Push Aside Payroll Problems by Hiring n Payroll Service

When your small business has reached the point where you need even one employee, its time to hire a payroll service. The service takes the worry and headaches out of the entire process, allowing you to focus on building and growing your business.

A payroll service ensures that employees are paid accurately and on time, but not all services offer the same level of benefits. It pays to shop around for the company that best fits your needs now and in the future. Payroll services may help you with employee schedules, your accounting practices and even software. The company may also track overtime and employee benefits.

Compliance

One of the most important tasks that a payroll provider does is ensure that the business is in compliance with all relevant reporting requirements and changes in tax laws. They know what forms employers must file and when.

Accuracy and Security

Employers are required to withhold specific taxes and in certain amounts. The computations can be complex. Payroll services ensure the appropriate amount of withholding is calculated. They use highly specialized software and are dedicated to accuracy in every aspect. They can provide the appropriate financial information for any governmental query or request. All data is maintained securely and confidentially.

Employee Verification

There’s a lot of paperwork involved when hiring any employee. A payroll service streamlines the process of verifying a potential employee and gathering the necessary information about them, such as if they’re eligible to work in the U.S., if they have a criminal history, and past employment records. Self-service employee accounts are another benefit. Individuals can manage their employee account online to enroll in benefits and update their information when needed.

Scalability

Even if you only have 1 employee now, that will change as your company grows. The ability to handle payroll for any number of employees is essential. You’ll want a payroll service that’s able to keep up with your evolving company needs and the services it offers, along with flexible payment plans.

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Accountant
posted by mavadmin
May 31, 2023

Accountant or Accountant Software?

It’s understandable that people want to save money, whether it’s on individual federal taxes or when keeping records for a business throughout the year. Many individuals are seriously debating whether to purchase professional accountant-level software or to hire an accountant. There’s really no comparison – hire an accountant.

Tax Accountant

Hiring an accountant minimizes the potential for an error and significantly reduces the danger of getting audited. Those with highly complicated tax situations involving stocks, bonds, investment income, dividends, and even cybercurrency are best served by an accountant. Professional accountants have worked with industry-grade software for years and even decades. They know exactly how and where to enter figures, and are familiar with all the terms used.

Tax accounts are highly trained professionals. They’re knowledgeable about all aspects of tax law, have the benefit of experience, and continuing education. They can provide advice about investments, credits, deductions, and tax planning to lower an individual’s tax burden, while helping clients to more effectively manage their finances. Accountants are available throughout the year to offer advice and answer any questions clients might have as they arise.

Tax Software

Many individuals believe that if they have accounting software like professional accountants use, their problems are over. Accounting software like the experts work with varies widely in cost. Some have a one-time cost per user of up to $999 per year. That’s just for the software. It doesn’t include licensing fees.

There’s also a steep learning curve for a non-accountant. Professional accounting software is highly sophisticated, with terms and abbreviations with which the average individual won’t immediately be cognizant.

Individuals trying to use accountant software can easily find themselves in the 4 percent of taxpayers that are audited. The risk of an audit is elevated if an individual has income exceeding $200,000 per year, is a sole proprietor of a business, or has foreign assets. Non-accountants trying to use professional accounting software are increasing their risk of an audit.

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Accountant
posted by Mark Battalini
April 27, 2023

