Don't Mess With Taxes

Even when companies try to comply with employment tax law, things can go awry. That's why many businesses hire third-party providers to handle those filings. The key here, detailed later in this post, is to hire the correct and reputable service. A Portland area construction company operator was sentenced to federal prison last week for his role in a multiyear scheme to evade the payment of payroll and income taxes on his workers' wages. The Aloha, Oregon, businessman was one of six men indicted last December by a Portland federal grand jury on charges of conspiring to defraud the United... Read more →

Long-time ol' blog readers know I regularly nag remind them to make sure their payroll withholding is correct. The tax goal is to have the amount of income taxes taken out each pay period to be as close as possible to what you owe when you file your return. Adjusting that amount can get you to that target. That's accomplished by completing a new Form W-4 with your new withholding details, as discussed in my post earlier this year on how to get your tax withholding just right. OK, maybe I am a bit of a tax nag. Withholding changes... Read more →

Young woman getting ready to record an online video. (Photo by George Milton) Being an influencer apparently isn't all it's cracked up to be, especially when the tax collector gets involved. Sure, some of those ubiquitous TikTok videos are just for fun. Others, however, can make big bucks for their online creators. That happens when the viral stars are paid influencers. In most cases, the influencers work as independent contractors for the companies they endorse. SE and income tax due: This self-employed status, reminds the Internal Revenue Service, means the online promoters must pay self-employment (SE) tax in addition to... Read more →

Some of the world's largest companies are family owned. Yes, we're looking at you, Walmart. But the real backbone of every community is its locally owned and operated businesses. Although they are much smaller, these owners face many of the same challenges as do corporate behemoths that are run by and employ family members. Working with family can be even more fraught when it comes to taxes, since employment tax requirements for related employees may vary from those that apply to other employees. Here's an overview of some common family business tax considerations. Married couples as business partners: For better... Read more →

Homemade Gifts Made Easy May. A short word with many meanings. It's the name of the fifth month of the year. Here in the Norther Hemisphere, it's when springtime comes in fully. That's fitting, since its name comes from Maia, the Greek goddess of spring and growth. The Oxford English Dictionary also says the word is a verb that expresses possibility, as in "that may be true," or permission, as in "may I ask a few questions?" When it comes to taxes, I like to combine the meanings. May is a time of growth and renewal and the possibility of... Read more →

Image courtesy @SBAgov Welcome to National Small Businesses Week (NSBW). This year is the 60th anniversary of the weeklong celebration of the United States' entrepreneurs and small business owners. More than half of Americans either own or work for a small business. These smaller firms also create about two out of every three new jobs in the U.S. each year. The event, which in 2023 runs from April 30 through May 6, is officially hosted by the U.S. Small Business Administration (SBA). But the Internal Revenue Service joins in the celebration since taxes are a big part of any business.... Read more →

Tax Day means double tax duty for millions of taxpayers. In addition to filing their annual return for last year's earnings, they also must make their first estimated tax payment for the current year. For 2023, these dual payments are due next week, on Tuesday, April 18. Next week's April 18 Tax Day is the end of the 2022 tax year for millions of filers. It's also the beginning of the 2023 tax year for those who pay estimated taxes. Our tax system is pay as earn, which for most employed people is taken care via withholding from their paychecks.... Read more →

The IRS' tax relief for tornado-stricken Tennessee residents and business owners is welcome. But that's just one part of picking up the pieces after a major disaster. Keep reading after the Volunteer State tax specifics for tips that all of us can use to recover, financially and physically, if we ever must cope with a catastrophe. Damage caused by an EF3 tornado that touched down southwest of Covington, Tennessee. Covington is the county seat of Tipton County, one of 10 counties in the Volunteer State that the Internal Revenue Service granted tax relief following the March 31-April 1 tornado and... Read more →

Great American Park vendor selling frozen treats and beer at a Cincinnati Reds game. (Photo by Chris Metcalf via Flickr CC) Happy MLB Opening Day! No, it's not an official holiday, but it should be. I've been to several Major League Baseball opening days in person over the years. It's great fun. It's also expensive. A ticket to a major league ballpark these days can blow a full grocery budget to bits. And speaking of food, the cost of concessions is outrageous. But since you no longer can bring in food — yes, I'm old enough to remember when we... Read more →

Photo by Elisa Ventur on Unsplash When you make a mistake on your Form 1040, the best thing that could happen is the Internal Revenue Service will catch your relatively insignificant error, fix it, and send you a notice about the change. A worse outcome is the IRS changes reduce and/or delay the refund you're expecting. And the absolute worst tax error outcome is that your mistake isn't a minor one, and the IRS decides to take a longer, closer look at your filing. The only way to avoid these situations is to double check your return to ensure it's... Read more →

