Category Archives: Independent Contractors

IRS Offers 10 Tax Tips

WHO WANTS A FREE TAX TIP?

If you haven’t filed yet, the IRS has these 10 tax-time tips to help you. The April 18 deadline to file your federal tax return is less than two weeks away. Don’t wait until the last minute.

1.Gather your records. Make sure you have all your tax records. This includes receipts, canceled checks and other records that support income, deductions or tax credits that you claim. If you purchased health insurance through the Marketplace, you will need the information in Form 1095-A to file.

2.Report all your income. You will need to report your income from all of your Forms W-2, Wage and Tax Statements, Forms 1099 and any other income – even if you don’t receive a statement – when you file your tax return.

3.Try IRS Free File. Free File is available only on IRS.gov. If you made $62,000 or less, you can use free name-brand tax software to file your federal tax return. If you earned more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. If you need more time to file, you can also use IRS Free File to get an automatic six-month extension to file your taxes. Remember, an extension to file your tax return is not an extension to pay taxes you owe, which are due April 18.

4.Try IRS e-file. Electronic filing is the best way to file a tax return. It’s accurate, safe and easy. If you owe taxes, you have the option to e-file early and pay by April 18 to avoid penalties and interest.

5.Use Direct Deposit. The fastest and safest way to get your refund is to combine e-file with direct deposit. The IRS issues more than nine out of 10 refunds in less than 21 days.

6.Visit IRS.gov. IRS.gov is a great place to get what you need to file your tax return. Click on the “Filing” icon for links to filing tips, answers to frequently asked questions and IRS forms and publications. Get them all at any time. The IRS Services Guide outlines the many ways to get help on IRS.gov.

7.Use IRS online tools. The IRS has many online tools on IRS.gov to help you file. For instance, the Interactive Tax Assistant tool provides answers to many of your tax questions. The tool gives the same answers that an IRS representative would give over the phone. If you want to find a tax preparer with the qualifications and credentials that you prefer, use the IRS Directory of Federal Tax Return Preparers. IRS tools are free and easy to use. They are also available 24/7.

8.Weigh your filing options. You have different options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free help at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site.

9.Check out number 17. IRS Publication 17, Your Federal Income Tax, is a complete tax resource that you can read on IRS.gov. It’s also available as an eBook. It can help you with many tax questions, such as whether you need to file a tax return, or how to choose your filing status.

10.Review your return. Mistakes slow down your tax refund. If you file a paper return, be sure to check all Social Security numbers. That’s one of the most common errors. Remember that IRS e-file is the most accurate way to file.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Tax Tibits: Do I have to issue my landscaper and housekeeper a 1099?

1099 and the law You are required to issue a 1099 to anyone you pay $600 or more in the course of your trade or business who is not incorporated.

Typical payments requiring a 1099 include services performed by independent contractors, such as gardeners and housekeepers for your business, as well as rents your business pays.

Received a Payment and Other Reporting Situations

Per the IRS, if, as part of your trade or business, you received any of the following types of payments, you will have to file a specific form.

Payment of mortgage interest (including points) or reimbursements of overpaid interest from individuals (1098)
Sale or exchange of real estate (1099-S)
You are a broker and you sold a covered security belonging to your customer (1099-B)
You are an issuer of a security taking a specified corporate action that affects the cost basis of the securities held by others (Form 8937)
You released someone from paying a debt secured by property or someone abandoned property that was subject to the debt (1099-A) or otherwise forgave their debt to you (1099-C)
You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment (1099-MISC)

Not Required to File Information Returns

You are not required to file information return(s) if any of the following situations apply:

You are not engaged in a trade or business.
You are engaged in a trade or business and
- the payment was made to another business that is incorporated, or
- the sum of all payments made to the person or unincorporated business is less than $600 in one tax year (unless the recipient is an attorney or law form, see specific instructions for 1099-MISC for further details).

If you need to issue a 1099, and haven’t, we can prepare the 1099 forms if you would like. Just contact us. We can be reached at 619-589-8680.

