payroll tax Archives - Blau Company Accounting & Tax Preparation

DOMA Repeal’s Effect on Employers

Prior to the repeal of the Defense of Marriage act, many large employers elected to extend benefits traditionally reserved for married employees to employees in same-sex marriages, domestic partnerships and civil unions. Unfortunately for those couples, under the Defense of Marriage Act, the Federal Government did not extend the tax-free treatment of benefits to those couples. Benefits such as health insurance, life insurance, and other benefits provided and exempted from tax under §125 Cafeteria Plans were considered taxable to the employee, and therefore subject to social security, medicare, and unemployment taxes. With the repeal of DOMA, these forward thinking companies [...]

December 18th, 2013|Business Tax|Comments Off

Template: Worker Classification/Independent Contract vs. Employee

The question of whether a worker is an independent contractor or employee for federal income and employment tax purposes is a complex one. It is intensely factual, and the stakes can be very high. If a worker is an employee, the company must withhold federal income and payroll taxes, pay the employer's share of FICA taxes on the wages plus FUTA tax, and often provide the worker with fringe benefits it makes available to other employees. There may be state tax obligations as well. These obligations don't apply for a worker who is an independent contractor. The business sends the [...]

November 26th, 2013|Business Tax|Comments Off

Hiring your Children in your Business

An article in 'Practical Tax Strategies,' a magazine for tax professionals, recently detailed out the significant tax savings that can be had by hiring your children to work in your business. The article, written by C. Andrew LaFond, CPA and Bruce A Leauby, Phd., CPA state that the 'tax benefits associated with hiring a child depends on the age of the child, the type of business hiring the child, and whether certain other benefits are provided." Sole proprietors hiring children under the age of 18 receive a special benefit related to social security and medicare. The child, as an employee, [...]

November 18th, 2013|Business Tax|Comments Off

“Use-it-or-Lose” FSA Rules Relaxed

Taxpayers who utilize Flexible Spending Accounts (FSAs) are well aware of the 'use-it-or-lose-it' rule regarding expending pre-tax money set aside for medical expenses. Previously, any amounts unused by year-end are forfitted. Under Internal Revenue Code Section 125(j) as added in the Affordable Care Act (also known as 'Obamacare'), taxpayer are now eligible to roll-over up to $500 of unused funds to a following plan year. The roll-over does not affect the $2,500 contribution maximum in the subsequent year. Sponsors (employers) must amend their plan to take into account the new elective changes. Aaron's Take: The end-of-year rush to spend FSA money [...]

November 13th, 2013|Business Tax, Personal Tax|2 Comments

IRS Sets 2014 IRA and 401(k) Limits

The Internal Revenue Service has announced the following retirement contribution plan limits for the 2014 tax year. IRA Contributions […]

November 13th, 2013|Business Tax, Personal Tax|2 Comments

Reasonable Compensation in S-Corporations

S-Corporations are the preferred entities for any small, closely held active business. The reason for this preference is due to the ability to place a 'cap' on the social security paid for the corporation's owners. S-Corporation owners only pay social security on wages paid, as compared to self-employment taxable entities such as sole proprietorship and partnerships who are required to pay social security on the entirety of the business profits. The effective use of an S-Corporation can save thousands of dollars to a profitable business. There is, however, one key factor in avoiding IRS scrutiny. The S-Corporation cannot pay [...]

November 10th, 2013|Accounting, Business Tax|Comments Off

When a Fee is a Fee and a Tip is a Fee …

Effective January 1, 2014, IRS Revenue Ruling 2012-18 provides restaurants guidance concerning the use of automatic gratuities, or 'service charges' charged on the basis of table size. Generally, gratuities are not includable in the income of the establishment and are reported separately by employees. The revenue ruling states that 'auto grats' are considered fees collected by the restaurant and should be included in income. The resulting pay-out to employees should be added to wages and taxed accordingly. The revenue ruling defines a gratuity as one which is paid out subject to the following: the payment must be made free from [...]

September 9th, 2013|Accounting, Business Tax|Comments Off