Self-employment tax can be a significant financial burden for small business owners. However, there are ways to reduce or even eliminate this tax liability. One option is to form a limited liability company (LLC) and elect to be taxed as an S corporation. What is Self-Employment Tax? Self-employment tax is a combination of Social Security … Read more
Understanding Business Structures for Married Couples Married couples have various options when it comes to structuring their business. One common question is whether they can file a joint Schedule C. To answer this, we need to delve into the different business structures available and their implications for tax purposes. Sole Proprietorship vs. Partnership A sole … Read more
Understanding the IRS’s Audit Threshold The Internal Revenue Service (IRS) has a vested interest in ensuring that taxpayers accurately report their income and pay their fair share of taxes. To achieve this, the IRS conducts audits, which involve examining a taxpayer’s financial records to verify the accuracy of their tax return. While the IRS does … Read more
Filing taxes is an essential obligation for individuals and businesses alike. While the process can be daunting, it’s crucial to approach it with accuracy and attention to detail to minimize the chances of an audit. One factor that can influence the likelihood of an audit is the method of filing: paper returns versus electronic returns. … Read more
401(k) plans are a popular retirement savings vehicle that offer tax benefits. Contributions are made on a pre-tax basis, reducing your current taxable income. However, when you withdraw funds from your 401(k), they are typically taxed as ordinary income. Understanding the tax implications of 401(k) distributions is crucial to avoid unexpected tax liabilities. When to … Read more
When it comes to managing your finances, keeping track of your checks is essential. But what about voided checks? Are they worth keeping, or should you shred them? What is a voided check? A voided check is a check that has been canceled before it was cashed. This can happen for a variety of reasons, … Read more
The Internal Revenue Service (IRS) has specific guidelines for determining who is required to file a tax return, regardless of whether they owe taxes or not. Understanding these requirements is crucial to avoid penalties and ensure compliance with tax laws. General Filing Requirements In general, individuals are required to file a tax return if their … Read more
Failing to report income to the IRS can have serious consequences, including penalties, interest charges, and even an audit. The IRS has a variety of methods to detect unreported income, including: T-account analysis: This method compares sources of cash on the left and cash expenditures on the right to determine if taxpayers have sufficient funds … Read more
Navigating the IRS Tax Filing Deadline The Internal Revenue Service (IRS) sets specific deadlines for filing tax returns. Generally, individual income taxes are due on April 15th of each year. However, circumstances may arise that prevent timely filing, leading to questions about the possibility of filing past due returns. This article delves into the intricacies … Read more
The Internal Revenue Service (IRS) imposes specific requirements for individuals to pay their estimated taxes throughout the year. Failure to meet these requirements can result in penalties for underpayment of estimated taxes. However, the IRS provides “safe harbor” rules that allow taxpayers to avoid these penalties under certain conditions. This article delves into the intricacies … Read more