Tax Tip - Where is my W2??

  • By proadAccountId-371192
  • 06 Apr, 2017

Tax Tip:

You’re ready to fill out your 2016 return but haven’t yet received your W-2. What do you do? First contact your employer and ask for a copy of the form. If that doesn’t work, you can call the IRS, which will send a letter to your employer. You’ll need the company’s name, address and phone number, dates of employment and an estimate of wages and tax withheld, which you can get from your final pay stub. 

Don’t file your return late!

If you still haven’t received the W-2 by early April…April 18 is the filing due dates… file your return anyway and attach Form 4852. This is a substitute W-2 form on which taxpayers should estimate their wages and taxes withheld to the best of their ability. This can be found at www.irs.gov . Using a year-end pay stub will help. 

Gambling Winnings

By proadAccountId-371192 15 Jun, 2017

Social Security Numbers and Employee Name Reporting Errors

When there is a mismatch in the employee name and/or Social Security number (SSN) as reported on Forms/N-2, compared to records at the Social Security Administration, the wage information reported with the mismatched name posted to suspense, any employee with a non-matching SSN on Form W-2 will lost benefits to which he or she is entitled.

In the case of information returns, such as Form 1099-MISC, under present rules the employer can establish “reasonable cause” for failure to match names and tax identification numbers (TINS), by presenting a properly completed From W-9 (Request for Taxpayer Identification Number and Certification). However, employers do you have an equivalent document to prove due diligence for Form W-2 reporting. Form W4 (Employee’s Withholding Allowance Certificate) has been suggested for this purpose, but there is no current requirement that every employee must file Form W-4 with the employer.

Under the Internal Revenue Code, the penalty for reporting invalid SSN’s on Form W-2 without reasonable cause, may be imposed if the number of incorrectly reported SSN’s for a tax year exceeds the greater of 1- or 0.5% of the information returns required to be filed. The maximum penalty under Code section 6722 is $50 for each incorrect payee statement, up to a maximum aggregate penalty of $100,000 per filer for the tax year.

“Reasonable Cause” Had Been Clarified As An Employer Defense

Employers penalized for putting an incorrect SSN on a Form W-2 are now helped by a seemingly more lenient IRS view of “reasonable cause,” based on the employee’s failure to provide a correct SSN. Specifically, the IRS requires only three things for the “reasonable cause” defense to apply:

·        that the employer received an SSN from the employee

·        that the employer relied on that number in good faith, entering it into its payroll records and putting it on the employee’s Form W-2; and

·        that the employer later received a penalty notice from the IRS notifying the employer that the employee’s SSN was incorrect

In practical terms, the IRS says, “reasonable care” by the employer, justifying waiver by the IRS of the penalty, could work as follows. The employer would have to show that it made an initial request for the employee’s SSN, normally done routinely when the employee begins working for the employers; and that the employer indeed received the SSN from the employee, usually on Form W-4. The employer would not be required to make a further solicitation for the employee’s SSN unless the IRS notifies the employer that the employee’s SSN is incorrect, for example by means of a penalty notice. An employer which receives such a notice may be required to make up to two annual requests after receiving the notice.

If you need assistance with matters relating to 1099's or W2 Social Security Match issues please contact the professionals at Aberdare Business Solutions at info@aberdare.us.com or 281.599.3380,

By proadAccountId-371192 14 Jun, 2017

Tax Laws Small Business Owners Should Know About

 

When it comes to taxes, there is no such thing as being over prepared. Unfortunately for busy small business owners, keeping up with the rapidly changing federal and state tax laws can feel like a burden. However, it's crucial to pay attention to your tax responsibilities in order to maximize deductions and prevent liability problems in the future. Whether you hire an outside agency or have an internal accountant helping sort out your finances, here are four important things for small business owners to know about federal income taxes in 2017.

 

1.) Affordable Care Act: Any business owner who is defined as an applicable large employer (ALE), under the Employer Shared Responsibility Provision (ESR) of the Affordable Care Act (ACA), must include a detailed reporting of healthcare coverage. Businesses with fewer than 50 full-time equivalent employees are exempt from penalties (also known as the Employer Shared Responsibility Payment or "Play or Pay" penalty) faced by larger employers that do not offer coverage. Additionally, you may be eligible for the Small Business Health Care Tax Credit if you cover at least 50% of your full-time employee's premium costs and you have fewer than 25 full-time equivalent employees.

