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Small Business Tax Tips: Are You Ready For The January 31 Deadline?

April 15 is not the only critical tax deadline. If you are a small business owner with employees or independent contractors, January 31 is an important tax deadline you cannot afford to ignore.

The end of January is the due date for several payroll-related tax forms and tax payments. Before reviewing them, here’s some good news. Whenever a federal tax deadline falls on a Saturday, Sunday or legal holiday, the due date is automatically moved to the next business day. Since January 31, 2009 is a Saturday, the due date has been extended to Monday, February 2, 2009. (Perhaps those two extra days will come in handy!) Also keep in mind that to comply with any federal tax deadline, your mailing must be postmarked on or before the due date.

Here are the key federal payroll forms and tax payments due on February 2, 2009:

1. Form 941, Employer’s Quarterly Federal Tax Return. This is the form used to report all employee compensation (wages, salaries, commissions, bonuses, etc) during the fourth quarter, as well as federal income tax withholdings, social security taxes and medicare taxes (both the employee’s withholding amount and the employer’s match).

If the quarter’s total tax (as shown on Line 10) is more than $2,500, then you should have been making payroll tax payments during the quarter according to the IRS payroll tax payment requirements. (See IRS Publication 15 for details on that.)

But if the quarter’s total tax is less than $2,500, you can pay your entire quarterly payroll tax liability with Form 941. Just be sure to include voucher Form 941-V with the return and make your check payable to the U.S. Treasury.

2. Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. This is the form used to report federal unemployment tax, which employers’ must pay (i.e. out of your own pocket) on behalf of each employee. The tax is typically 0.8% of the first $7,000 in wages paid to each employee each year. So the most you pay for any one employee is $56, assuming the employee had at least $7,000 in wages.

The Form 940 is only filed annually. But the 940 tax must be paid at the end of any quarter in which the unemployment tax liability reaches $500. So you should be calculating the tax every quarter to see what your liability is. If it reaches $500, make a payment by the end of the month following the end of the quarter. If it’s less than $500, you carry over the liability to the next quarter.

Most small businesses that have fewer than 10 employees usually don’t have to make a federal unemployment tax payment for quarters 1, 2 or 3. But when the 4th quarter rolls around you will have to pay the entire annual tax liability. If your total annual tax is $500 or less, you can pay it with the Form 940 (be sure to include voucher Form 940-V). If the tax is more than $500, you must pay the tax at your local bank or via the IRS electronic payment system (EFTPS).

3. Form W-2, Wage and Tax Statement. You must give or mail W-2’s to all your employees no later than February 2, 2009. Employers must include Copy B, Copy C and Copy 2 along with the Instructions for Employee. In addition, you must send a copy of all W-2’s to the Social Security Administration by March 2, 2009, along with Form W-3, Transmittal of Wage and Tax Statements.

4. Form 1099-MISC, Miscellaneous Income. The most common use of this form is to report total annual payments to independent contractors (sole proprietors who provided services to your business) of $600 or more. You must send Copy B of the 1099-MISC to the recipient by February 2, 2009. And you must also send Copy A to the IRS by March 2, 2009, along with Form 1096.

Important: Your state probably has payroll tax forms and payments due on January 31 or February 2, so be sure to check with your state’s tax department for details.

 
By: Wayne M Davies –  Article Directory: http://www.articledashboard.com  Looking for more small business tax tips? For a free copy of the 25-page Special Report "How To Instantly Double Your Deductions", visit www.yousaveontaxes.com . Wayne M. Davies is author of 3 ebooks on tax reduction strategies for small business owners and the self-employed. 

Bank Asks Offshore Clients to Sign Tax Forms – DealBook Blog Credit Suisse is asking wealthy American clients with offshore accounts to sign special tax forms

Tax Tip Of The Day: Need Tax Forms? « CMD Media

The IRS has free tax forms and publications available on a wide variety of topics. You can access forms and publications on the IRS website 24 hours a day, 7 days a week, at IRS.gov.

New fillable tax forms: Putting in my 22 cents: Consumer Reports

The new forms are not tax preparation software, like the free or pay version of TurboTax and TaxAct, that walk you through your return. 

