit by the Department of Labor or any state agency regarding the classification of the workers.
Q4. Are exempt organizations eligible for the VCSP?
A4. Yes, exempt organizations are eligible if all eligibility requirements are met.
Q5. Are government entities eligible for the VCSP?
A5. Yes, government entities are eligible if all eligibility requirements are met.
Q6. Is the VCSP available to state and local government agencies for workers covered under a Section 218 agreement?
A6. No, the VCSP is not available to state and local government employers for workers covered under a Section 218 agreement. However, the VCSP is available to state and local government employers for workers not provided Social Security coverage under a section 218 agreement.
Q7. Is an exempt organization that is currently under a Form 990 series examination considered to be “currently under audit by the IRS” such that the exempt organization is not eligible for the VCSP?
A7. Yes, an exempt organization that is currently under a Form 990 series examination is considered to be “under audit by the IRS” and is not eligible to participate in the VCSP.
Q8. Can a taxpayer who is not currently under audit but who was previously audited be eligible for the VCSP?
A8. A taxpayer who was previously audited by the IRS or the Department of Labor concerning the classification of the workers may be eligible for the VCSP if the taxpayer has complied with the results of the IRS or Department of Labor audit.
Q9. How does a taxpayer take part in the VCSP?
A9. In order to participate in the VCSP, an eligible taxpayer must complete and submit an application, using Form 8952, Application for Voluntary Classification Settlement Program (which will be available in early October). The application should be filed at least 60 days from the date the taxpayer wants to begin treating its workers as employees.
Q10. Should payment be submitted with the application?
A10. No, taxpayers should not submit payment with the VCSP application.
Q11. What happens once the VCSP application has been submitted?
A11. Once submitted, the IRS will review the application and verify the taxpayers eligibility. Once the IRS accepts the taxpayer into VCSP, the IRS will contact the taxpayer (or the taxpayers authorized representative if an executed Power of Attorney is included with the application) to enter into the VCSP closing agreement with the IRS.
Q12. When does the taxpayer pay the amount due under the VCSP?
A12. Taxpayers must make full and complete payment of any amount due under the VCSP when they return the signed VCSP closing agreement to the IRS.
Q13. What are the results of participating in the VCSP?
A13. A taxpayer who participates in the VCSP agrees to treat the class or classes of workers as employees for future tax periods for employment tax purposes and will not be subject to an employment tax audit with respect to the worker classification of the workers for prior years. The taxpayer will pay 10% of the employment tax liability that may have been due on the compensation paid to the workers, calculated at the reduced rates of IRC section 3509, for the most recent year, with no liability for any interest or penalties. In addition, the taxpayer will extend the period of limitations on the assessment of employment taxes for three years for the first, second and third calendar years beginning after the date the taxpayer has agreed under the VCSP closing agreement to begin treating the class or classes of workers as employees.
Q14. Will I be contacted if my application is rejected?
A14. Yes, if you are not eligible, the IRS will contact you to inform you that your VCSP application has not been accepted.
Q15. If my application is rejected, can I apply again at a later point in time?
A15. Yes, if your VCSP application has been rejected because you are not eligible, you may reapply.
Q16. How is the amount of the VCSP payment calculated?
A16. Payment under the VCSP is 10% of the amount of employment taxes calculated under the reduced rates of section 3509 of the Internal Revenue Code for the compensation paid for the most recent tax year to the workers being reclassified under the VCSP. Under section 3509, the effective tax rate for compensation up to the Social Security wage base is 10.68% in 2010 or 10.28% in 2011, and 3.24% for compensation above the Social Security wage base.
The amount due under the VCSP is calculated based on compensation paid in the most recently closed tax year, determined at the time the VCSP application is being filed. Accordingly, the 10.68% effective rate applies under the VCSP in 2011 since the most recently closed tax year is 2010. The 10.28% effective rate applies under the VCSP in 2012 since the most recently closed tax year is 2011. The rate of 3.24% applies to compensation above the Social Security wage base in both situations.