 

2.) Bonus Depreciation: Under the PATH act, bonus depreciations will expire in 2020. Bonus depreciations are a tax break that allow businesses to deduct 50% of the costs for new capital equipment, such as hardware or software, when it is purchased. However, the percentage will be decreased each year until it expires. In 2017, the deduction will remain at 50%. In 2018, it will be decreased to 40%, and in 2019, it will be decreased to 30%. It may be in your business' best interest to invest in new equipment this year to take advantage of this deduction.

 

3.) Work Opportunity Tax Credit: The Work Opportunity Tax Credit incentivizes employers to hire certain target individuals, including military veterans, who have been out of work for 27 weeks or more. Through the PATH Act, this credit has been extended through 2019. Eligible businesses can receive up to 40% of qualified first year wages up to $6,000 through this credit.

 

4.) R&D Tax Credit: A change through the PATH ACT gives businesses that make less than $50 million annually and invest heavily in research the opportunity to offset the R&D credit against the alternative minimum tax (AMT). Businesses that specialize in areas like construction, software, aerospace subcontracting, bio-tech, and manufacturing can leverage this if they have engineers, scientists or product development employees on staff. Section 121(c) of the PATH Act also adds a new section to IRC 41 stating that qualified small businesses will be able to elect to use part of the current-year credit, all of the current-year credit, or even a carryforward credit against payroll tax. This will allow smaller businesses that may not have a lot of regular income tax liability to still take advantage of the R&D credit benefit.

 

Save yourself time and stress this tax season by working with our trusted Aberdare Business Solutions advisers. For more information or a business evaluation please call our office at 281.599.3380 or email info@aberdare.us.com
By proadAccountId-371192 14 Jun, 2017

Even though we are mid way through the tax year, it never hurts to just brush up on a few of the 2017 tax changes for the year and see if they impact you.  This gives you 6 months to make any adjustments necessary, to bring you to a good place by the end of the year.

****The Social Security wage base increases in 2017 to $127,200, up $8,700 from 2016’s cap . The Social Security tax rate on employers and employees remains at 6.2%. The employer’s share of Medicare tax stays at 1.45% of all pay. The employees share is 1.45%, too, but they also pay the 0.9% Medicare surtax on wages that exceed $200,000 for singles and $250,000 for married couples. This extra levy doesn’t hit employers. Self-employeds are also subject to the surtax.

 Social Security recipients see a tiny 0.3% hike in their benefits in 2017. The earnings test limits head up, too. Individuals who turn 66 in 2017 do not lose any benefits if they earn $44,880 or less before they reach that age. People who are age 62 through 65 by the end of 2017 can make up to $16,920 before they lose any benefits. There is no earnings cap once a beneficiary turns 66. The amount needed to qualify for coverage climbs to $1,300 a quarter. So earning $5,200 anytime during 2017 will net the full four quarters of coverage.


**** Businesses that hire the long-term unemployed get a tax credit . The work opportunity tax credit is expanded to cover employers that hire people who’ve been out of work for 27 weeks or more and received unemployment benefits. The 40% credit on the first $6,000 in wages applies for those beginning work after 2015.


**** The 2017 standard mileage rate for business driving falls to 53 -1/2 cent a mile, a 0.5 cent drop . The rate decreases to 17 cent a mile for travel for medical purposes and job-related moves. But the rate for charitable driving remains at 14cent per mile.

If you have questions or would like to arrange a meeting to see how these changes impact your business please do not hesitate to contact our office to set up a meeting or conference call with one of our professionals.   Aberdare Business Solutions 281.599.3380

By proadAccountId-371192 14 Jun, 2017

Combating payroll tax fraud is a high priority for IRS and the Justice Dept. Department Of Justice is pursuing an increasing number of civil injunctions against businesses, and their officers, that have repeatedly failed to deposit taxes withheld from workers. 

 These serial offenders must timely pay their employment taxes and notify the Service after making payroll deposits. They can’t transfer assets or establish a new business until the bill is fully paid. There are more criminal prosecutions of willful violators, too.

