Monday, August 21, 2017

Need To Amend Your Personal Tax Return? File Form 1040X


File an amended tax return to correct information that changes tax calculations.  This includes making changes to filing status and dependents, or correcting income credits or deductions.

Don’t file an amended return to fix math errors because the IRS will correct those.


The IRS offers tips on how to amend a tax return:
  1. File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct errors to an original tax return the taxpayer has already filed. Taxpayers can’t file amended returns electronically. Mail the Form 1040X to the address listed in the form’s instructions.

  2. Preparing Form 1040X. Many taxpayers find the easiest way to figure the entries for Form 1040X is to make the changes in the margin of the original tax return and then transfer the numbers to their Form 1040X. Taxpayers should be sure to check a box at the top to show the year they are amending. Form 1040X will be the taxpayer’s new tax return, changing the original entries to include new information. Taxpayers should explain what they are changing and why on the second page of Form 1040X in Part III.

  3. Know when to amend. Taxpayers should amend a tax return to correct their filing status, the number of dependents or total income. They should also amend to claim deductions or credits not claimed or to remove deductions and credits they are not entitled to on the original return. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return.

  4. Know when NOT to amend. In some cases, it is not necessary to amend a tax return. Taxpayers should not worry about math errors because the IRS will make the correction. Taxpayers do not need to amend their return if they forgot to include a required form or schedule. The IRS will mail a request to the taxpayer, if needed.

  5. Use separate forms for each tax year. Taxpayers amending tax returns for more than one year will need a separate 1040X for each tax year. Mail each tax year’s Form 1040X in separate envelopes. See "Where to File" in the instructions for Form 1040X for the correct address.

  6. Include other forms or schedules. If a taxpayer makes changes to any form or schedule, they should attach them to the Form 1040X when filing. Not doing so could cause a delay in processing.

  7. Wait to file for corrected refund for tax year 2016. Taxpayers should wait for the refund from their original tax return before filing an amended return. It is okay to cash the refund check from the original return before receiving any additional refund. Amended returns can take up to 16 weeks to process.

  8. Pay additional tax. Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.

  9. File within three-year time limit. Generally, to claim a refund, taxpayers must file a Form 1040X within three years from the date they timely filed their original tax return or within two years from the date the person pays the tax, whichever is later. For taxpayers who filed their original return early (for example, March 1 for a calendar year return), their return is considered filed on the due date (generally April 15).

  10. Track your amended return. Taxpayers can track the status of an amended return three weeks after filing. Go to “Where’s My Amended Return?” or call 866-464-2050.
Get Form 1040X on IRS.gov/forms at any time.

Additional IRS Resources:
IRS YouTube Videos:

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Friday, August 11, 2017

IRS Tax Tips For Starting A New Business

 

If summer plans include starting a business, be sure to visit our detailed information page for entity selection, formation, and startup considerations.



New business owners may also find the following five IRS tax tips helpful:

1. Business Structure.  An early choice to make is to decide on the type of structure for the business. The most common types are sole proprietor, partnership and corporation. The type of business chosen will determine which tax forms to file.

2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax a business pays depends on the type of business structure set up. Taxpayers may need to make estimated tax payments. If so, use IRS Direct Pay to make them. It’s the fast, easy and secure way to pay from a checking or savings account.

3. Employer Identification Number (EIN).  Generally, businesses may need to get an EIN for federal tax purposes. Search “EIN” on IRS.gov to find out if the number is necessary. If needed, it’s easy to apply for it online.

4. Accounting Method.  An accounting method is a set of rules used to determine when to report income and expenses. Taxpayers must use a consistent method. The two most common are the cash and accrual methods:

a. Under the cash method, taxpayers normally report income and deduct expenses in the year that they receive or pay them.
b. Under the accrual method, taxpayers generally report income and deduct expenses in the year that they earn or incur them. This is true even if they get the income or pay the expense in a later year.
Get all the basics of starting a business on IRS.gov at the Small Business and Self-Employed Tax Center.

