Waukesha Accountant | Edith Christian CPA

We offer professional services that will satisfy your tax and accounting needs with relative ease. If you are ready to learn more about our offerings, just pick up the phone and give us a ring. Our friendly and accommodating staff is waiting to field your call, answer your questions and discuss your circumstances. When it comes to your finances, every delay can be costly, so don’t waste any more time. Contact Edith I Christian, CPA!

 Don’t squander away your precious time by struggling with complicated IRS forms and complex bookkeeping chores. You can get fast and effective solutions to all of your tax and accounting affairs when you employ Edith I Christian, CPA. We know how stressful your life can be. But when you call on us, you can relax a little bit.

When is it time to hire an accountant or Bookkeeper | Edith Christian Accounting Milwaukee | Waukesha

Sometimes you can only go so far as far as being on top of your Milwaukee business and its accounting, sometimes it is time to have someone take over your accounting and bookkeeping so you can concentrate on your business
Here is a great article from FORBES.com

Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don't pay for anything new until you have absolutely have to. It's especially difficult to justify hiring financial help like a bookkeeper.
With user-friendly software such as QuickBooks available, many business owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they're doing things correctly.
Deciding about "hiring a bookkeeper is something I struggle with all the time," says Randy Mitchelson, owner of National Web Leads, an Internet marketing company in Estero, Fla. While he finds basic accounting easy to do, it takes him away from working on his business. Meanwhile, his accounting and tax planning have become only more complicated in the six years since he founded his business.
Entrepreneurs who hire accounting help usually discover they weren't doing nearly as well on their own as they thought they were.
Zalmi Duchman, chief executive of The Fresh Diet, a meal-delivery company based in Miami, lasted five years without a bookkeeper then hired one three months ago. The new employee cleaned up records that incorrectly mingled expenses and assets, reviewed employee purchases for duplications, and took over the mundane but critical task of paying bills. Duchman estimates his company is saving $500 to $1,000 in late fees every quarter. "I definitely have been able to make better and more educated decisions," he says.
So what are a small-business owner's options for professional help with financial tasks? Here is a primer:
Do I Need a Bookkeeper or an Accountant?Actually it's a trick question. You may need both.
Aaron Sylvan, a serial entrepreneur who lives in New York, compares the situation to needing to hire both a carpenter and an architect when building a house.
An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit-and-loss statement, if needed, and files a company's taxes.
After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.
In contrast, a bookkeeper does the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company's payroll, submitting invoices (promptly) and following up on them, and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered -- and recorded correctly -- into software like QuickBooks so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.
"I don't keep receipts; they're a pain," says Sylvan, who runs Sylvan Social Technology, an ecommerce-services company. "Every month I get a bank statement with a gazillion transactions," such as taxi rides, meals, conferences and other expenses he has placed on his company's debit card.
His bookkeeper spends a few hours a week sorting it all out. As a result, Sylvan has a better idea about how his expenditures stack up against his budget. He knows he won't bill clients incorrectly or miss important payments.
"Knowledge is power," even when it comes to the small details, Sylvan says. "If you don't have a bookkeeper, you're probably not being as strategic as you could be in how you spend your money."
When to Bring in a BookkeeperIn his running a half-dozen businesses the past 15 years, Sylvan has typically hired a bookkeeper for a few hours a week within a few months after starting a new venture. For the first six to nine months, he's usually too busy to focus much on recordkeeping, then "things begin to stabilize," he says. "Then you can see trends and you can start to think strategically about where your money is going and where you can save." And this is when a bookkeeper becomes valuable. Since Sylvan has fewer than a dozen employees at each new company, the bookkeeping takes about one day a month, he says.
The rates for hiring a bookkeeper on a part-time basis in the U.S. can range from $15 to $60 an hour, depending on location, the workload and whether work is done at the company's office or from home.
Sylvan typically sees his accountant once a year, at tax time. But business owners requiring capital or frequently negotiating credit with a bank are likely to contact their accountants more often.
When to Hire a Staff Accountant or Bookkeeper Many small entrepreneurs can probably stick to outsourcing accounting or bookkeeping services for quite some time. The typical service business can often outsource its chief financial officer tasks and bookkeeping until its revenues rises well above the $1 million mark -- or until it has about 30 employees. Until then, most businesses usually don't have enough work to keep a full-timer busy every day.
It's time to hire full-time help, though, when you're calling your accountant often enough that you wish he or she were in the office all the time. Bring in a full-time bookkeeper when your part-timer is spending two or three full days in the office and still falling behind.
Most new business owners find a staffing solution somewhere along the continuum that ranges from trying to go it alone and paying for full-time help.

