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.… Read the rest

IRS Explains How Offer in Compromise Works

Taxpayers who have a tax debt they cannot pay may have heard that they can settle their tax debt for less than the full amount owed. It’s called an Offer in Compromise. Before applying for an Offer in Compromise, here are some things to know: In general, the IRS cannot accept a settlement offer if the taxpayer can afford to pay what they owe.… Read the rest

Helpful Tips to Keep in Mind When Amending Your Tax Return

Taxpayers can fix mistakes or omissions on their tax return by filing an amended tax return. Those who need to amend will find the following tips helpful. File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct the tax return. Taxpayers can’t file amended returns electronically. They can obtain the form on IRS.gov/forms at any time.… Read the rest

What to Do When an IRS Letter Arrives in the Mail

The IRS mails millions of pieces of correspondence every year to taxpayers for a variety of reasons. Below are some suggestions on how to best handle a letter or notice from the IRS: Do not panic. Simply responding will take care of most IRS letters and notices. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and provides specific instructions on what to do.… Read the rest

Missed the Tax Return Deadline? IRS Offers Help

  The tax deadline for most taxpayers was Tuesday, April 18, 2017. The IRS has some advice for taxpayers who missed the filing deadline. File and pay as soon as possible. Taxpayers who owe federal income tax should file and pay as soon as they can to minimize any penalty and interest charges. For taxpayers due a refund, there is no penalty for filing a late return.… Read the rest

Tax Tips to Help You Determine What Makes a Gift Taxable

Taxpayers who give money or property to others may wonder about the federal gift tax and if it applies. Most gifts are not subject to the gift tax. Here are seven tax tips about the gift tax and giving: Nontaxable Gifts. The general rule is that any gift is potentially taxable. However, there are exceptions to this rule. The following are nontaxable gifts: Gifts that do not exceed the annual exclusion amount for the calendar year, Tuition or medical expenses a taxpayer pays directly to a medical or educational institution for another person, A taxpayer’s gifts to their spouse, Gifts to a political organization for its use, and Gifts to charities.… Read the rest

Tips on Making Estimated Tax Payments

Taxpayers usually will have taxes withheld from their pay if they are an employee. However, if a person doesn’t have taxes withheld, or they don’t have enough tax withheld, they may need to make estimated tax payments. Taxpayers that are self-employed normally have to pay their taxes this way. Here are five tips about making estimated tax payments: When the tax applies.… Read the rest

Know these Helpful Tips about Employee Business Expenses

Taxpayers who pay work-related expenses out of their own pocket may be able to deduct them. Generally, employee business expenses are deductible if they are more than two percent of adjusted gross income. In most cases, they go on IRS Schedule A, Itemized Deductions. Other key points about employee business expenses: They must be Ordinary and Necessary. People can only deduct unreimbursed expenses that are ordinary and necessary to their work as an employee.… Read the rest

Know about the Home Office Deduction

Taxpayers who use their home for business may be able to deduct expenses for the business use of it. Qualified persons can claim the deduction whether they rent or own their home. Use the simplified method or the regular method to claim a deduction. Here are six tips to keep in mind about the home office deduction: Regular and Exclusive Use.… Read the rest

Are Tips Taxable? IRS Offers ‘Tips’

Generally, income received in the form of tips is taxable. The IRS provides some information that helps taxpayers report tip income correctly: Show all tips on a tax return. Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to report the amount of any unreported tip income to include as additional wages. This includes the value of non-cash tips such as tickets, passes or other items.… Read the rest