1099 Deadline Fast Approaching

Specific Instructions for Form 1099-MISC
File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
  • At least $600 in:
    Rents (box 1);
  • Prizes and awards (box 3);
  • Other income payments (box 3);
  • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
  • Any fishing boat proceeds (box 5);
  • Medical and health care payments (box 6);
  • Crop insurance proceeds (box 9);
  • Payments to an attorney (box 10) (see Payments to attorneys, later);
  • Section 409A deferrals (box 12); or
  • Nonqualified deferred compensation (box 14).

You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

For COMPLETE  IRS details

Visit the IRS

IRS

For additional help with 1099 preparation….Call our office

828-322-5813

Tax Savings for Business Owners

Very Important information
regarding Tax Savings for Business Owners

Dear Client:

As a business owner, you should be aware that you can save family income and payroll taxes by putting junior family members on the payroll. You may be able to turn high-taxed income into tax-free or low-taxed income, achieve social security tax savings (depending on how your business is organized), and even make retirement plan contributions for your child.

Here are the key considerations:

Turning high-taxed income into tax-free or low-taxed income. You can turn some of your high-taxed income into tax-free or low-taxed income by shifting some of your business earnings to a child as wages for services performed by him or her. In order for your business to deduct the wages as a business expense, the work done by the child must be legitimate and the child’s salary must be reasonable.

For example: Suppose a business owner operating as a sole proprietor is in the 37% tax bracket. He hires his 17-year-old daughter to help with office work full-time during the summer and part-time into the fall. She earns $10,000 during the year (and doesn’t have any other earnings). The business owner saves $3,700 (37% of $10,000) in income taxes at no tax cost to his daughter, who can use her $12,400 standard deduction for 2020 to completely shelter her earnings. Family taxes are cut even if the child’s earnings exceed his or her standard deduction. That’s because the unsheltered earnings will be taxed to the child beginning at a rate of 10%, instead of being taxed at the parent’s higher rate.

What about income tax withholding?

Your business probably will have to withhold federal income taxes on your child’s wages. Usually, an employee can claim exempt status if he or she had no federal income tax liability for last year, and expects to have none for this year. However, exemption from withholding can’t be claimed if (1) the employee’s income exceeds $1,100 for 2020 (and includes more than $350 of unearned income (such as dividends) for 2020), and (2) the employee can be claimed as a dependent on someone else’s return. Keep in mind that your child probably will get a refund for part or all of the withheld tax when he or she files a return for the year.

Social security tax savings, too.

If your business isn’t incorporated, you can also save some self-employment (i.e., social security) tax dollars by shifting some of your earnings to a child. That’s because services performed by a child under the age of 18 while employed by a parent isn’t considered employment for FICA tax purposes.

For example: Let’s say a sole proprietor who usually takes $120,000 of earnings from the business pays $5,700 to her 17-year-old child. The sole proprietor’s self-employment income would be reduced by $5,700, saving her $165.30 (the 2.9% HI portion of the self-employment tax she would have paid on the $5,700 shifted to her daughter). This doesn’t take into account a sole proprietor’s income tax deduction for one-half of his or her own social security taxes.

A similar but more liberal exemption applies for FUTA (unemployment) tax, which exempts earnings paid to a child under age 21 while employed by his or her parent. The FICA and FUTA exemptions also apply if a child is employed by a partnership consisting solely of his parents.

Note that there’s no FICA or FUTA exemption for employing a child if your business is incorporated or a partnership that includes non-parent partners. However, there’s no extra cost to your business if you’re paying a child for work you’d pay someone else to do, anyway.

Retirement benefits. Your business also may be able to provide your child with retirement benefits, depending on the type of plan it has and how it defines qualifying employees.

For example: If it has a simplified employee pension (SEP), a contribution can be made for the child up to 25% of his or her earnings but the contribution can’t exceed $57,000 for 2020. The child’s participation in the SEP won’t prevent the child from making tax-deductible IRA contributions as long as adjusted gross income (computed in a special way) is below the level at which deductions for IRA contributions begin to be disallowed. For 2020, that figure is $65,000 for a single individual.

If you have any questions about how these rules apply to your particular situation, please don’t hesitate to call. Also keep in mind that some of the rules about employing children (such as the maximum amount they can earn tax-free) change from year to year, and may require your income-shifting strategy to change, too.

Very truly yours,
Michael E. Rink

Business Succession Planning

As we hit the ground running for 2020

We are celebrating our 64th year of providing accounting services!

As we hit the ground running in 2020,
we promise to keep you abreast of tax changes
and methods to cut your tax bill in the new decade.

We have many new things to offer
Like cool automated features to simplify doing business with us!

 

hickory tax services

Do you really want to donate your hard earned money to the IRS?

Do you really want to donate your hard earned money to the IRS?
Probably NOT

…………………………..But if you are trying to do your own taxes online, you may be missing a lot of tax deductions. This is where we come into the picture. Call our office from now to January 1st and we will see if you need our services. No reason to come in until we have a quick chat to see if our services fit your situation. You will be speaking directly with Michael Rink, CPA.

Don’t Delay…it cost you nothing to call ~ except your time.

828-322-5813

charlotte nc cpas

Child Tax Credits

Who qualifies for the Child Tax Credit???
News from the Internal Revenue Service: Taxpayers who claim at least one child as their dependent on their tax return may be eligible to benefit from the child tax credit.