Read more here 

 

Waukesha Accountant Edith Christian CPA | Organize your Accounting

Tips for keeping your Accounting Organized for Small business.

1. Keep it separate. That new backpack for your kids isn’t a business expense, but your business credit card was handy so you used it. Sure, you can pay back your business for a personal expenditure, or the other way around, but if you’re going to do it right you actually have to record an accounting transaction. Things get complicated fast, and you don’t need that headache. By keeping separate bank and credit card accounts for business and personal, you’ll save yourself hours of work and make it easy to keep track of deductible expenses in one place. Some applications can automatically handle the behind-the-scenes accounting for crossover expenses, but even so, we recommend handling business and personal finances as independently as possible.
2. Call in a pro. Since the days of the abacus, accountants have been trusted and respected allies to small business owners everywhere. Their intimate knowledge of the profession as well as tax laws in their jurisdiction will save you money almost every time. I know how tempting it can be to save a buck and do it yourself, but it’s almost never more cost-efficient in the end. An accountant will almost always find more deductions and keep you penalty-free. On that note, the cleaner your records, the fewer billable hours you’ll have to pay, so make sure you’re organized year-round. But when things get technical or taxes are due, save yourself the money, time and headaches and call in a trusted professional.
3. Pencil it in. Actually, use a pen. A permanent marker even. Set aside about 15 minutes every week — that’s the equivalent of just one Facebook visit every seven days — to organize your finances, and don’t let other things take priority during this time.  You’ll have more insights into your business, be able to make more informed financial decisions and have everything organized when tax time approaches. Something always feels more pressing than your finances. But when you find the time every week, you’ll feel your stress levels — now and at year-end — fall fast.
4. Consider your people. When you’re looking for insights into your businesses spending, don’t forget to properly track what is likely one of your biggest expenses: labor. Whether you’re paying a full staff or you’re the only one on the payroll, make sure you’re tracking the costs of wages, benefits, overtime and any other costs associated with labor. By tracking your spending on labor, perks and benefits, you may find you have more money to incentivize your employees — or that you’re outspending your budget. Either way, doing the math now can help you make better decisions later.
5. Finally, don’t forget to get paid. This one seems pretty obvious, but you would be shocked at how many small business owners don’t properly track invoices and customer payments. If you’re not keeping proper records that you can make sense of at a glance, it could be months before you realize you have outstanding invoices. You could be collecting payments late, or missing some altogether. Make sure you’re properly tracking all payments due and recording when each invoice is paid, how long customers generally take to pay, and which customers you’ve had difficulties collecting payments from in the past.

Tax extensions for Waukesha and Milwaukee taxpayers | Milwaukee Tax Preperation by Edith Christian

 Need to file an extension on your tax returns?  Call Edith Christian CPA serving Waukesha and Milwaukee.  We can help you with that.

Here is some information on applying for a tax extension.

Extension of Time To File Your Tax Return

Need more time to prepare your federal tax return? This page provides information on how to apply for an extension of time to file.
Please be aware that an extension of time to file your return does not grant you any extension of time to pay your tax liability.

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Extensions for Individuals
If you are not able to file your federal individual income tax return by the due date, you may be able to get an automatic 6-month extension of time to file. To do so, you must file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return  by the due date for filing your calendar year return (usually April 15) or fiscal year return. This form is also available en español.
Special rules may apply if you are:

• living outside the United States
• out of the country when your 6-month extension expires, or
• serving in a combat zone or a qualified hazardous duty area.

You can also go to Filing Information in Publication 17, Your Federal Income Tax (HTML page), for more information regarding the rules for automatic extensions and filing federal individual income tax returns.

