penalties

Do You Need to Make an Estimated Tax Payment by September 17?

To avoid interest and penalties, you must make sufficient federal income tax payments long before your April filing deadline through withholding, estimated tax payments, or a combination of the two. The third 2018 estimated tax payment deadline for individuals is September 17.

If you don’t have an employer withholding tax from your pay, you likely need to make estimated tax payments. But even if you do have withholding, you might need to pay estimated tax. It can be necessary if you have more than a nominal amount of income from sources such as self-employment, interest, dividends, alimony, rent, prizes, awards or the sales of assets.

A two-prong test

Generally, you must pay estimated tax for 2018 if both of these statements apply:

  1. You expect to owe at least $1,000 in tax after subtracting tax withholding and credits, and
  2. You expect withholding and credits to be less than the smaller of 90% of your tax for 2018 or 100% of the tax on your 2017 return — 110% if your 2017 adjusted gross income was more than $150,000 ($75,000 for married couples filing separately).

If you’re a sole proprietor, partner or S corporation shareholder, you generally have to make estimated tax […]

By |September 10th, 2018|New Tax Laws, tax planning, withhold|0 Comments

How to Avoid Getting Hit with Payroll Tax Penalties

For small businesses, managing payroll can be one of the most arduous tasks. Adding to the burden earlier this year was adjusting income tax withholding based on the new tables issued by the IRS. (Those tables account for changes under the Tax Cuts and Jobs Act.) But it’s crucial not only to withhold the appropriate taxes — including both income tax and employment taxes — but also to remit them on time to the federal government.

If you don’t, you, personally, could face harsh penalties. This is true even if your business is an entity that normally shields owners from personal liability, such as a corporation or limited liability company.

The 100% penalty

Employers must withhold federal income and employment taxes (such as Social Security) as well as applicable state and local taxes on wages paid to their employees. The federal taxes must then be remitted to the federal government according to a deposit schedule.

If a business makes payments late, there are escalating penalties. And if it fails to make them, the Trust Fund Recovery Penalty could apply. Under this penalty, also known as the 100% penalty, the IRS can assess the entire unpaid amount against a […]

By |July 9th, 2018|employer, income tax, tax|0 Comments

1099 Requirements for 2015

The IRS requires that you file information returns (1099’s) for cash and check payments issued by your trade or business to individuals not treated as your employees as well as non-incorporated entities. The IRS strictly enforces the requirements and aggressively audits this area of the law; additionally, there are numerous penalties that may be assessed if you fail to comply. We recommend that PRIOR to making payments for services, you obtain taxpayer identification (ID) numbers from all of your service vendors. If they don’t provide you a SSN or IRS business ID number (EIN), you are required to withhold taxes on payments to that vendor. A 1099 form must be filled in if:

Amount Requiring Reporting

Contract Labor, Commissions, Director Fees and
Other Non-employee Compensation                                                      $600 or more

Dividends, Interest and Royalties                                                            $10 or more

Professional Fees               […]

By |March 11th, 2016|irs, Uncategorized|0 Comments

Impacts of the Affordable Care Act on Employer/ Business Owner

Beginning in 2015, if you employ at least 100 full-time employees or full-time equivalents (and after 2015, at least 50 full-time employees or equivalents), you may become subject to the employer mandate that was enacted as part of the Affordable Care Act (ACA), and if you fail to meet its requirements, you may owe a nondeductible excise tax.

You could potentially be subject to the excise tax, if any of your full-time employees are certified, as described below, as having received “health care assistance,” and you either: (1) do not offer health care coverage for all of your full-time employees; or (2) offer “minimum essential” coverage under your group health care plan that either is not “affordable,” or does not provide “minimum value” to your employees.

If you do not offer health care coverage to your full-time employees, the excise tax will be $166.67 for any month, i.e., 1/12 of $2,000 for 2015, times the number of your full-time employees during any month, reduced by a 80-person threshold (30 in 2016).

If you do offer health care coverage to your employees, but it is not affordable or does not provide minimum value, the excise tax will be […]

By |February 10th, 2015|affordable care act|1 Comment

The Personal Impact of the Affordable Care Act

Open enrollment for 2015 for Covered California closes on February 15th.

Open enrollment is the one-time during the year when most Californians who need insurance cannot be denied by a health plan and when millions can get subsidized health insurance for the upcoming year.

All individuals not covered by an employer sponsored health plan, Medicaid, Medicare, other public insurance program (such as Tricare), or meeting an exemption from coverage must acquire an approved private-insurance policy or pay a shared responsibility payment. If you do not have coverage or meet one of the exemptions, you will pay this payment. The fine for 2015 is either a) 2 percent of your total income or b) fines for each member of your household ($325/adult, $162.50/child, or $975/total household), whichever is greater.

Individuals who have limited income may enroll in Medi-Cal at any time.

Health care impacts 2014 income tax returns

Most people already have qualifying health care coverage and will only need to check a box to indicate that they satisfy the individual shared responsibility provision when they file their tax returns in early 2015.

However, an important Affordable Care Act tax provision for individuals and families is the premium tax credit. Further, […]

By |February 10th, 2015|affordable care act|1 Comment