If you need assistance processing your payroll or calcuating your payroll taxes contact the payroll professionals at Aberdare Business Solutions, where are ready to assist.  281.599.3380

By proadAccountId-371192 14 Jun, 2017

Quick Social Security Tax Tip:  The social security wage base is projected to rise to $130,200 for 2018. A $3,000 increase from this year’s ceiling. That’s President Trump’s budget forecast, based on data from the Social Security Admin. For those doing long-range planning, the estimates are $135,000 for 2019, $139,800 for 2020 and $145,800 for 2021.

Need help with payroll or social security calculations?  Contact the professionals at Aberdare Business Solutions for assistance.  281.599.3380


By proadAccountId-371192 09 Jun, 2017

Brain Teaser: Bankruptcy Tax Issue

 Taxes shown on IRS-prepared late returns aren’t discharge in bankruptcy.  This is so even when a taxpayer later files the overdue returns, a court says.

 When a man failed to file his tax returns timely, the IRS audited him and assessed taxes base on substitute returns that the agency prepared. About one month later, he filed his own Forms 1040 for those years, and IRS reduced the taxes he owned. However, he never paid the taxes. After a few years had passed, he filed for bankruptcy and argues the tax bill should be wiped out. An appeals court ruled against him because his filings after IRS assessed taxes weren’t an honest attempt to comply with the tax law and thus weren’t returns for bankruptcy purposes (Giacchi, 3rd Cir.).

By proadAccountId-371192 09 Jun, 2017

Health Care – Don’t expect quick resolution on replacing Obamacare in the Senate. GOPers in the upper chamber are setting aside the controversial House bill and starting over. They’re setting up working groups and my even hold hearings.

  Two Big Problems - Senators will have to deal with arcane procedural rules so that they can sideswipe Democrats and get a bill passed by a simple majority. That means scaling down the bill, with a result unlikely to satisfy House conservatives. Also, the controversy over Trump’s firing of the FBI director will bog down Congress. 

Getting major bills passed in such an inflamed environment figures to be tough. The bottom line; a signed bill is still a long way off. Any final legislation will look far difference from the House version.  

  Mixed new for small firms that provide health insurance to workers. Qualifying for a tax credit will get easier. Now that the Trump administration has hinted it will dismantle the Small Business Health Options Program (SHOP). On the federal government’s health care website, small businesses must purchase group coverage, through SHOP to get the limited tax credit. Starting in 2018 or thereabouts, the credit would be made available to employers that purchase health plans directly from insurance companies or through brokers. Many other rules will still apply, including the two-year limit for claiming the credit. But GOP House members have called for an end to the credit after 2019.

  The annual ceiling on deductible payments to HAS accounts is slated to go up in 2018 to $3,450 for account owners with self-only coverage and to $6,900 for those with family coverage. People born before 1964 can put in an additional $1,000. The limits on out-of-pocket costs, such as deductibles and copayments, will increase to $13,300 for folks with family coverage and to $6,650 for individual coverage.  Minimum policy deductible will climb to $2,700 for families and $1,350 for singles. The House would expand the use of HSAs. Among the proposed changes. The ceiling on deductibles contributions would nearly double, to $6,650 for self-only coverage and $13,300 for account owners who carry family coverage. HSA funds could be used for the purchase of over the counter medicines and the fine for payouts made for nonmedical costs would be halved, to 10%.

By proadAccountId-371192 23 May, 2017

How to Document Issues With An Employee

 Whether your company has a HR manager or not, it is still up to every business owner and supervisor to keep accurate and consistent documentation of employees. From formal performance evaluations to positive recognition sent in an email, a written record of an employee's actions can be used as evidence to support everything from promotions to employment termination. Though including positive feedback in an employee's file is important, keeping a detailed record of employee violations is crucial and mandatory as it can protect a company from future litigation. Use these five tips to ensure you're documenting employee infractions appropriately:

 

1.)   Write It Down
This may seem like an obvious point, but the most important, and often the most challenging, part of keeping records of employee behavior is actually documenting it in a timely manner. Whether you are dealing with formal documentation for an employee's personnel file or informal documentation that records a manager's discussions and observances, all documentation should be written down (in print or in email) and saved in a secured, private place. This should be done for all employees, not just for employees with performance issues. If you make a record of one employee violating a company policy, you must keep records of all employees who violate that policy. Consistency and fairness are key.

