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.
For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt.

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Wednesday, April 26, 2017

Owe Federal Income Taxes? Maybe You Need To Make An Offer In Compromise !



Taxpayers who have a tax debt they cannot pay may be able to settle their tax debt for less than the full amount owed by making 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. Taxpayers should first explore other payment options. A payment plan is one possibility. Visit IRS.gov for information on Payment Plans – Installment Agreements.

  • A taxpayer must file all required tax returns first before the IRS can consider a settlement offer. When applying for a settlement offer, taxpayers may need to make an initial payment. The IRS will apply submitted payments to reduce taxes owed.

  • The IRS has an Offer in Compromise Pre-Qualifier tool on IRS.gov. Taxpayers can find out if they meet the basic qualifying requirements. The tool also provides an estimate of an acceptable offer amount. The IRS makes a final decision on whether to accept the offer based on the submitted application.

  • Taxpayers wishing to file for an Offer in Compromise should visit IRS website’s Offer in Compromise page for more information. There taxpayers can find step-by-step instructions as well as the required forms. Taxpayers can download forms anytime at www.irs.gov/forms or call 800-TAX-FORM (800-829-3676) and ask for Form 656-B, Offer in Compromise booklet.
Additional IRS Resources:
IRS YouTube Videos:

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Thursday, April 20, 2017

Didn't Timely File Your IRS Federal Income Tax Return? Facts About Late Filing And Penalties

April 18 was this year’s general deadline for filing your federal tax return AND for paying any tax owed. 

If you are due a refund, there is no penalty if you file a late tax return.

Taxpayers who owe tax, and failed to file and pay on time, will most likely owe interest and penalties on the tax they pay late.

To keep interest and penalties to a minimum, taxpayers should file their tax return and pay any tax owed as soon as possible.

Here are some facts that taxpayers should know:

  1. Two penalties may apply. One penalty is for filing late and one is for paying late. They can add up fast. Interest accrues on top of penalties
  2. Penalty for late filing. If taxpayers file their 2016 tax return more than 60 days after the due date or extended due date, the minimum penalty is $205 or, if they owe less than $205, 100 percent of the unpaid tax. Otherwise, the penalty can be as much as 5 percent of their unpaid taxes each month up to a maximum of 25 percent. 
  3. Penalty for late payment. The penalty is generally 0.5 percent of taxpayers’ unpaid taxes per month. It can build up to as much as 25 percent of their unpaid taxes.
  4. Combined penalty per month. If both the late filing and late payment penalties apply, the maximum amount charged for the two penalties is 5 percent per month.
  5. Taxpayers should file even if they can’t pay. Filing  and paying as soon as possible will keep interest and penalties to a minimum. IRS e-file and Free File programs are available for  returns filed after the deadline. If a taxpayer can’t pay in full, getting a loan or paying by debit or credit card may be less expensive than owing the IRS.  
  6. Payment options. Taxpayers should explore their payment options at IRS.gov/payments. For individuals, IRS Direct Pay is a fast and free way to pay directly from a checking or savings account. The IRS will work with taxpayers to help them resolve their tax debt. Most people can set up a payment plan using the Online Payment Agreement tool on IRS.gov.
  7. Late payment penalty may not apply. If taxpayers requested an extension of time to file their income tax return by the tax due date and paid at least 90 percent of the taxes they owe, they may not face a failure-to-pay penalty. However, they must pay the remaining balance by the extended due date. Taxpayers will owe interest on any taxes they pay after the April 18 due date.
  8. No penalty if reasonable cause.  Taxpayers will not have to pay a failure-to-file or failure-to-pay penalty if they can show reasonable cause for not filing or paying on time.
Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
Additional IRS Resources:
IRS YouTube Videos:

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, April 10, 2017

Need An Extension Of Time To File Your Federal Income Taxes Form 1040 ?


This year’s tax-filing deadline is April 18. 


Taxpayers needing more time to file their taxes can get an automatic six-month extension from the IRS.




