Tuesday, July 10, 2012

Summer hiring rules for 100% Parent-owned Businesses

By Laura Nelson, Nelson Bookkeeping Services

Here’s what we told our membership of 30,000 professional bookkeepers in our May update, The General_Ledger newsletter.

• Owners’ children of any age can work any number of hours or time of day. Those who are under 16 cannot do hazardous work (e.g., work with lawn mowers, sewing machines), work near flammable or hazardous materials or where food is cooked.

• If the only employees are immediate family, owners’ children need not be paid the minimum wage—but if others are regularly employed, even family must be paid minimum wage.

• Owners’ children under 21:
Wages are exempt from FUTA.

• Any children under 18:
If the business is 100% parent-owned, the children under 18 are exempt from FICA.
If not owners’ children, obtain an age certificate recognized by the DOL and your state Wage and Hour Division (WHD). DOL often accepts state age certificates, but ask your WHD to be sure. Return it to the worker at termination.
The workers may not do hazardous work.

• Workers aged 14-15 who are not owners’ children can work 8 hrs./day, 40 hrs./wk., June 1-Labor Day, between 7 a.m.-9 p.m. if school is not in session.
Exceptions: Limits do not apply to news carriers or children employed exclusively by a parent/sole proprietor. For agricultural jobs, contact the DOL.

• Other children under 14 cannot be hired unless they work for a parent/sole-owner.

Friday, April 6, 2012

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Thursday, March 29, 2012

Tax Tip - Itemize vs Standard Deduction

The standard deduction is exactly what it sounds like—a flat amount that you can deduct from your taxable income. The amount you can deduct is based on your filing status, number of dependents, and what year you’re filing the taxes for. For additional information on the standard deduction, see IRS Publication 501.

When you itemize deductions, you have the ability to deduct the actual dollar amount of individual deductions. Some of these deductions come in the form of mortgage interest, property taxes, medical expenses, and more. If you think that if you totaled up all of your allowed deductions and it would be greater than the standard deduction, it would probably be wise to itemize.

What Expenses Can be Itemized?

-Mortgage interest      
-Charitable contributions
-Property taxes.
-State and local income taxes.

-Medical expenses that exceed 7.5% of your adjusted gross income.

 -Various miscellaneous expenses that exceed 2% of your income such as: union dues, tools and supplies needed for work, tax preparation fees, some legal fees, and many more.
Should You Itemize?There is no right or wrong answer, and it depends on your situation. To determine if itemizing would be valuable, you should take a look at Schedule A of Form 1040. On this sheet, you can list your itemized expenses, and then total them up to compare the amount to the standard deduction. If the itemized amount is greater, then you would want to itemize. If the total itemized amount is less than the standard deduction, you would not want to itemize.
The largest deductions for most people are mortgage interest and property taxes, and in these situations, even a modest mortgage can put you over the standard deduction limit. Since this can mean hundreds of dollars over the standard deduction, the tax savings can be significant.
Call us - Executive resources FSI - 530-888-6691

Missing Your W-2 Form?

You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2011 earnings and withheld taxes no later than January 31, 2012 (if mailed, allow a few days for delivery).

If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.

If you still do not receive your W-2 by February 15th, contact the IRS for assistance at 1-800-829-1040. When you call, have the following information handy:

·         the employer's name and complete address, including zip code, and the employer's telephone number;

·         the employer's identification number (if known);

·         your name and address, including zip code, Social Security number, and telephone number; and

·         an estimate of the wages you earned, the federal income tax withheld, and the dates you began and ended employment.

If you misplaced your W-2, contact your employer. Your employer can replace the lost form with a "reissued statement." Be aware that your employer is allowed to charge you a fee for providing you with a new W-2.

You still must file your tax return on time even if you do not receive your Form W-2. If you cannot get a W-2 by the tax filing deadline, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement (available on the IRS website), but it will delay any refund due while the information is verified.

If you receive a corrected W-2 after your return is filed and the information it contains does not match the income or withheld tax that you reported on your return, you must file an amended return on Form 1040X, Amended U.S. Individual Income Tax Return.

If you have questions about your Forms W-2 and 1099 or any other tax-related materials, please call or email our office.  Executive Resources FSI - 530-888-6691

Taxpayer Scams - Beware

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.
Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:
• Do not sign the return or place a Preparer Tax identification Number on it.
• Do not give you a copy of your tax return.
• Promise larger than normal tax refunds.
• Charge a percentage of the refund amount as preparation fee.
• Require you to split the refund to pay the preparation fee.
• Add forms to the return you have never filed before.
• Encourage you to place false information on your return, such as false income, expenses and/or credits.

The following are the "Dirty Doxen" of Tax Scams as listed by the IRS:

Identity Theft
Return Preparer Fraud
Hiding Income Offshore
"Free Money" from the IRS and Social Security Tax Scams
False or Inflated Income and Expenses
False Form 1099 Refund Claims
Frivolous Arguments making outlandish Claims to avoid taxes
Falsely Claiming Zero Wages
Abuse of Charitable Organizations and Deductions
Disguised Corporate Ownership
Misuse of Trusts

Click on the link to the IRS article for full details

Read the complete article form the IRS at this link for more details - Don-t be a victim, Be Informed!

With your interest in mind, Executive Resources FSI - 530-888-6691

Medical and Dental Expenses and Your Taxes

Having significant medical or dental costs in 2011, may allow you deductions when you file your tax return. Below are eight facts you should know when evaluating medical and dental expenses and other benefits for tax deductions.

You must itemize. You can deduct qualifying medical and dental expenses only if you itemize on Schedule A on form 1040.

The Deduction is limited. You can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year.

The Expenses must have been paid in 2011. You can include medical and dental expenses you paid during the year, regardless of when the services were provided. Be sure to save your receipts and keep good records to substantiate your expenses.

You cannot deduct reimbursed expenses. Your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

What expenses qualify. You may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement, or those with a qualifying relative who is not your child.
You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.

Some Transportation costs may qualify. You may deduct transportation costs primarily for and essential to medical care that qualifies as a medical expense, including fares for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile for 201

Health Saving Plans for medical expenses. Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.

Please give us a call if you need help - Executive Resources FSI - 530-888-6691