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Extensions for Corporations, Partnerships, REMICs, and Certain Trusts

• Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns
• Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback

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Other Extension Forms

• Form 2350 Application for Extension of Time to File U.S. Income Tax Return (For U.S. Citizens and Resident Aliens Abroad Who Expect To Qualify for Special Tax Treatment)
• Form 4768 Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes
• Form 5558 Application for Extension of Time to File Certain Employee Plan Returns 
• Form 8809 Application for Extension of Time to File Information Returns 
• Form 8868, Application for Extension of Time To File an Exempt Organization Return.
• Form 8892, Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax
  

click here for full info from irs.gov

Last Minute Tax Deductions | Waukesha Tax Preparation

Tax Day is this Monday, April 15. Yes, that's right -- THIS Monday!
Haven't filed your taxes yet? Check out these tips to ensure you and your spouse receive the maximum benefits on your returns, even in the last minute rush to pay good 'ol Uncle Sam.

• Be aware of extended tax breaks: This year, in efforts to avoid the fiscal cliff, legislation extended some family-friendly tax breaks that previously expired. This includes the tuition and fees deduction and a credit for energy efficient home improvements, both of which were set to expire after 2011.
The tuition and fees deduction can lower your taxable income up to $4,000 for qualified higher education expenses you paid in 2012.
You are eligible to claim a credit for up to 10 percent of the cost of eligible home improvements to your main residence, with a maximum lifetime credit of $500! For example, in 2012, if you and your spouse purchased and installed energy efficient windows and doors or insulation, you may be eligible for this tax break.
click here for the rest of the article

We offer professional services that will satisfy your tax and accounting needs with relative ease. If you are ready to learn more about our offerings, just pick up the phone and give us a ring. Our friendly and accommodating staff is waiting to field your call, answer your questions and discuss your circumstances. When it comes to your finances, every delay can be costly, so don’t waste any more time. Contact Edith I Christian, CPA! 262-646-2008 http://www.edithchristiancpa.net

Milwaukee Tax Accounting | Itemizing or Standard Deductions

When it comes to reducing your tax burden, itemizing deductions may be the way to go. The standard deduction is certainly easier, and might be a better option if you have a simple tax situation or don’t own a home, but if you determine that itemizing is right for you, it could lead to substantial savings.

Itemizing vs. Standard Deduction

The standard deduction is exactly what it sounds like—a flat amount that you can deduct from your taxable income. The amount you can deduct is based on your filing status, number of dependents, and what year you’re filing the taxes for. For additional information on the standard deduction, see IRS Publication 501.
When you itemize deductions, you have the ability to deduct the actual dollar amount of individual deductions. Some of these deductions come in the form of mortgage interest, property taxes, medical expenses, and more. If you think that if you totaled up all of your allowed deductions and it would be greater than the standard deduction, it would probably be wise to itemize.

What Expenses Can be Itemized?

The most common expenses include:

• Mortgage interest.
• Charitable contributions.
• Property taxes.
• State and local income taxes.
• Medical expenses that exceed 7.5% of your adjusted gross income.
• Various miscellaneous expenses that exceed 2% of your income such as: union dues, tools and supplies needed for work, tax preparation fees, some legal fees, and many more.

Should You Itemize?

There is no right or wrong answer, and it ultimately depends on your situation. To determine if itemizing would be worthwhile, you should take a look at Schedule A of Form 1040. On this sheet, you can list your itemized expenses, and then total them up to compare the amount to the standard deduction. If the itemized amount is greater, then you would want to itemize. If the total itemized amount is less than the standard deduction, you would not want to itemize.
The largest deductions for most people come in the form of mortgage interest and property taxes, and in these situations, even a modest mortgage could put you over the standard deduction limit. Since this can total into the thousands of dollars over the standard deduction, the tax savings can be significant. While this can be a big deduction, keep in mind that just because you own a home it doesn't mean the mortgage tax deduction is better than the standard deduction.

Accounting Waukesha | What Tax Forms do I file?

