Parts 1 and 2 of previous blogs on this topic discussed the deferral of employment tax deposits and payments for the year 2020 and the effects that this deferral may have on the employer (Deferral of employment tax deposits and payments through December 31, 2020 | Internal Revenue Service (irs.gov)). Part 3 will continue this discussion. Determining the amounts for credits and deferral can be tricky. It is best to consult a tax professional for help with employment taxes as they relate to COVID and The Coronavirus, Aid, Relief and Economic Security Act (CARES Act).Employers may defer the payment and deposit of their share of Social Security tax prior to determining whether they are entitled to employment retention credits, the Families First Coronavirus Response Act (FFCRA) paid leave credits, the Research Payroll Tax Credit, the advance payments of these credits, the amount of any refunds with respect to these credits and the amount already deposited that may be retained because of those credits (Employer Tax Credits | Internal Revenue Service (irs.gov)). These credits may actually trigger an overpayment on the employer’s part for which a refund must be requested. However, if a payment is due and the amounts are not paid, the employer’s deferred deposits will lose their deferred status and may be subject to failure to deposit penalties or Trust Fund Recovery Penalty (TFRP). The employer may also be subject to pay penalties accruing from the deferred due date for payment.
Tuesday, June 8, 2021
Monday, May 31, 2021
Part 1 discussed the deferral of employment tax deposits and payments for the year 2020 (Deferral of employment tax deposits and payments through December 31, 2020 | Internal Revenue Service (irs.gov)). The Coronavirus, Aid, Relief and Economic Security Act (CARES Act) allows the employer to defer the employer’s share of the social security tax for the first quarter of 2020. What would have been the full amount of the employment tax liability due for that quarter, including the liability for which deposits would have been due on or after March 27, 2020, did not have to be paid. However, this presents a bookkeeping problem. There is now a discrepancy for the first quarter between the amount of the liability reported and the amount of deposits and payments for that liability. The Internal Revenue Service (IRS) will send a notice to these employers identifying the difference as an unresolved amount. This notice will also include additional information instructing the employer how to inform the IRS that it had deferred payment or deposit of the employer’s portion of the social security tax due after March 27, 2020, for the first quarter of that year under section 2302 of the CARES Act.This deferral applies to all businesses including those that deposit employment taxes annually. As long as the deposit amount relates to the tax imposed on wages paid on or after December 31, 2020, during the payroll tax deferral period, then the employer may defer this amount. If an employer had already deposited the amount with the IRS for employment taxes, he or she may receive a refund of Social Security tax already deposited. This is a result of paying the amount due but then receiving tax credits, such as the Research Payroll Tax Credit, the Families First Coronavirus Response Act (FFCRA) paid leave credits, and the employee retention credit (Employer Tax Credits | Internal Revenue Service (irs.gov)). Since this can be complicated in reporting, it is best to consult a tax professional for help with payroll taxes.
Friday, May 28, 2021
It is not necessary to say that this past year has been a particularly trying one. COVID has upended the entire world, especially the business one. Businesses long established as the foundation of the American economy have found themselves to being greatly diminished or have disappeared forever, such as Sears, Fry’s Electronics, and Soup!antation eatery. Likewise, many other small businesses have been forced to permanently close. The Federal and State governments tried to help with tax credits, but sometimes even that did not help. So now the focus is trying to get back to “normal” or to a new version of “normal”.COVID changed the way we do business, but like the saying goes: there is no escaping death and taxes. Both Federal and State Taxes (and local taxes) are still due, but perhaps in a diminished form. Congress passed the Coronavirus, Aid, Relief and Economic Security Act (CARES Act) to help with the economic havoc wrought by COVID (Deferral of employment tax deposits and payments through December 31, 2020 | Internal Revenue Service (irs.gov)). With the help of this Act, businesses were able to continue to pay their employees and stay in business. However, this Act also brought a different set of accounting for payroll taxes with it. A tax professional, such as the ones at Bullseye Tax Relief, can help you navigate these uncharted waters.
Tuesday, May 25, 2021
We will discuss the last two of the five business structures recognized by the Internal Revenue Service (IRS) (Business Structures | Internal Revenue Service (irs.gov)) in this blog. Corporations (Forming a Corporation | Internal Revenue Service (irs.gov)) and S-Corporations (S Corporations | Internal Revenue Service (irs.gov)) involve shareholders rather than owners that the first three business structures have.help with employment tax.
Sunday, May 23, 2021
As discussed in an earlier blog, there are five business structures recognized by the Internal Revenue Service (IRS) (Business Structures | Internal Revenue Service (irs.gov)). Partnerships and Limited Liability Companies have been previously discussed. Sole Proprietorships (Sole Proprietorships | Internal Revenue Service (irs.gov)) will be discussed in this blog.
Thursday, May 20, 2021
All businesses must pay taxes. However, not all business taxes are the same for every business. The type, amount and form used in paying taxes is dependent upon the type of business entity. When someone starts a business, he or she must decide what business structure the business is to have. There are five business structures (Business Structures | Internal Revenue Service (irs.gov)), each with advantages and disadvantages. They are:
Tuesday, May 18, 2021
As stated in earlier blogs, the Internal Revenue Service (IRS) is not perfect. They can, and do, make mistakes. They can miscalculate tax amounts owed or even overlook deductions. Fortunately, for taxpayers there is a process that can reverse or stop an IRS’ decision or action that is unfair or incorrect. An Administrative appeal gives you a second chance that may lead to a more favorable outcome with your tax problem. Help is available without going to court.An Administrative Appeal process can apply to any appeal filed regarding a decision and/or action taken by the IRS. This can include decisions made during audits or for collecting a tax debt. The IRS allows any taxpayer who feels that the IRS was unfair or incorrect regarding a tax situation, to appeal without legal action through their Office of Appeals. This entity is separate from the IRS themselves so that decisions are objective.
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