IRS You Tube Videos: 
  • IRS Small Business Self-Employed Tax CenterEnglish
For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt.

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Monday, July 24, 2017

IRS Income Tax Tips: Making The Most Out Of Miscellaneous Deductions

Miscellaneous deductions are tax breaks that generally don’t fit into a particular tax category.  They can help reduce taxable income and the amount of taxes owed. 

For example, some employees can deduct certain work expenses like uniforms as miscellaneous deductions.  To do that, they must itemize their deductions instead of taking the standard deduction on their tax return.

Here are several tips from the IRS about miscellaneous deductions:

  • The Two Percent Limit.  Most miscellaneous costs are deductible only if the sum exceeds 2% of the taxpayer’s adjusted gross income (AGI).  For example, before being able to deduct certain expenses, a taxpayer with $50,000 in AGI must come up with more than $1,000 in miscellaneous deductions.  Expenses may include:
    • Unreimbursed employee expenses.
    • Job search costs for a new job in the same line of work.
    • Job tools.
    • Union dues.
    • Work-related travel and transportation.
    • The cost paid to prepare a tax return. These fees include the cost paid for tax preparation software. They also include any fee paid for e-filing a return.
  • Deductions Not Subject to the Limit. Some deductions are not subject to the 2% limit. They include:
    • Certain casualty and theft losses. In most cases, this rule is for damaged or stolen property held for investment. This may include property such as stocks, bonds and works of art.
    • Gambling losses up to the total of gambling winnings.
    • Losses from Ponzi-type investment schemes.
Taxpayers can’t deduct some expenses. For example, personal living or family expenses are not deductible. To claim allowable miscellaneous deductions, taxpayers must use Schedule A, Itemized Deductions. For more about this topic, see Publication 529, Miscellaneous Deductions. Get them on IRS.gov/forms at any time.

Avoid scams. The IRS will never initiate contact using social media or text message. First contact generally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

Additional IRS Resources:
IRS YouTube Videos:

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Wednesday, June 14, 2017

An Open Letter To Deputy Attorney General Rod Rosenstein And Special Counsel Robert Mueller

The latest news of another left wing progressive attacking and murdering republicans over the hysteria created by this fake witch hunt Russia collusion story should give Rod Rosenstein and Robert Mueller pause.

The left wing news media and the democrats will continue to agitate for civil war for as long as Rod Rosenstein and Robert Mueller are allowed to continue this farce witch hunt investigation.  Trump supporters will not likely sit idly by forever while these violent attacks continue, and when/if the Trump supporters begin to defend themselves and their constitutionally elected President a modern civil war could erupt.

I hope Rod Rosenstein and Robert Mueller will understand that this phony Russia witch hunt may well become this century's Dread Scott decision.  How this phony Russia witch hunt is handled and resolved could either quell or provoke this Century's civil war.  Just as the Dread Scott decision lead directly to our 19th century civil war.

For the sake of the Union, Rod Rosenstein and Robert Mueller need to understand that no trumped up process crime prosecutions (obstruction, etc.) are likely to be tolerated by a substantial portion of the public.  The only way to end this matter peacefully is to quickly bring any actual charges of actual non-process crimes out into the open (if there are any) and otherwise wrap up this phony witch hunt investigation within the next 60 days.  If they don't, the media and the democrats will continue to agitate for civil war, and Rod Rosenstein and Robert Mueller will not be able to escape moral responsibility for contributing to the resulting carnage.

I urge Rod Rosenstein and Robert Mueller to think of the country, and not have such a narrowly blind focus to the world around them that they make today decisions that will live in infamy.  Their handling of these matters should be guided accordingly.  Taking too long risks the media and the democrats igniting a new civil war.  Making the wrong decisions and a failure to exercise prosecutorial discretion for the good of the country also risks igniting a new civil war.