Tips on Effective Debt Management for Consumers

April is National Financial Literacy Capability Month and a good time for consumers to educate
themselves about how to manage their debt. There are strategies anyone can use to pay down
debt, without considering a consolidation loan.
Stop Spending
The first step is to stop additional spending. It’s only adding to your debt problem. Take a hard
look at where your money is going. Eliminate non-essential expenses and look for other ways to
save, such as cheaper phone plans, stop eating out, and forego costly morning coffee.
Budgeting
Compile a list of what you make each month and a list of all your debt. Add up the minimum
payments. It can be helpful to divide the debt total by the 4 weeks of the month and keep an
equal amount out of each paycheck.
Credit Cards
Pay down the smallest credit card balance first. When that one is paid off, take the money you
were paying on the small balance and add it to the payment on the next smallest balance. It can
be helpful to switch a balance from a high interest card to one with a lower interest rate.
Call Creditors
Call the people you owe money to – explain that you’re having trouble paying what you owe
and why. Ask if there’s a way your payments can be reduced or if they have an available
payment plan. Some companies are willing to work with you.
Collection Calls
If you receive a call from a debt recovery company, make sure its legitimate. There are
numerous scams operating and the debt may not even be yours. Mistakes do happen.
Never make an immediate “first” payment over the phone. Ask what creditor the agency is
representing. Never make payments unless you know the creditor for which the collection
agency is working. Call the creditor to see if they’ve sent the debt to collections.
Keep a Log
Keep a log of the collection agencies that call, the date, time, and name of the person you
talked to. It's illegal for collection agency representatives to intimidate, threaten or use bad
language. Send a request via certified mail with return receipt requested, indicating they should
stop. If the agency continues to call, report it to the Federal Trade Commission.

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Tax Preparation
posted by Mark Battalini
November 20, 2022

Do Single People Pay Fewer Taxes Than Married Couples?

The answer is no. In fact, the opposite is true. Single people are taxed at a higher rate than a married couple that file jointly. It’s essentially a penalty for being single. It’s not just something that affects people who are single by choice – it also impacts individuals who are divorced or lose a spouse through death.

Singles pay more over their lifetime in taxes, receive less in Social Security benefits than their married counterparts, and don’t have the luxury of two incomes to pay for life’s necessities or to create a retirement fund. The inequality affects women more than men.

The state of your finances is your responsibility. Diligence in managing, planning and saving for your future is critical at every stage of your life. You’ll need to factor in your Social Security benefits, pensions and other sources of income for retirement.

Don’t let a spouse or partner control your finances without your input. Enlist a financial advisor or accountant to help you identify tax strategies and other means of maximizing your money.

Single people are charged a higher rate on their income taxes than married couples. Child-focused policies are written in favor of married couples and don’t consider single parents. The tax structure in the U.S. also favors couples at upper income levels.

High-income couples have access to shelters, credits and deductions that singles and lower-income people don’t. Tax laws are written with the traditional nuclear family in mind and don’t account for modern family units and living arrangements.

The more people make, the more they’re taxed as they enter higher tax brackets. Couples receive the same amount of tax breaks for both people, even if only one person is working. That’s not true for single people The current system is designed in such a way that a married couple pays less in taxes than 2 unmarried people filing individually.

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IRS Information
posted by Mark Battalini
November 6, 2022

Top Five IRS Audit Triggers

An IRS audit is one of the most dreaded events on the planet. It fills the heart with dread knowing the potential penalties for even an innocent misreporting or mistake. Each tax return is rated by a computer scoring system called the Discriminant Function System (DIF) System. It rates each return on the potential for change, compared with similar returns.

Income

Failure to report all income from W-2s and 1099s will trigger an audit. Employers must supply workers with a W-2 and they’re also required to provide a copy to the IRS. The same is true for independent contractors that receive a 1099. The IRS knows from employer records that an individual has received the income and failure to report it will result in an audit.

Earned Income Tax Credit

A surprising number of low-income earners are audited each year that claim the Earned Income Tax Credit (EITC). The program has a long history of fraud since taxpayers can receive money back when they claim it. The EITC is designed to help qualifying low- and moderate-income families reduce their tax liability and, in some instances, increase their refund.

Self-Employed

Independent contractors, sole proprietors, and those engaged in the gig economy are a collective group that are highly scrutinized and even the smallest anomaly will trigger the DIF System. It especially looks at income compared to business expenses that are claimed. Individuals are entitled by law to claim allowable work-related expenses, but should be sure they’re actually work related.

Hobby vs Business

The IRS has very clear rules about what qualifies as a hobby and what’s considered a legitimate business. Claiming a hobby as a business allows individuals to claim business expenses, but it doesn’t quality as a business according to the IRS if a net profit hasn’t been reported in the prior 5 years.

High Income

The more money an individual makes, the more loopholes there are in which to hide assets and income. Those with incomes of $1 million are more likely to be audited than other income brackets. If a business suddenly starts posting a significant amount of income or losses, the owners can expect to be audited.