Which Form – 1040, 1040A or 1040EZ?
The three forms used for filing individual federal income tax returns are Form 1040EZ (PDF), Form 1040A (PDF), and Form 1040 (PDF).
Form 1040EZ is the simplest form to fill out. You may use Form 1040EZ if you meet all the following conditions:

1. Your filing status is single or married filing jointly
2. You claim no dependents
3. You, and your spouse if filing a joint return, were under age 65 on January 1, 2013, and not blind at the end of 2012
4. You have only wages, salaries, tips, taxable scholarship and fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500
5. Your taxable income is less than $100,000
6. Your earned tips, if any, are included in boxes 5 and 7 of your Form W-2
7. You do not owe any household employment taxes on wages you paid to a household employee
8. You are not a debtor in a Chapter 11 bankruptcy case filed after October 16, 2005
9. You do not claim any adjustments to income, such as a deduction for IRA contributions, a student loan interest deduction, an educator expenses deduction, or a tuition and fees deduction
10. You do not claim any credits other than the earned income credit

If you file Form 1040EZ, you cannot itemize deductions or claim any adjustments to income or tax credits (other than the earned income credit).
Form 1040EZ LinksReferences:
Form 1040EZ Instructions
Filing Options
If you cannot use Form 1040EZ, you may be able to use Form 1040A if:

1. Your income is only from wages, salaries, tips, taxable scholarships and fellowship grants, interest, or ordinary dividends, capital gain distributions, pensions, annuities, IRAs, unemployment compensation, taxable social security or railroad retirement benefits, and Alaska Permanent Fund dividends
2. Your taxable income is less than $100,000
3. You do not itemize deductions
4. You did not have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option
5. Your taxes are only from the Tax Table, the alternative minimum tax, recapture of an education credit, Form 8615 or the Qualified Dividends and Capital Gain Tax Worksheet
6. Your only adjustments to income are the IRA deduction, the student loan interest deduction, the educator expenses deduction, the tuition and fees deduction, and
7. The only credits you are claiming are the credit for child and dependent care expenses, the earned income credit, the credit for the elderly or the disabled, education credits, the child tax credit, the additional child tax credit, and the retirement savings contribution credit

You can also use Form 1040A if you received dependent care benefits.
Form 1040A LinksReferences:
Form 1040A Instructions
Filing Options
Often used Schedules:
Form 1040A or 1040, Schedule B (PDF) - Interest and Ordinary Dividends
Form 1040A or 1040, Schedule R (PDF) - Credit for the Elderly or the Disabled
Form 1040A or 1040, Schedule EIC (PDF) - Earned Income Credit
Form 1040A or 1040, Schedule 8812 (PDF) - Child Tax Credit
Often used Forms:
Form 8917 (PDF) - Tuition and Fees Deduction
Form 2441 (PDF) - Child and Dependent Care Expenses
Form 8863 (PDF) - Education Credits (American Opportunity and Lifetime Learning Credits)
Form 8888 (PDF) - Allocation of Refund (Including Savings Bond Purchases)
Finally, you must use Form 1040 under certain circumstances, such as:

1. Your taxable income is $100,000 or more
2. You have certain types of income such as unreported tips; certain nontaxable distributions; self-employment earnings; or income received as a partner, a shareholder in an "S" Corporation, or a beneficiary of an estate or trust
3. You itemize deductions or claim certain tax credits or adjustments to income, or
4. You owe household employment taxes

A complete list of conditions outlining when Form 1040 must be used is in the Form 1040A Instructions.
Form 1040 LinksReferences:
Form 1040 Instructions
1040 Central
Filing Options
Often used Schedules:
Form 1040, Schedule A (PDF) - Itemized Deductions
Form 1040A or 1040, Schedule B (PDF) - Interest and Ordinary Dividends
Form 1040, Schedule C-EZ (PDF) - Net Profit From Business
Form 1040, Schedule D (PDF) - Capital Gains and Losses
Form 1040, Schedule E (PDF) - Supplemental Income and Loss
Form 1040A or 1040, Schedule EIC (PDF) - Earned Income Credit
Form 1040A or 1040, Schedule 8812 (PDF) - Child Tax Credit
Form 1040A or 1040, Schedule R (PDF) - Credit for the Elderly or the Disabled
Often used Forms:
Form 8917 (PDF) - Tuition and Fees Deduction
Form 2441 (PDF) - Child and Dependent Care Expenses
Form 8863 (PDF) - Education Credits (American Opportunity and Lifetime Learning Credits)
Form 8888 (PDF) - Allocation of Refund (Including Savings Bond Purchases)
If you were a nonresident alien during the tax year and you were married to a U.S. citizen or resident alien, you may use any one of these three forms, based on your circumstances, only if you elect to file a joint return with your spouse. Other nonresident aliens may have to file Form 1040NR (PDF) or Form 1040NR-EZ (PDF). For more information on resident and nonresident aliens, refer to Topic 851 and Publication 519, U. S. Tax Guide for Aliens, Chapter 7.