Photo by Emanuel-Kluge via Flickr When U.S. residents make international moves for work, there's one part of the country that goes with them. They remain U.S. taxpayers, filing federal tax returns on the on their overseas earnings. Uncle Sam, however, does provide some tax breaks to his citizens living and working abroad. Their filing deadline is June 15. Thanks to tax treaties, globally peripatetic taxpayers also get certain foreign earned income exclusions and/or foreign income tax credits. These exclusion amounts also are affected by the cost of living, as noted in Part 8 of the ol' blog's 2023 annual inflation... Read more →

Some small business owners say they'd rather face angry bees than deal with their companies' taxes. (Photo by 1 bayanın gözüyle) Most of the focus at tax time is on individual filers. That's understandable. The Internal Revenue Service gets more personal income tax returns each year than it does business filings. Of the 261 million returns that IRS employees processed during fiscal year 2021, 167.9 million were from individuals. Business filings accounted for more than 12.2 million. But more than 12 million is not a number to be dismissed. That's why a couple of business tax pieces earn this weekend's... Read more →

March is supposed to come in like a lion and go out like a lamb, at least according to the old weather saying. Feline ferocity also could help when it comes to taxes. We need that predatory focus since we only have around six weeks — less due to that dang hour we'll lose this month to Daylight Saving Time! — until our federal (and state, for some folks) returns are due. That aggressiveness also could pay off long after the annual tax deadline, thanks to tax breaks that can help add to your post-work savings. So let's not waste... Read more →

Most U.S. workers get a salary or wages. Those amounts are reported to them early every year on Form W-2, which they use to file their annual tax return. But a lot of those folks also get other money throughout the year, and the Internal Revenue Service wants to know about that, too. These amounts, basically any income not reported on a W-2, go in Part I of Form 1040's Schedule 1, appropriately titled Additional Income. In many, but not all, cases the additional earnings are reported on one of the many types of 1099 forms. As with W-2s, 1099s... Read more →

When it comes to paycheck tax withholding, you want to get it just right to avoid a bear of a tax problem. (Goldilocks caught in Baby Bear's bed drawing by Leonard Leslie Brooke via Wikipedia Commons) Almost 29 million taxpayers have filed returns so far this 2023 tax season. Most early filers are tax refund recipients. Those of us who tend to owe send our 1040s to the IRSs closer to the April deadline, which is on the 18th this year. Both filing tendencies underscore a need to get tax withholding right. Overwithholding costs: IRS data show that most taxpayers,... Read more →

The IRS has implemented a document upload process to deal with certain tax notices that looks so easy, you shouldn't need your cat's, or any other, help to use it. (Photo by Ruca Souza) I've spent the last few days online, downloading documents we need to file our tax return, which I'll eventually do electronically. I am not alone. More of us handle most of our lives' issues online. In addition to taxes, we shop, bank, watch entertainment programs, and communicate with friends and family digitally. Now the Internal Revenue Service has expanded our electronic tax interaction options to help... Read more →

Photo by Polina Zimmerman While millions are debating when to file their tax return, others are asking a more elemental question. Do I have to file a 1040 at all? It's a good question. The short answer is probably. But there are some situations where the Internal Revenue Service doesn't demand individuals file. Here's a look at just who is off the tax filing hook. Filing requirements for most of us: Generally, if you are a U.S. citizen or resident you must consider three things when determining whether you have to file a tax return: your age, your filing status,... Read more →

Being a bit pokey can sometimes pay off at tax filing time. (Photo by Kay Bell) My husband and I have a lot in common. We also are a lot different. I tend to obsessiveness, wanting to take care of things as soon as I can. The hubby, on the other hand, is more deliberative. Unless it absolutely has to be done immediately, he's OK with waiting. And waiting and waiting. We've managed to make out differing approaches work. And I must admit that sometimes, he's right to put off projects. Not always, but sometimes. Situations change, making moot what... Read more →

Every filing season, eager taxpayers, most of them expecting a refund, send their returns to the Internal Revenue Service as soon as they can. For most it works out OK. Others, however, discover on their own, or learn from the IRS, something just not quite right, and costly, on their Form 1040. It works the other way, too. In some instances, folks submit a return without claiming a tax break that would have saved them dollars. The IRS isn't going to tell you about that! The best way to make sure you enter all the data that the IRS wants,... Read more →

Unemployment benefits can be a godsend when you lose your job. They also can be a god-awful problem at tax time. That money you get to help tide you over until you find another job is taxable income. In certain situations, however, lawmakers have provided unemployment compensation, or UC (and yes, that's its official name, so the compensation moniker explains the taxing), have exempted some of the government money from federal tax. COVID UC exemption: That was the case during the height of the COVID-19 pandemic. The extraordinary circumstances of so many people losing their jobs at the same time... Read more →