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Tax
posted by Mark Battalini
September 26, 2022

What’s the Difference Between 1099 and W-2?

The U.S. tax system is complicated, complex, and the IRS has hundreds of forms to account for different reporting needs. One of the biggest confusions for individuals is the difference between Form 1099 and the W-2. Both are important, absolutely required, but serve very different purposes.

Form 1099

There are multiple types of Form 1099. The most common is used to report various types of payments that are made by a business or individual that’s not an individual’s regular employer. The person that made the payments completes the appropriate details and sends a copy to the payee and the IRS at tax time.

A Form 1099-MISC is used by the government to report income such as Medicare earnings. It’s also used to report prizes and awards, fishing boat proceeds, medical and healthcare payments, and crop insurance proceeds. Form 1099-MISC is also utilized to report earnings from direct sales of at least $5,000.

W-2

In comparison, individuals complete a W-2 when they start a new job. It tells the employer how much money to withhold in federal, state and Social Security (FICA) taxes from each paycheck. The IRS utilizes that information to track each person’s earnings and income every year from employment. IRS rules state that employers must provide individuals with their W-2 by Jan. 31^st of each year.

The form is used each year when an individual files their annual income tax returns. The W-2 shows the amount of any benefits that may have been paid by the employer on an employee’s behalf that encompasses items ranging from health savings accounts (HSA) and number of dependents to insurance benefits.

If there are any errors such as name misspellings, incorrect Social Security number, or an incorrect amount, individuals should contact their employer for a corrected copy of their W-2. Independent contractors should receive a 1099-NEC instead of a W-2.

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Tax
posted by Mark Battalini
July 26, 2022

How is Mortgage Tax Calculated?

Not to be confused with interest rates on a mortgage or ongoing property taxes to be paid each year, a mortgage recording tax is used to document a loan transaction. It’s a fee that’s paid when someone takes out a mortgage. There are currently eight states that charge a mortgage tax and one of those is Florida. Numerous lending institutions offer online mortgage tax calculators that perform the financial calculations.

Individuals can do the math themselves by taking the total amount being borrowed and dividing it by 100. Then round up that number to the nearest whole number. Local laws may allow for a deduction to reduce the amount.

Florida residents pay 35 cents per $100, based on the amount of debt being incurred on the mortgage. However, that amount can vary among counties and a surtax may also apply. It’s customary for the seller to pay the tax, though that isn’t a mandate. The real estate agent is responsible for securing a check for the amount before the deed is recorded.

Failure to pay the amount promptly can result in the state assessing a monthly penalty fee. A floating interest rate may also be placed on any unpaid document. Parties exempt from the tax include state and federal government agencies, political subdivisions, and Florida counties and municipalities. When an entity is exempt from the tax, the other party must pay it.

Many types of deeds require this documentation, including warranty and quit claim deeds, easements, and contracts for mineral, timber, gas and oil rights. A mortgage tax is also collected if an individual refinances. However, a mortgage reassignment can transfer the original mortgage tax to the new lender. Not all lending institutions will do this, but if the lender agrees to do so, it can save individuals a significant amount of money.

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Tax Preparation
posted by Mark Battalini
June 26, 2022

Adjusting Your W-4

There are some very good reasons to adjust your withholdings on your W-4. The form tells your employer how much money to keep out of your check for federal income tax. It will have an effect on your tax liability and prevent you from receiving an unexpected tax bill when filing your federal return.

Your W-4 is also critical for preventing a penalty for underpayment. Some people choose to claim every possible withholding, essentially living on less throughout the year to obtain a large refund at tax time. The IRS wants you to reduce your tax bill and have a refund that’s as close to zero as possible.

Life Events

Any time that your life circumstances change, you should complete a new W-4 with your employer. That includes a marriage, divorce or the birth or adoption of a child. Major life events also include buying a house, getting a raise, and contributing to educational funds. Some of those changes will make you eligible for credits on your federal tax return.

Part-Time Employment

If you normally work all year, but get laid off or experience downtime, you’ll need to adjust your withholding to account for those changing circumstances.