We do more than just tax preparation at US-TaxLaws.com. We are your best source for professional tax preparation and/or financial consulting services. We give clients a total solution that can include:

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services
Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & Trusts, Estate Planning   Bookkeeping   Payroll

Tips to Help You Keep What You Earn in 2015

Many of our clients are in-home businesses. Entrepreneurs, start-ups, small businesses, child care providers, independent professionals, operators and so on. What makes US-TaxLaws.com different is we’re more than taxes. We’re about financial health. We help our clients make their tax dollars work for them. They’re going to have to pay taxes… the question is how much and why. Continue reading →

2015 Tax Dates

January 15, 2015

4th Quarter 2014 Estimated Tax Payment Due

April 15, 2015

Individual Tax Returns Due for Tax Year 2014

Individual Tax Return Extension Form Due for Tax Year 2014

1st Quarter 2015 Estimated Tax Payment Due

Last Day to make a 2014 IRA Contribution

June 15, 2015

2nd Quarter 2015 Estimated Tax Payment Due

September 15, 2015

3rd Quarter 2015 Estimated Tax Payment Due

October 15, 2015

Extended Individual Tax Returns Due

Last Chance to Recharacterize 2014 Roth IRA Conversion

January 15, 2016

4th Quarter 2015 Estimated Tax Payment Due

Mileage Rates Deductions for Business, Charity Services and Medical Travel

Mileage Deduction Rates

Studies funded by the IRS demonstrate it continues to be more expensive to drive a car. The standard mileage deductions (or reimbursement rates) appear in the following table:

Mileage Deduction Rates 2014

Category	Rate (January to December)
Business Miles	56.0 cents per mile
Charitable Services	14.0 cents per mile
Medical Travel	23.5 cents per mile

Source: http://www.money-zine.com/financial-planning/tax-shelter/income-tax-changes-2

2015 SCORE Workshops in San Diego

Continuing Education for the entrepreneur, start-up and small business owner.

Note: Fees apply for most workshops.
Click on linked titles below for additional information and to register.
Access their calendar here.

Starting a Restaurant – January 20, 2015 FREE 9:00 a.m. – 12:00 p.m. PST
(Poway, CA)
This workshop is a MUST if you are serious about owning and operating your own restaurant! These essential aspects of a restaurant project will be discussed: Concept Planning…

Tax Considerations for Small Businesses – January 21, 2015 FREE 9:00 a.m. – 11:00 a.m. PST (Downtown San Diego, CA) See Parking Notes Below.
There are several types of taxes that businesses must pay during the calendar year. Understanding each one of these tax liabilities, being certain to meet the time requirements (and save penalty…

Advanced LinkedIn Marketing Hands On Laptop Training – January 21, 2015
6:00 p.m. – 8:30 p.m. PST (San Diego, CA)
This is an intensive hands on workshop designed for business owners that want to take their LinkedIn presence to the next level. It’s a packed agenda including: Advanced Networking…

Bing Ads for Small Businesses – January 23, 2015 FREE 8:30 a.m. – 10:00 a.m. PST
(Fashion Valley San Diego, CA)
Bing Ads is a robust collection of tools and information you can use to place advertisements on the web. Bing Ads can help you: Connect with customers who are engaged and likely to spend more…

Business Plan B: Setting Goals and Telling the World – January 24, 2015
9:00 a.m. – 12:00 p.m. PST (Kearny Mesa, CA)
Having identified your target market and competitive advantage in the first session, this workshop helps you develop a mission statement, preliminary goals and a marketing plan.

Notes on Parking in Downtown San Diego

The SBA/SCORE office is located across India St. from the America Plaza Trolley stop and one block away from the Santa Fe Depot Train and Trolley Station.
Parking is available in our building (entrance is on Columbia Street)
(Credit or Debit Only) $2.00 per/30 minutes – Maxium $24.00
Early Bird Special $12 (In by 9AM – Out by 6PM) – All prices subject to change without notice.
Additional parking is available in the area at indoor and outdoor lots – prices vary.
All metered street parking is limited to the time designated on the meter (usually 2 hours.) You must move your car after the time is up. You cannot add money to the meter to extend your parking time.
Allow extra driving time as construction around building may cause traffic delays.

SCORE is a Resource Partner of the U.S. Small Business Administration

SCORE services are provided without regard to race, color, religion, gender, sexual orientation, national origin, age, disability, genetic information, marital status, amnesty, or status as a covered veteran in accordance with applicable federal, state and local laws. Persons with disabilities may request reasonable special accommodations with a two week advance notice. Contact: Jill Andrews, 550 West C Street, Suite 550, San Diego, CA 92101 or (619) 727-4885. The material in this email is based on work supported by the U.S. Small Business Administration under cooperative agreement #SBAHQ12 S-0001. Any opinions, findings and conclusions or recommendations expressed in this email are provided by SCORE and do not necessarily reflect the views of the SBA.

To find a SCORE Chapter near you visit: www.score.org or web search SCORE with your city or state.

Click here to find an SBA District Office near you.