2.)   Be Specific

Writing down every positive/negative behavior or action an employee makes isn't necessary, but if an event occurs that will potentially impact an employee's standing with the company, it is important to write a detailed report of the incidence immediately after it occurs. Your written record and credibility may be questioned if you wait too long to record the events, so timeliness is critical. On each document (formal or informal), include your name and title, the employee's name and title, and the date. If misconduct occurs, state which specific policies the employee violated and how this action harms the company. This provides valuable knowledge to any future supervisors who manage this employee and protects you and the company if the employee takes legal action in the future.

3.)   Be Objective

Documentation may be used by fellow colleagues and third parties (such as lawyers) at any time, so it's important to write all documentation in a professional manner. The point of keeping a record is not to editorialize, but instead to maintain a factual and fair history of events. Avoid using opinions (like calling an employee “lazy”) and interpretations of an employee's behavior (like stating a employee is “in over his head.”) Instead, note when the employee missed a specific deadline or failed to complete a task he/she was assigned. Stick to the facts without inserting your feelings.

4.)   Share Feedback

When it comes to addressing issues with an employee, it is important to be direct and provide feedback as soon as an incident occurs. Include an action item or takeaway from any initial conversations to address how the employee will avoid this behavior moving forward. If there are consistent problems, you may need to put the employee on a performance improvement plan or sit down for a formal evaluation to share detailed documentation that outlines the issues to date. During this meeting, review the infractions, discuss a plan of action to address the errors, create a timeline for improvement and state the consequences if the behavior continues. Ensure another supervisor or HR manager is in these meetings to witness all formal actions taken and ask the employee to sign and date the formal document for acknowledgment. This protects the company if further incidents occur. If the employee wishes to formally respond in written form, allow them to do so and include that in his/her file.

5.)   Follow Up

After a formal evaluation or disciplinary action is taken, it's important to continue the conversation by setting up regular meetings to track the employee's progress. Review any agreements or goals previously discussed and document any changes. If you've made commitments to help the employee strengthen their skills, document when and how you've provided assistance. If additional incidents occur or the employee is still under-performing, discuss additional options with a HR manager or legal representative. If termination is the next step, make sure you understand all legal and contractual requirements. The termination process will be much easier if you've been properly documenting the employee's behavior all along!

Want to learn more about how our trusted Aberdare Business Solutions advisers can set your business up for success? Give us a call at 281.599.3380 or email info@aberdare.us.com .

By proadAccountId-371192 25 Apr, 2017

Invoice Overhaul: Make it Easy for Customers to Pay on Time

 

Not receiving payment as promptly as you’d like might be the most frustrating part of managing your freelancer finances. Especially in the small business world, the success of your self-employed venture hinges solely on not just getting paid, but getting paid on time. Silently checking your inbox or mailbox each day doesn’t cut it, but neither will bugging your clients 24/7. Get things in order by giving your invoicing process an overhaul.

Evaluate

First, take a good, hard look at your current invoicing process and see if there are any obvious ways you can improve. For example, if you’re inconsistent about when you send out invoices, it can send the message that you’re fine with customers being inconsistent with when they send payment back.

Look into how your customers usually receive invoices, how they generally remit payment back to you, and the average length of time it takes to collect payments.

Look for Patterns

Throughout this process, look for patterns. Is there a connection between the amount of time you’ve been working with a client and how frequently or infrequently their payments are on time? Are invoices that are sent out weekly more likely to be received on time than invoices sent out monthly?

In addition to evaluating the platforms you use and timetables you abide by, consider reviewing your communication with clients. Are you lackadaisical, passive-aggressive or overly forgiving when discussing payment schedules?

Track to Act

Create a customer database to track payments and client behaviors. This will help you act accordingly. If you find that one account has sent late payments for the past six months, it may be time to contact them and re-establish payment terms or discuss a late payment penalty policy. On the other hand, if you find that another account has sent payments on time for the past year, you might send them a thank you note or offer a discount on their next invoice to show your appreciation.

Organize and Automate

Use an online invoice generator, if you aren’t already doing so, to streamline the look of and information in each of your invoices. This will help clients know exactly how much you’re charging them for each product or service, and they’ll know what to expect and look for with each invoice. You’ll eliminate any possibility of a delay because of ambiguity. Then, automate what you can — whether that’s setting up recurring billing with your long-term clients or using a tool like Boomerang that will send scheduled invoice reminder emails to clients.