It’s important for people who might qualify for this credit to review the eligibility rules to make sure they still qualify. Taxpayers who haven’t qualified in the past should also check because they may now be able to claim the credit.

Here are some details about this credit:
The maximum amount of the credit is $2,000 per qualifying child.
Taxpayers who are eligible to claim this credit must list the name and Social Security number for each dependent on their tax return.
The child must be younger than 17 on the last day of the tax year, generally Dec 31.
The child must be the taxpayer’s son, daughter, stepchild, foster or adopted child, brother, sister, stepbrother, stepsister, half-brother or half-sister. An adopted child includes a child lawfully placed with them for legal adoption. They can also include grandchildren, nieces or nephews.
The child must have not provided more than half of their own support for the year.
The taxpayer must claim the child as their dependent on their federal tax return.
The child cannot file a tax return for the same year with the status married filing jointly, unless the only reason they are filing is to claim a refund.
The child must be a U.S. citizen, a U.S. national or a U.S. resident alien.
In most cases, the child must have lived with the taxpayer for more than half of 2019.
The IRS Interactive Tax Assistant tool Is My Child a Qualifying Child for the Child Tax Credit? helps taxpayers determine if a child qualifies for this credit.
In some cases, a taxpayer qualifies and gets less than the full credit. These taxpayers must have earned income of at least $2,500 to receive a refund, even if they owe no tax, with the additional child tax credit.
The credit begins to phase out at $200,000 of modified adjusted gross income. This amount is $400,000 for married couples filing jointly.

Taxpayers can use the worksheet on page 6 of Publication 972, Child Tax Credit, to determine if they can claim this credit.

If you have any questions or would like us to review your options with you please feel free to call us, (828) 322-5813.

Dealing with Taxes can be Spooky!

Safety Tips for the Fun Filled Night!

Costumes:
•All costumes, wigs and accessories should be fire-resistant
•Avoid masks, which can obstruct vision
•If children are allowed out after dark, fasten reflective tape to their costumes and bags, or give them glow sticks
•When buying Halloween makeup, make sure it is nontoxic and always test it in a small area first
•Remove all makeup before children go to bed to prevent skin and eye irritation

While Trick-Or-Treating:
•A responsible adult should accompany young children on the neighborhood rounds
•If your older children are going alone, plan and review a route acceptable to you
•Agree on a specific time children should return home
•Teach your children never to enter a stranger’s home or car
•Instruct children to travel only in familiar, well-lit areas and stick with their friends
•Tell your children not to eat any treats until they return home
•Children and adults are reminded to put electronic devices down, keep heads up and walk, don’t run, across the street

Motorists on Halloween night:
•Watch for children walking on roadways, medians and curbs
•Enter and exit driveways and alleys carefully
•At twilight and later in the evening, watch for children in dark clothing
•Discourage new, inexperienced drivers from driving on Halloween

Hickory Tax Service

Tax Relief Services by Rink and Robinson

It’s tax season and we’re guessing you’re scurrying about trying to find all your necessary documents to file. Once you find your documents, then what? How confident do you feel that you can do your taxes and maximize your returns? Are you afraid of getting audited? For all your tax return and tax relief services, look no further than the professionals at Rink and Robinson Certified Personal Accountants and Consultants. We can help get you out of a tax rut and make your life easier.

At Rink and Robinson, our services range from litigation support to non-profit accounting and consulting. We understand how important it is that the money in your life is tracked and handled appropriately. That’s why we take extra care to make sure our clients feel at ease with our work. With 50 years of tax services under our belt, we want you to feel confident that you have made the right choice to hire us as your CPA.

While we do provide many services, our tax reporting and tax relief services are the most requested services at this time of year. Our professionals are ready and able to maximize your returns for the 2016 year. Should you end up audited, we can walk you through the process of the audit to end up in the green rather than the red. Auditors can be intimidating and know how to get the most information out of you. You could even wind up sharing information with the auditor that you in no way legally obligated to share.

Don’t fall prey to the IRS and a tricky economic system. Let our group of knowledgeable and experienced CPA professionals help make the most of your business or investments. We can handle any accounting problem you throw our way. Rink and Robinson CPA and Consultants will surely become your go-to accounting firm for years to come. Call us today to see how we can best help you.

charlotte tax services

Get Tax Relief with Rink and Robinson CPAs

Rink and Robinson Certified Personal Accountants and Consultants hear frequently how stressed folks are over tax audits. We completely understand! Tax season is a stressful time, and we get why you might be a little uneasy. An IRS audit can be incredibly difficult to deal with. When it comes to IRS audits and tax relief, Rink and Robinson is the accounting firm you can trust to get you out of a rut.

When you get that letter in the mail from the Internal Revenue Service stating you are being audited, your first step should be to decide whether you need professional help. There are many reasons you could be audited. The IRS has a computer system that can pick up on outlying data, such as above average withholdings. Your 1099s, W2s or cash wages not matching your report could raise a red flag with the IRS. You could even just be a victim of random selection for IRS audits.

Sometimes people choose to handle audits by themselves, and that is perfectly fine. When you decide that you need professional help with your tax relief, we are here for you. Auditors know how to get information from you that you are under no obligation to give. They can be intimidating and get more money from you than you need to give. Our CPAs at Rink and Robinson know how to get you out of that and can be the difference between being in the red or green.

Don’t fall prey to the IRS and make sure you don’t wait too long to have your audit taken care of. Rink and Robinson CPA will be your go to for years for any tax relief services you will run into. Call us today to see how we can best help you during this tax season.