Looking Forward to 2015 Tax Benefits

In 2015, Various Tax Benefits Increase Due to Inflation Adjustments

For tax year 2015, the Internal Revenue Service announced annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments. Continue reading →

New Standard Mileage Rates Now Available; Just Announced

New Standard Mileage Rates Just Announced by IRS ; Business Rate to Rise in 2015

WASHINGTON — The Internal Revenue Service today issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

57.5 cents per mile for business miles driven, up from 56 cents in 2014
23 cents per mile driven for medical or moving purposes, down half a cent from 2014
14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously). Details on these and other special rules are in Revenue Procedure 2010-51, the instructions to Form 1040 and various online IRS publications including Publication 17, Your Federal Income Tax.

Besides the standard mileage rates, Notice 2014-79, posted today on IRS.gov, also includes the basis reduction amounts for those choosing the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing an allowance under a fixed and variable rate plan.

Notice 2014-79 provides the optional standard mileage rates for substantiating the amount of deductible expenses for using an automobile for business, moving, medical, or charitable purposes. For 2015, the standard mileage rates are 57.5 cents for business use of an automobile, 14 cents for use of an automobile as a charitable contribution, and 23 cents for use of an automobile as a medical or moving expense.

Notice 2014-79 also provides the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

The rules for using the optional standard mileage rates to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.

Notice 2014-79 will be in IRB IRB 2014-53, dated December 29, 2014.

ACA & The Individual Shared Responsibility Payment

**Did you hear about The Individual Shared Responsibility?**

Beginning in 2014, the individual shared responsibility provision of the Affordable Care Act requires each individual to:

Maintain a minimum level of health care coverage – known as minimum essential coverage, or
Qualify for an exemption, or
Make an individual shared responsibility payment when filing their federal income tax returns.

Minimum essential coverage generally includes government-sponsored programs, employer-provided health coverage, and coverage purchased in the individual market, including the Health Insurance Marketplace. Most people already have health insurance coverage that qualifies as minimum essential coverage, and therefore will not need to make a payment if they maintain their qualified coverage. However, for each month that you or a member of your family is without minimum essential coverage and does not qualify for an exemption, you will need to make an individual shared responsibility payment.

If you and your dependents had minimum essential coverage for each month of 2014, you will check a box indicating that when you file your 2014 federal income tax return. If you qualify for an exemption, you will attach a form to your tax return to claim that exemption. If you are required to make the individual shared responsibility payment, you will calculate your payment and make the payment with your return.

If you choose to make an individual shared responsibility payment instead of maintaining minimum essential coverage, this means you will not have health insurance coverage to help pay for medical expenses.

In general, the individual shared responsibility payment for 2014 is the greater of:

One percent of your household income above the income filing threshold for your tax filing status, or
A flat dollar amount of $95 per adult and $47.50 per child (under age 18) in your family, but no more than $285 per family.

The individual shared responsibility payment is also capped at the cost of the national average premium for bronze level health plans available through the Marketplace that would cover everyone in your family who does not have minimum essential coverage and does not qualify for an exemption – for example, $12,240 for a family of five. However this maximum fee will only impact the small number of high-income taxpayers who choose to go without health insurance. The payment amount is based on each individual’s personal circumstances, and information about figuring the payment can be found on our ‘Calculating the Payment’ page on IRS.gov/aca.

Example of Payment Calculation

Eduardo and Julia are married and have two children under age 18. No family member has minimum essential coverage for any month during 2014, and no family member qualifies for an exemption. For 2014, their household income is $70,000 and their tax return filing threshold amount is $20,300.

Using the household income formula: Subtract the tax return filing threshold amount for 2014 from the 2014 household income, then multiply the answer by one percent (0.01).
$70,000 – $20,300 = $49,700
One percent of $49,700 equals $497.00.
Using the flat dollar amount formula: Add $95 per adult for Eduardo and Julia to $47.50 per child – for their two children.
$95.00 + $95.00 + $47.50 + $47.50 = $285.00

Eduardo and Julia’s shared responsibility payment for the year for 2014 is $497. That’s because the household income formula amount of $497 is greater than flat dollar formula amount of $285, and it is less than the $9,792 annual national average premium for bronze level coverage for a family of four in 2014. More examples can be found on IRS.gov/aca.

More Information

Find out more about the tax-related provisions of the health care law at IRS.gov/aca.

Find out more about the health care law at HealthCare.gov.

Source: IRS- HCTT-2014-18

Affordable Care Act – For Individuals

Affordable Care Act has provisions for individuals who need to purchase Health Care.