Second Job

It doesn’t matter whether you get a part-time job, work the gig economy, run a side hustle, or have a home business, you’ll need to adjust your withholding. There are a great many types of income producing ventures that are viewed as self-employment by the IRS, which makes you liable for income tax on the amount, along with the self-employment tax, Social Security and Medicare.

Spousal Employment

If your spouse gets a new job or changes jobs, they’ll also have to complete a W-4. Any change in income – an increase or a decrease – will have an impact on your income and amount of taxes you owe. Couples need to use both incomes and approximate as closely as possible what they need to claim on their W-4.

Can You Get Tax Help for Free?

There are dozens of reasons why you need assistance with your taxes, especially if you’re doing them yourself. If you’re one of the millions that prepare their own taxes online, the services offer help in the form of popup windows, but those can be even more confusing and you may want to speak with a real person that’s knowledgeable about your particular circumstances.

You should bear in mind that the IRS was overwhelmed with calls in 2020 and again in 2021. People waited for hours on the phone to have their questions answered. That situation is likely to continue in 2022 and beyond.

Volunteer Income Tax Assistance (VITA)

VITA can be found online. You enter your zip code and the distance within which you want to find a volunteer. If you don’t find someone within your search criteria, keep expanding the distance. The online search will provide you with the name of the agency, it’s location and directions for contacting it. VITA help is available at a variety of locations ranging from colleges to community centers.

Tax Counseling for the Elderly (TCE)

To qualify for TCE, you must meet certain criteria. You’ll need to be a senior citizen, disabled, earn moderate or less income, or not be able to speak English very well.

IRS Taxpayer Assistance Center

These are IRS offices where you can search for a location where you can make an appointment to speak with an IRS representative. However, these sites can be 50 miles or more away from your location.

Taxpayer Advocate Center

The service is an independent organization within the IRS. It can be a good resource for those with a financial hardship due to a tax situation, levy or lien.

AARP Foundation Tax-Aide Program

Operated by the AARP for over 50 years, its focus is on those age 50 and older with a low to moderate income, though technically they offer help to any taxpayer.

MilTax Program

This is for current military personnel, a spouse or dependent child of someone in the military, or those who have served in the past. The organization offers help over the phone 24/7 and appointments can also be scheduled for MilTAX at a VITA office.

Local Services

Each year libraries and community centers in almost every town offers services provided by volunteers to help individuals with their tax-related questions. Some offer tax preparation seminars and workshops.

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Tax
posted by Mark Battalini
April 17, 2022

What is the Penalty for Not Paying Taxes?

Individuals that don’t pay their taxes in full by the deadline of April 15 each year are subject to a monetary penalty. The IRS can charge up to 6 percent interest on the unpaid balance and may choose to add a late payment penalty of 0.5 to 25 percent. Individuals that don’t pay their taxes are digging themselves a financial hole that can be almost impossible to escape.

Notices about the unpaid balance will begin to arrive and the letters will take on a more severe tone the longer a taxpayer ignores them. The IRS may place a tax lien against any property and financial assets that the person owns. The IRS will then be entitled to some or all of the money if an asset is sold.

Even if the actions aren’t reported on the taxpayer’s credit report, liens are part of public records. It can affect the person’s ability to maintain security clearance, obtain employment, a credit card or loan. Filing bankruptcy is no guarantee that the lien or tax bill will be dismissed.

The account may be sent to a collection agency for recovery. For those that owe tens of thousands of dollars or more, an individual could receive a visit from a revenue officer. During this time, the IRS may begin seizing assets.

The law says the IRS can take the taxpayer’s vehicle to sell at auction, 401(k) accounts, IRAs and homes. The State Department may get involved and can refuse to renew or issue a passport or revoke an existing passport.

However, what many don’t know is that the IRS generally won’t pursue individuals for unpaid taxes after 10 years, but they might, due to the 10 Year Statute of Limitations. The IRS doesn’t consider it in their best interests or cost effective to continue trying to collect and will wipe it clean from their books. It’s a complicated process that can be temporarily suspended under circumstances and the only one qualified to advise an individual on this is a tax professional.

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