Posts Tagged "employee"

Do you have a household employee? Don’t ignore the nanny tax

Posted on Jan 29, 2018

As you review your filing requirements for 2018, make sure you don’t overlook the nanny tax related to household employees. If you have a housekeeper or any other household employee, you could be liable to pay state and federal payroll taxes. How to know if you must pay the nanny tax First, you’ll need to determine whether you have a household employee. Generally, this is someone you hire to work in or around your house. It could be a babysitter, nurse, gardener, etc. It doesn’t matter whether they work part-time or full-time, or whether you pay them hourly, weekly, or by the job. But not everyone who works around your house is an employee. For example, if a lawn service sends someone to cut your grass each week, that person is not your employee. As a general rule, workers who bring their own tools, do work for multiple customers and/or control when and how they do the work are not your household employees. Your responsibilities If you have a household employee, you’ll generally be responsible for 2017 payroll taxes if you paid that individual more than $2,000 last year. However, federal unemployment tax kicks in if you pay more than $1,000 to all domestic employees in any quarter. It’s not always easy to tell whether you have a household employee, or whether exceptions apply. If in doubt, don’t hesitate to call our office. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

CONTRACTOR OR EMPLOYEE?

Posted on Sep 20, 2017

Knowing the difference is important Is a worker an independent contractor or an employee? This seemingly simple question is often the contentious subject of numerous IRS audits. As an employer, getting this wrong could cost you plenty in the way of Social Security, Medicare and other employment-related taxes. Here is what you need to know. As the worker: If you are a contractor and not considered an employee you must: Pay self-employment taxes (Social Security and Medicare-related taxes) Make estimated federal and state tax payments. Handle your own benefits, insurance and bookkeeping. As the employer: You must ensure your employee versus independent contractor determination is correct. Getting this wrong in the eyes of the IRS can lead to: Payment and penalties related to Social Security and Medicare taxes. Payment of possible overtime, including penalties for a contractor reclassified as an employee. A legal obligation to pay for benefits. Things to consider When the IRS recharacterizes an independent contractor as an employee they look at the business relationship between the employer and the worker. The IRS focuses on the degree of control exercised by the business over the work done and they assess the worker’s independence. Here are some of their guidelines: The more the employer has the right to control the work (when, how and where the work is done), the more likely the worker is an employee. The more the financial relationship is controlled by the employer, the more likely the relationship will be seen as an employee and not an independent contractor. To clarify this, an independent contractor should have a contract, have multiple customers, invoice the company for work done, and handle financial matters in a professional manner. The more businesslike the arrangement, the more likely you have an independent contractor relationship. While there are no hard-set rules, the more reasonable your basis for classification and the more consistently it is applied, the more likely an independent contractor classification will not be challenged. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

Don’t make this major business mistake

Posted on Jul 28, 2014

Poor communications may be the number one problem for most businesses. It affects employee performance, employee morale, customer satisfaction, and orders from vendors. At a minimum, have the person to whom you are speaking, repeat what he or she heard you say. If appropriate and circumstances permit, provide a brief demonstration of what you want accomplished. The preferred method of contact and in the best order are: face to face, by telephone, by written instructions (letter or e-mail). Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ <https://plus.google.com/108764776146415485651/posts> , LinkedIn <http://www.linkedin.com/in/gillilandcpa> , Facebook <https://www.facebook.com/gillilandcpa> , and Twitter...

Read More

Classify workers properly

Posted on Jun 17, 2014

Don’t subject your business to tax penalties by misclassifying an employee as an independent contractor. The IRS is aware that employers prefer to treat workers as independent contractors to avoid paying fringe benefits and payroll taxes. If you’re not absolutely sure how to treat a given worker, contact us. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ <https://plus.google.com/108764776146415485651/posts> , LinkedIn <http://www.linkedin.com/in/gillilandcpa> , Facebook <https://www.facebook.com/gillilandcpa> , and Twitter...

Read More

Health insurance tax credits are good medicine for small businesses

Posted on Feb 26, 2014

Small businesses may be missing out on an important new tax perk related to health insurance. And the stakes are even higher in 2014. The Affordable Care Act provides a tax incentive for small business owners who pay at least a portion of their employees’ health insurance. This year as much as 50% (up from 35% in 2013) of the employer’s cost for worker health care premiums can be deducted as a tax credit. That’s a dollar-for-dollar reduction in your 2014 tax bill. But as with most tax deals, you must meet certain requirements to qualify. First, you must employ fewer than 25 full-time equivalent (FTE) employees. A half-time employee would count as a .5 FTE, so you must consider all workers in your calculation. The fewer FTE employees you have, the higher the tax credit percentage. Second, the average annual wages of your employees must be less than $50,000. To make the calculation, you would take your total wages and divide by the FTE number you figured above. In most cases the owner’s salary is not included in the formula. Finally, the business owner must contribute at least 50% of the total cost for single coverage. Family coverage is not factored in. The policy must also be purchased through the Small Business Health Options Program, or SHOP to be eligible for the credit. A few more wrinkles: if a business doesn’t owe tax for the current year, they can apply the credit to past or future years. In addition, the excess of the employer’s actual cost of health insurance over and above the credit received can still be deducted as a business expense. And the new rules also mean that small nonprofit organizations can receive a tax credit of up to 35% of their health insurance costs if they meet the above requirements. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ <https://plus.google.com/108764776146415485651/posts> , LinkedIn <http://www.linkedin.com/in/gillilandcpa> , Facebook <https://www.facebook.com/gillilandcpa> , and Twitter <https://twitter.com/dnggcpa>...

Read More