Federal Tax Deadline Oct 15, 2019

Federal Tax Deadline Oct 15, 2019

Tomorrow is the federal tax extension deadline! Get your affairs in order today!

Call us for more info.

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President Trump Signs Taxpayer First Act to Reform the IRS

President Trump Signs Taxpayer First Act to Reform the IRS

On July 1, President Trump signed the Taxpayer First Act (H.R. 3151). This bipartisan legislation aims to modernize and improve the IRS by creating an independent office of appeals, requiring the IRS to submit to Congress a plan to redesign and restructure the agency, enhancing cybersecurity efforts, and implementing other changes to better serve taxpayers. Several provisions were supported by APA’s Government Relations Task Force through meetings with congressional staff.

Payroll Provisions

Here are some of the payroll provisions in the Taxpayer First Act.

·Lowered electronic filing threshold. The IRS currently requires electronic filing when a business files at least 250 information returns (e.g., Forms W-2 or 1099-MISC). The legislation lowers the threshold to 100 in calendar year 2021 and then to 10 thereafter.

·Internet platform for Form 1099 filing. The legislation requires the creation of an online platform for businesses to prepare and file Forms 1099. The legislation directs the IRS to develop the platform with a user interface and functionality similar to SSA’s Business Services Online and to implement it by January 1, 2023.

·Authentication of e-Services users. The legislation requires the IRS to verify individuals who apply to open an e-Services account before they can use its tools.

·Independent Office of Appeals. The law creates a new position, Chief of Appeals, who will report directly to the IRS Commissioner and oversee the Independent Office of Appeals to resolve tax controversies without litigation.

·Cybersecurity and identity protection. Referred to as “21st Century IRS,” the legislation requires the IRS to collaborate with the private sector to protect taxpayers from identity theft refund fraud.

To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, give us call at 714-400-9201 or visit our website at www.Alvareztaxinc.com

 

California to have highest gas prices in nation when new gas tax kicks in July 1

California to have highest gas prices in nation when new gas tax kicks in July 1

When the new gas tax kicks in July 1, California will have the highest gas tax in the country.

The new gas tax will add an additional 5.6 cents per gallon of gas.

Consumer Watchdog President Jaime Court argues even though the new gas tax is expected to generate more than $50 billion over the next decade for much-needed road repairs, road infrastructure and transit upgrades, consumers shouldn’t be stuck with the bill.

“I had an issue with the tax increase when it went into effect because I felt that it should be paid for by the oil refineries excessive profits,” he said.

With the state average at over $4 a gallon, motorists pay close to $1.20 more per gallon at the pump than the national average. The state energy commission reports 70 cents of that difference is attributed to tougher gas standards and environmental regulations. Court claims otherwise.

“The state of California is investigating now the high cost of gas in this state… I know what it is because I look at the oil refineries profit reports. It’s gouging. When the oil refineries are making more off California gasoline than they make anywhere in the rest of the nation, we know that that profit is gouging,” Court added.

Court said he’s working with the governor’s office to rein in oil companies providing relief for consumers at the pump.

“We are an isolated market, and we have five oil refineries that control 90% of the gasoline in this state in terms of making it, and also in Southern California, control 80% of the retail gasoline stations,” he added.

Hire Your Children This Summer: Everyone Wins

Hire Your Children This Summer: Everyone Wins

If you’re a business owner with children, hiring them for the summer can provide many benefits. One is tax savings. By shifting business income to a child as wages for services performed, you can turn your high-taxed income into tax-free or low-taxed income. You may also be able to realize payroll tax savings (depending on the child’s age and how your business is organized) and enable retirement plan contributions for the children. Everybody wins! Many rules apply. Contact us to learn more.

You may be able to:

Shift your high-taxed income into tax-free or low-taxed income,
Realize payroll tax savings (depending on the child’s age and how your business is organized), and
Enable retirement plan contributions for the children.

It must be a real job

When you hire your child, you get a business tax deduction for employee wage expenses. In turn, the deduction reduces your federal income tax bill, your self-employment tax bill (if applicable), and your state income tax bill (if applicable). However, in order for your business to deduct the wages as a business expense, the work performed by the child must be legitimate and the child’s salary must be reasonable.

For example, let’s say a business owner operates as a sole proprietor and is in the 37% tax bracket. He hires his 16-year-old son to help with office work on a full-time basis during the summer and part-time into the fall. The son earns $10,000 during 2019 and doesn’t have any other earnings.

The business owner saves $3,700 (37% of $10,000) in income taxes at no tax cost to his son, who can use his 2019 $12,200 standard deduction to completely shelter his earnings.

The family’s taxes are cut even if the son’s earnings exceed his or her standard deduction. The reason is that the unsheltered earnings will be taxed to the son beginning at a rate of 10%, instead of being taxed at his father’s higher rate.

How payroll taxes might be saved

If your business isn’t incorporated, your child’s wages are exempt from Social Security, Medicare and FUTA taxes if certain conditions are met. Your child must be under age 18 for this to apply (or under age 21 in the case of the FUTA tax exemption).

Be aware that there’s no FICA or FUTA exemption for employing a child if your business is incorporated or a partnership that includes non-parent partners.

Start saving for retirement early

Your business also may be able to provide your child with retirement benefits, depending on the type of plan you have and how it defines qualifying employees. And because your child has earnings from his or her job, he can contribute to a traditional IRA or Roth IRA. For the 2018 tax year, a working child can contribute the lesser of his or her earned income, or $6,000 to an IRA or a Roth.

Raising tax-smart children

As you can see, hiring your child can be a tax-smart idea. Be sure to keep the same records as you would for other employees to substantiate the hours worked and duties performed (such as time-sheets and job descriptions). Issue your child a Form W-2.

IRS Offers Options to Help Taxpayers Who Can’t Pay

IRS Offers Options to Help Taxpayers Who Can’t Pay

If you owe the IRS but you can’t pay in full, there are options.

The agency is anticipating many taxpayers being impacted by the tax overhaul.

If you have to pay more than you expect, the IRS offers options such as paying in installments or delaying the collection.

Taxpayers that owe taxes can choose one of the payment options listed below:

  • Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes. Online applications to establish tax payment plans, like online payment agreements and installment agreements, are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time.
  • Installment Agreement — Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Even taxpayers who don’t qualify for a payment agreement may still pay by installment. Certain fees apply.
  • Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.
  • Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool.

For more information give us a call.