Supporters of our constitutionally elected President are watching and for now waiting for the system to put an end to these phony witch hunts.  I'm begging them both to act accordingly for the good of the country.

I doubt the Supreme Court thought their plain property law decision in Dread Scott that followed logical prior precedents in the law of property would lead to the civil war of the 19th century and the deaths of 500,000 citizens.  Yet that is exactly what happened.  The court's blind excuses and failure to act for the preservation of the union should not be repeated by Rod Rosenstein and Robert Mueller.

Gary L. Britt, CPA, J.D.

Wednesday, May 3, 2017

Small Business And Startup Lawyer: IRS Income Tax Research Credits Can Now Be Used To Reduce Payroll Taxes !!!

Eligible small business startups can now choose to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability, according to the Internal Revenue Service. 

This new option will be available for the first time to any eligible small business when filing its 2016 federal income tax return. 

Before 2016, the research credit, like most tax credits, could only be taken against income tax liability. The option to elect the new payroll tax credit may especially benefit any eligible startup that has little or no income tax liability.

To qualify for the new option for the current tax year, a small business must have gross receipts of less than $5 million and could not have had gross receipts prior to 2012. A small business meeting this standard with qualifying research expenses can then choose to apply up to $250,000 of its research credit against its payroll tax liability.

To choose this option, fill out Form 6765, Credit for Increasing Research Activities, and attach it to a timely-filed business income tax return. Because many business taxpayers request a tax-filing extension, they still have time to make the choice on a timely-filed return. A number of special rules and computations apply to this credit. See the instructions to Form 6765 for details.

For eligible small businesses that already filed and failed to choose this option, there is still time to make the choice. Under a special rule for tax-year 2016, they can still do so by filing an amended return. This return must be filed by Dec. 31, 2017.

Amended return forms vary depending upon the type of business. Sole proprietors file Form 1040X. Regular corporations file Form 1120X. S corporations file Form 1120S, identifying it as a corrected return (line H(4). For information on amending a partnership return, see the instructions to Form 1065.

After choosing this option, either on an original or amended return, a small business claims the payroll tax credit by filling out Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. This form must be attached to its payroll tax return, usually Form 941, Employer’s Quarterly Federal Tax Return.

Further details on how and when to claim the credit are in Notice 2017-23, available on IRS.gov. The notice also provides interim guidance on other technical issues, such as controlled groups and the definition of gross receipts.


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Monday, May 1, 2017

IRS Tax Rules For Independent Contractor Versus Employee Status

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

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Friday, April 28, 2017

Tax Help And Advice For New And Established Small Businesses


The Internal Revenue Service is highlighting products to help small business owners and self-employed individuals understand and meet their tax obligations. 

Some of these tools focus on an emerging areas of business activity -- the sharing economy – also referred to as the on-demand, gig or access economy.

People involved in the sharing economy engage in activities such as renting a spare bedroom, providing car rides or offering a number of other goods or services. Because there are tax implications for companies providing the services and individuals performing the services.

The IRS has created the following special products to help these businesses and workers understand their tax responsibilities:

  • Sharing Economy Tax Center, a webpage to help people quickly find answers to tax questions, as well as tips and forms for the sharing economy.

Other Small Business Products:

The IRS provides an overview of other products in a newly created YouTube video. Some featured products for small business owners and self-employed individuals are:
  • Self-Employed Individual Tax Center – a resource for sole proprietors and others who are in business for themselves. This site has many useful tips and references to tax rules a self-employed person may need to know.
  • IRS Video Portal -- video and audio presentations on a variety of topics of interest to small businesses.
  • Online Learning and Educational Products  – a page with tools to help taxpayers learn about taxes on their own time and at their own pace. For example, the IRS Tax Calendar for Businesses and Self-Employed has important tax dates for businesses. Download the Calendar Connector tool to get the dates even when offline.
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