Tag Archives: IRS

IRS Small Business Tip – Employee or Independent Contractor??

Issue Number: IRS Small Business Week Tax Tip 2017-02
Inside This Issue
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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 directs or controls financial and certain relevant aspects of a worker’s job, it exercises financial control. This includes:
• The extent of the worker’s investment in the facilities or tools used in performing services
• The extent to which the worker makes his or her services available to the relevant market
• How the business pays the worker, and
• The extent to which the worker can realize a profit or incur a loss
2.  Relationship.  How the employer and worker perceive their relationship is also important for determining worker status. Key topics to think about include:
• Written contracts describing the relationship the parties intended to create
• Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation or sick pay
• The permanency of the relationship, and
• The extent to which services performed by the worker are a key aspect of the regular business of the company
• The extent to which the worker has unreimbursed business expenses
The IRS can help employers determine the status of their workers by using form Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. IRS Publication 15-A, Employer’s Supplemental Tax Guide, is also an excellent resource.
Share this tip on social media — Employee or Independent Contractor? Know the Rules. https://go.usa.gov/x58ra#IRS


IRS Alerts

Borrowed via Checkpoint Newsstand – Thomson Reuters post 2/7/17
The following are some recent phishing scams and myths that the IRS would like you to be aware of :
Federal Tax Highlights

Washington Alert — Part I

IRS, joined by state tax agencies and the tax industry, has issued an “urgent alert” to all employers regarding the Form W-2 (Wage and Tax Statement) email phishing scam. (IR 2017-20) According to the agency, the phishing scam “has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits”. The W-2 scammers have been coupling their attempts to steal employee W-2 information with a scheme regarding wire transfers. As described by IRS, cybercriminals use a variety of techniques to make an email appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments and requests a list of all employees and their Forms W-2. In a new twist, the perpetrators follow up with an “executive” email to the payroll department or comptroller and ask that a wire transfer be made to a specific account. In some cases, companies have responded to this request. Noting that there has been “an upswing of [scam] reports in recent days”, IRS urged employers to immediately share this information with their payroll, finance and human resource personnel. They also should have an internal policy on the distribution of employee W-2 information and conducting wire transfers. “This is one of the most dangerous email phishing scams we’ve seen in a long time”, said IRS Commissioner John Koskinen. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns.” Additional information is available at irs.gov/uac/dangerous-w-2-phishing-scam-evolving-targeting-schools-restaurants-hospitals-tribal-groups-and-others

IRS has issued tips to taxpayers that refute several “myths” pertaining to tax refunds currently circulating. (IR 2017-16) The myths included the following – all refunds are delayed; calling IRS or a tax professional will provide a better refund date; ordering a tax transcript is a “secret way” to obtain a refund date; the “Where’s My Refund” tool must be incorrect because there is no deposit date appearing; and delayed refunds for those claiming the earned income tax credit or the additional child tax credit will be delivered on Feb. 15. Complete details can be found at irs.gov/uac/newsroom/irs-answers-common-early-tax-season-refund-questions-and-addresses-surrounding-myths

IRS has commenced publishing entries to its annual list of “Dirty Dozen” tax scams for the 2017 filing season. (IR 2017-15) Phishing schemes now lead the newest Dirty Dozen list. As of Feb. 3, IRS published two additional entries on its list – telephone scams and identity theft. It is expected that the agency will be announcing daily additions to the list. Updated information will appear at irs.gov/uac/newsroom/dirty-dozen

 

If you receive any suspicious emails, phone calls, or mail, contact us at  Schutte & Hilgendorf CPAs .

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.

 

 


HAPPY NEW YEAR – Important Announcements for Employers

HAPPY 2017!

This letter was sent to all of our business clients at year end with important Arizona and Federal announcements affecting employers in the new year.

Click the link:   Business-Year-End-Letter-2016

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


2017 Standard Mileage Rates

From the IRS website:

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.   The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

 

Go to the following link for more information:

 

2017 Standard Mileage Rates for Business, Medical and Moving Announced

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Volunteers for Charities – Tax Tips

If you volunteer for a charitable organization and you itemize your deductions, here are some tips to keep in mind:

  • Keep track of your mileage, date, and purpose of the trip.  The IRS allows you to deduct 14 cents per mile.
  • You can also deduct parking fees if applicable.
  • There are also deductions for other expenses incurred while volunteering such as the cost of stamps for a fund-raising mailing, or ingredients for making cookies for a bake sale fund raiser or for your religious organization.

 

If you have any questions about this or any other tax questions, please give us a call at 928-778-0079.

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


IRS Tax Tips: Premium Tax Credit Checkup for your 2016 Health Insurance Marketplace Coverage

If you or anyone in your family are getting advance payments of the “premium tax credit” you should check to see if you need to adjust your premium assistance.  Please see IRS tax tips link below for more detailed information.

 

Premium Tax Credit Checkup for 2016 Health Insurance Marketplace Coverage

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


IRS Warns of Latest Tax Scam Involving Bogus Federal Student Tax

Go to the following link:

 

IRS Warns of Latest Tax Scam Involving Bogus “Federal Student Tax”

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


INCREASE IN PENALTIES FOR FAILING TO FILE AN INCOME TAX RETURN

On February 24, 2016, President Obama signed a new law banning income taxes on Internet Services.  This law also included a provision increasing the penalty for failing to file a tax return.

 

The higher failure-to-pay penalty is effective for returns to be filed after calendar year 2015, so it applies to this tax return season.  The penalty is equal to 5 percent of the amount of additional taxes owed for every month that your return is late, up to a maximum of 25 percent.

 

Remember there are 2 penalties:  A failure-to-file penalty AND a failure-to-pay penalty.   If you have a balance owing it is always better to file the returns timely and pay when you can or set up an Installment Agreement Payment Plan with the IRS.  You can also pay your tax balance by credit card.

 

Filing an extension ONLY delays filing the return.  If you owe tax, the tax must be paid by April 15 to avoid a failure-to-pay penalty.

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.

 


IRS Tax Tip 2016-20:

What You Need to Know About Taxable and Non-Taxable Income  (click on the link below)
IRS Tax Tip 2016_20

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


2016’s Dirty Dozen Tax Scams

In this day and age of technology, each day brings new ways for thieves to part individuals from their hard earned income.  Each year the IRS releases a list of what it considers the worst tax scams of the year.  See the link below for the article published by the Journal of Accountancy for the worst tax scams in 2016.    

“dirty dozen” worst tax scams

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.