Below are five things to know about filing an extension:

  1. Use IRS Free File to file an extension. IRS Free File allows taxpayers to prepare and e-file their taxes for free. It can also be used to e-file a free extension to file request. Midnight April 18 is the deadline for receipt of an e-filed extension request. Free File is accessible for tax return preparation and e-filing through Oct. 17. It is only available through IRS.gov.
  2. Use Form 4868. Fill out a request for an extension using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The deadline for mailing the form to the IRS is April 18. Form 4868 is available on IRS.gov/forms.
  3. More time to file is not more time to pay. Requesting an extension to file provides taxpayers an additional six months (until Oct. 16) to prepare and file taxes. However, it does not provide additional time to pay taxes owed. Taxpayers should estimate and pay any owed taxes by April 18 to avoid a potential late-filing penalty. To avoid penalties and interest, pay the full amount owed by the original due date.
  4. Use electronic payment options to get an automatic extension. An extension of time to file will automatically process when taxpayers pay all or part of their taxes electronically by April 18. There is no need to file a paper or electronic Form 4868 when making a payment with IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS) or by debit or credit card.  Select “Form 4868” as the payment type. Keep the confirmation as proof of payment.
  5. The IRS can help. The IRS offers payment options for taxpayers who can’t pay all the tax they owe. In most cases, they can apply for an installment agreement with the Online Payment Agreement application on IRS.gov. They may also file Form 9465, Installment Agreement Request. If a taxpayer can’t make payments because of financial hardship, the IRS will work with them.
Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return

Additional IRS Resources:
What Is the Due Date of My Federal Tax Return or Am I Eligible to Request an Extension?
IRS YouTube Video:

For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt.

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Wednesday, April 5, 2017

Save Federal Income Taxes By Deducting Employee Business Expenses

Employees, if you itemize on your federal tax return, remember to deduct your work-related expenses. 


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:

1. They must be Ordinary and Necessary.  Employees can deduct unreimbursed expenses that are ordinary and necessary to their work as an employee.  An ordinary expense is one that is common and accepted in the industry.  A necessary expense is appropriate and helpful to a business.

2. Expense Examples. Some potentially deductible costs include:
  • Required work clothes or uniforms not appropriate for everyday use.
  • Supplies and tools for use on the job.
  • Business use of a car.
  • Business meals and entertainment. 
  • Business travel away from home. 
  • Business use of a home.
  • Work-related education.
This list is not all-inclusive. Special rules apply for reimbursed expenses by an employer. IRS Publication 529, Miscellaneous Deductions, and Publication 463, Travel, Entertainment, Gift and Car Expenses, provide more details.

3. Forms to Use. In most cases, expenses are reported using Form 2106 or Form 2106-EZ. IRS Schedule A may also be used.

4. Educator Expenses. K-12 teachers may be able to deduct up to $250 of certain expenses paid in 2016. These may include books, supplies, equipment and other materials used in the classroom. They are an adjustment to income rather than an itemized deduction. In other words, people do not need to itemize to claim them. IRS Publication 529 has more.

5. Keep Records. The IRS urges people to keep good records for proof of income and expenses and also as a reminder not to overlook anything. IRS Publication 17, Your Federal Income Tax, has more on what to keep.



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Tuesday, April 4, 2017

IRS Federal Income Tax Tips 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.

One can use the "simplified method" or the "regular method" to calculate the amount of the deduction.



Here are six tips to keep in mind about the home office deduction:


1. Regular and Exclusive Use. Generally, taxpayers must use a part of their home regularly and exclusively for business purposes. The part of a home used for business must also be:
  • A principal place of business, or
  • A place where taxpayers meet clients or customers in the normal course of business, or
  • A separate structure not attached to the home. Examples could include a garage or a studio.
2. Simplified Option. To use the simplified option, multiply the allowable square footage of the office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save time because it simplifies how to figure and claim the deduction. It will also make it easier to keep records. The rules for claiming a home office deduction remain the same.

3. Regular Method. This method includes certain costs paid for a home. For example, part of the rent for rented homes may qualify. For homeowners, part of the mortgage interest, taxes and utilities paid may qualify. The amount deducted usually depends on the percentage of the home used for business.

4. Deduction Limit. If the gross income from the business use of a home is less than expenses, the deduction for some expenses may be limited.

5. Self-Employed. Taxpayers who are self-employed and choose the regular method should use Form 8829, Expenses for Business Use of Your Home, to figure the amount to deduct. Claim the deduction using either method on Schedule C, Profit or Loss from Business. See the Schedule C instructions for how to report the deduction.

6. Employees. Employees must meet additional rules to claim the deduction. For example, business use must also be for the convenience of the employer. If qualified, claim the deduction on Schedule A, Itemized Deductions.

For more on this topic, see Publication 587, Business Use of Your Home. View, download and print IRS tax forms and publications on IRS.gov/forms anytime.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Additional IRS Resources:
  • FAQs - Simplified Method for Home Office Deduction
IRS YouTube Videos:
  • Home Office Deduction for Daycare Providers (Simplified Method)English
  • Home Office Deduction for Schedule C Filers (Simplified Method)English
  • Home Office Deduction for Schedule F, Employee, Partnership Filers (Simplified Method)English

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