New IRS Publication Helps You Find out if You Qualify for a Health Coverage Exemption

Taxpayers who might qualify for an exemption from having qualifying health coverage and making a payment should review a new IRS publication for information about these exemptions. Publication 5172, Health Coverage Exemptions, which includes information about how you get an exemption, is available on IRS.gov/aca.

The Affordable Care Act calls for each individual to have qualifying health insurance coverage for each month of the year, have an exemption, or make an individual shared responsibility payment when filing his or her federal income tax return.

You may be exempt if you:

Have no affordable coverage options because the minimum amount you must pay for the annual premiums is more than eight percent of your household income,
Have a gap in coverage for less than three consecutive months, or
Qualify for an exemption for one of several other reasons, including having a hardship that prevents you from obtaining coverage or belonging to a group explicitly exempt from the requirement.

On IRS.gov/ACA, you can find a comprehensive list of the coverage exemptions.

How you get an exemption depends upon the type of exemption. You can obtain some exemptions only from the Marketplace in the area where you live, others only from the IRS when you file your income tax return, and others from either the Marketplace or the IRS.

Additional information about exemptions is available on the Individual Shared Responsibility Provision web page on IRS.gov. The page includes a link to a chart that shows the types of exemptions available and how to claim them. For additional information about how to get exemptions that may be granted by the Marketplace, visit HealthCare.gov/exemptions.

Source: Issue Number: IRS-HC-TT-2014-19

MarketWatch Highlights Tax Law Changes

Have you planned for these 7 tax law changes?

CALL US - 619-589-8680 Seven significant new income tax law changes went into effect at the beginning of the year as a result of two pieces of legislation:

The 2010 Health Care Reform Act
The American Taxpayer Relief Act of 2012

Although the new laws are primarily designed to increase taxes for those with higher levels of income, everyone with earned income is affected. With the first seven months of 2013 behind us, have you begun planning for these changes? Continue reading →

Important Tax Date – February 28

FOR ALL BUSINESSES – TAX FILING INFORMATION

CAUTION TAX FORMS NEEDED! File information returns (for example, Forms 1099 for certain payments you made during 2013. There are different forms for different types of payments. Use a separate Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, which form to use, and extensions of time to file.

If you file Forms 1097, 1098, 1099, 3921, 3922, or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms generally remains January 31.

All businesses.

Give annual information statements to recipients of certain payments you made during 2013. You can use the appropriate version of Form 1099 or other information return. Form 1099 can be issued electronically with the consent of the recipient. Payments that may be covered include the following.

Cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish.
Compensation for workers who are not considered employees (including fishing boat proceeds to crew members).
Dividends and other corporate distributions.
Interest.
Rent.
Royalties.
Payments of Indian gaming profits to tribal members.
Profit-sharing distributions.
Retirement plan distributions.
Original issue discount.
Prizes and awards.
Medical and health care payments.
Debt cancellation (treated as payment to debtor).
Cash payments over $10,000. See the instructions for Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.

This information is available in IRS Publication 509 – Tax Calendars for Use in 2014

How Can You Avoid the New 3.8 % Obamacare Tax

A TAX BY WHATEVER NAME IS STILL PAINFUL

Cropped Doctor Patient Pic copy Whatever the name, taxes can be painful and the new tax is known by a few: the Affordable Care Act tax, the Obamacare tax, the Net Investment Income Tax (NIIT), or Medicare Tax. Most media (and even the President) is using the name “Obamacare Tax”, so we will use that name for this writing. For a full Q&A on the new tax, please see our Q&A on NIIT aka Obamacare Tax.

This is a tax on UNEARNED INCOME. Unearned income is defined as income derived from sources other than employment, such as interest and dividends from investments, or from rental property (source: investorwords.com). The types of income that will be affected by the new Obamacare tax are. Continue reading →

3 Tax Tips You Need to Know Heading Into 2014

Countdown to the New Year.

The budget deal that Congress and President Obama struck at the beginning of the year to avoid the fiscal cliff resulted in seven tax increases. If you throw in the six tax hikes that are part of Obamacare, that means there are 13 new taxes that may have hit you in 2013.

1.) The biggest potential taxes for wage earners include: Continue reading →

Do you need to issue a Form 1099-MISC for services rendered?

Who Must Issue 1099’s?

Businesses. You must report payments to others for services.
Nominees. If you are receiving income – but part of the income belongs to another.

BUSINESSES
If you paid $600.00 or more to a person or business during 2013 and may need to issue a form. This applies to business expenses only. You don’t need to report payment for personal expenses or any payments made to a corporation.
This is true even if you are a one-person office.

Continue reading →