Foreigners get free tax return help – News

Students who plan on attending should bring their visa, passport, last year’s return (if they have it), W-2 and 1042S form.

Technorati Tags: business tax forms, michigan tax forms, payroll tax forms, w2 tax forms

Divorce, Taxes, and the IRS

In Divorce, potential tax liability can frequently become the tool for one spouse to use against the other spouse. If improperly used, this tool can destroy all of the marital assets. In the worst case, tax liability can seriously impact the future financial security of either spouse and subject them to criminal sanctions.

Situation 1 – Your Spouse Owns a Business The most common situation where taxes become an issue in a divorce is they there is a family business. The owner – spouse may have hidden cash receipts or engage in a practice of recording inflated expenses. This common practice by many business owners is a fraudulent attempt to minimize taxes. The other spouse is often aware of and approves of this practice. During the marriage, minimization of taxes results in higher household income and a better lifestyle for the couple. This practice is illegal or borders on illegal. During the marriage it is a secret between the married couple. But during a divorce each spouse may try to use past tax behavior to gain an advantage. The owner – spouse wants to minimize past income in an effort to lower child support, alimony, or division of marital property. Of course the other spouse wants to prove the opposite.

The result is a game of chicken – with one spouse threatening to turn the other spouse in to the IRS. This is a dangerous game for all involved. Do it yourselfers will find the situation blowing up in their face. People with attorneys may find the attorney reluctant to deal with the situation.

The Potential Problems:

Your Attorney cannot assist the owner/spouse commit the crime of tax evasion.
The non-owner spouse may end up liable for half of the back taxes, penalties, and fines. The divorce court Judge may decide to turn everyone in. In an extreme situation, everyone can go to jail.

Situation 2 – You Make a Surprise Discovery: Your Spouse is a Tax Cheat

Another common situation in divorce: the sudden realization that a spouse is a tax cheat – and you were completely unaware until the divorce.

The Potential Problems:

You may end up owing the IRS half the overdue taxes.
You may end up owing the IRS the ENTIRE tax bill.
The overdue tax bill may be double the actual unpaid taxes, due to penalties, fines, and interest.

The Potential Solution:

The IRS has a provision called Innocent Spouse Relief. This provision gives complete or partial tax forgiveness to an innocent spouse. But be aware – the definition of "innocent" is technical, elusive, and difficult to understand.

Two available forms of tax relief:

Innocent Spouse Relief – Discharge of Liability
Separate Tax Liability for Each Spouse

The first form of relief wipes out your tax debt in part or full. You must have not had any knowledge of the incorrect or fraudulently prepared tax returns. That means you cannot look like you were aware of any part of the return. Also, you must not have benefited from the hidden income. That means you cannot be driving a Mercedes and at the same time signing a tax return that show $200/week in income.

The second form of relief is slightly easier to get. If you qualify, the IRS will separate out the tax liability of your income from your spouse’s hidden income. This type of relief may have the effect of wiping out extreme tax bills and penalties.

The Bottom Line: Always be aware of these types of tax situations. The financial effect can be far worse than the divorce. If you believe this type of problem is in your future, start preparing immediately. Do not sign a joint tax return for your upcoming tax filing. File married-filing-separately. The moment you suspect a potential tax liability, begin to separate your financial life from your spouse’s financial life and then promptly file for divorce.

 

 

Copyright 2006 The Divorce Center P.A. About The Author

Divorce Attorney Howard Iken has a rapidly growing divorce practice in the Tampa Bay area of Florida. He can be reached at 727-844-7676. More information on divorce can be found at http://www.18884mydivorce.com. More information on Divorce Attorney Howard Iken can be found at http://www.18884mydivorce.com/pub/Aboutus/aboutus.htm

Get Organized (for free!) Before Tax Time | taxgirl

One of the biggest challenges that small businesses and solos face come tax time is getting organized. If you’re like me – and I don’t mind saying so – you.  

Spokesman.com | It’s tax time: Tips can help you through it | Feb …

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Few financial advisers encourage indebted clients with no emergency savings to spend an income tax refund on designer clothes and vacations. 

Deducting Contributions to an IRA

Contributions are based on the net income from a business, fef and SEP-IRAs can even be funded as late as October 15th for the previous tax year. 

 

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