 

Use Positive (or Negative) Reinforcement

As an incentive, consider offering a reward or discount to customers who not only pay on time but pay early. Make sure the reward is high enough to make it worth it to pay early, but reasonable enough to not affect your bottom line. In addition, consider penalizing those who are consistently late with an appropriate finance charge. Doing so will relay the message that you expect to be paid on time; just make sure the amount is reasonable enough to encourage them to be on time in the future without the risk of losing them as a client.

Offer Convenient Payment Options

Accepting only cash, check or credit won’t cut it anymore. Consider accepting various other methods of payment, including platforms and digital wallets like PayPal, Venmo, Apple Pay and even Bitcoin. Doing so shows your flexibility, and also makes it easier for customers to use whatever they’re already comfortable with. No matter how you collect payment, be diligent and transparent about data security so your clients won’t hesitate to pay.

Want to learn more about how our trusted Aberdare Business Solutions advisers can set your business up for success? Give us a call at 281.599.3380 or email info@aberdare.us.com .



 

 

By proadAccountId-371192 25 Apr, 2017

How to Document Issues With An Employee

 

Whether your company has a HR manager or not, it is still up to every business owner and supervisor to keep accurate and consistent documentation of employees. From formal performance evaluations to positive recognition sent in an email, a written record of an employee's actions can be used as evidence to support everything from promotions to employment termination. Though including positive feedback in an employee's file is important, keeping a detailed record of employee violations is crucial and mandatory as it can protect a company from future litigation. Use these five tips to ensure you're documenting employee infractions appropriately:

 

1.)   Write It Down
This may seem like an obvious point, but the most important, and often the most challenging, part of keeping records of employee behavior is actually documenting it in a timely manner. Whether you are dealing with formal documentation for an employee's personnel file or informal documentation that records a manager's discussions and observances, all documentation should be written down (in print or in email) and saved in a secured, private place. This should be done for all employees, not just for employees with performance issues. If you make a record of one employee violating a company policy, you must keep records of all employees who violate that policy. Consistency and fairness are key.

2.)   Be Specific

Writing down every positive/negative behavior or action an employee makes isn't necessary, but if an event occurs that will potentially impact an employee's standing with the company, it is important to write a detailed report of the incidence immediately after it occurs. Your written record and credibility may be questioned if you wait too long to record the events, so timeliness is critical. On each document (formal or informal), include your name and title, the employee's name and title, and the date. If misconduct occurs, state which specific policies the employee violated and how this action harms the company. This provides valuable knowledge to any future supervisors who manage this employee and protects you and the company if the employee takes legal action in the future.

3.)   Be Objective

Documentation may be used by fellow colleagues and third parties (such as lawyers) at any time, so it's important to write all documentation in a professional manner. The point of keeping a record is not to editorialize, but instead to maintain a factual and fair history of events. Avoid using opinions (like calling an employee “lazy”) and interpretations of an employee's behavior (like stating a employee is “in over his head.”) Instead, note when the employee missed a specific deadline or failed to complete a task he/she was assigned. Stick to the facts without inserting your feelings.

4.)   Share Feedback

When it comes to addressing issues with an employee, it is important to be direct and provide feedback as soon as an incident occurs. Include an action item or takeaway from any initial conversations to address how the employee will avoid this behavior moving forward. If there are consistent problems, you may need to put the employee on a performance improvement plan or sit down for a formal evaluation to share detailed documentation that outlines the issues to date. During this meeting, review the infractions, discuss a plan of action to address the errors, create a timeline for improvement and state the consequences if the behavior continues. Ensure another supervisor or HR manager is in these meetings to witness all formal actions taken and ask the employee to sign and date the formal document for acknowledgment. This protects the company if further incidents occur. If the employee wishes to formally respond in written form, allow them to do so and include that in his/her file.

5.)   Follow Up

After a formal evaluation or disciplinary action is taken, it's important to continue the conversation by setting up regular meetings to track the employee's progress. Review any agreements or goals previously discussed and document any changes. If you've made commitments to help the employee strengthen their skills, document when and how you've provided assistance. If additional incidents occur or the employee is still under-performing, discuss additional options with a HR manager or legal representative. If termination is the next step, make sure you understand all legal and contractual requirements. The termination process will be much easier if you've been properly documenting the employee's behavior all along!

Want to learn more about how our trusted Aberdare Business Solutions advisers can set your business up for success? Give us a call at 281.599.3380 or email info@aberdare.us.com .

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