Milwaukee Accountant Tax Tips For Small Businesses

As Milwaukee and Waukesha small businesses and their accountants and other advisers are preparing for year-end tax preparation, Here are five tips for payroll taxes.
1. Verify tax IDs.
A small-business owner should collaborate with his or her accountant or payroll service provider to ensure each tax ID number on payroll reports are correct and current. Any mistake should be fixed prior to processing the company’s last payroll of 2012.
2. Confirm W-2 and 1099 information with employees.
Before the end of the year, employees should review and confirm their W-2 and 1099 information. Small-business owners are responsible for providing accountants with updated employee W-2 information before the last payroll report in 2012. If a W-2c form must be filed with the IRS to correct information on a W-2, the accountant should be notified immediately.
3. Know your filing responsibilities.
Depending on the situation, the small-business owner or the company's accountant must file the company's taxes, and that responsibility should be confirmed with the accountant or tax advisor.
4. Submit payroll adjustments.
All employee payroll adjustments, including voided or manually issued employee checks, are to be submitted to the accountant or payroll service provider prior to the final 2012 payroll report. The deadline for this is Dec. 28.
5. Report all missing wages or miscellaneous income and tax credits.
Missing wages and miscellaneous income and tax credits are required to be reported to the accountant or payroll service provider before the final 2012 payroll report. These wages, income and tax credits include fringe benefits, tips, COBRA payments, employee moving expenses and unsubstantiated employee expense reimbursements.

Waukesha Accountants | Tax Credits in Wisconsin

Wisconsin residents can take advantage of a variety of tax credits to supplement their incomes. The most important of these include the Federal Earned Income Tax Credit; the Wisconsin Earned Income Tax Credit; the Wisconsin Homestead Credit and the Child Tax Credit.  These credits can bring thousands of extra dollars to individuals and families — yet every year, thousands of people who are eligible for these tax credits fail to claim them.
This website is intended to increase awareness and use of available tax credits among low and moderate income families in Wisconsin.  It is designed as a resource for Cooperative Extension educators, service providers, employers, and others interested in the economic well-being of Wisconsin families. It includes detailed information about key tax credits; ideas and resources for outreach; links to help locate free tax assistance; links to relevant tax forms and instructions; statistics on use of tax credits; and a variety of other information.

Information about key tax credits

• Federal Earned Income Tax Credit
• Wisconsin Earned Income Tax Credit
• Wisconsin Homestead Credit

Outreach: goals, strategies, and resources

• Goals of a tax credit outreach campaign
• Outreach strategies
• Resources for outreach, promotion, and tax assistance
• Find free tax assistance

When your accounting tasks are too much to bear, don’t lose heart. Just call on Edith I Christian, CPA. We’ll help you maximize your earnings in a fast, efficient and economical fashion. With our peerless personnel, we can handle virtually any accounting and income tax need in a timely and efficient manner.

• Tax Consulting for Individuals / Business
• Tax Preparation and Consulting
• New Business Start-Ups
• Divorce Financial / Tax Consulting
• Collaborative Divorce

You can benefit from our wide-ranging knowledge and expertise. Contact us today and learn more about our unique capabilities.

Milwaukee Taxes | Standard Tax information | Edith Christian CPA

The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. In general, the standard deduction is adjusted each year for inflation and varies according to your filing status. You cannot take the standard deduction if you itemize deductions.
Your standard deduction consists of the basic standard deduction and any additional standard deduction for age or blindness.
The basic standard deduction of an individual who can be claimed as a dependent on another person's tax return is the greater of:

1. An amount specified by law, or
2. The individual's earned income plus a specified amount (but the total cannot be more than the basic standard deduction for his or her filing status)

The additional standard deduction consists of the sum of any additional amounts for age or blindness. The additional amount for age will be allowed if you are age 65 or older at the end of the tax year. You are considered to be 65 on the day before your 65th birthday. For the definition of blindness, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information. The additional amount for blindness will be allowed if you are blind on the last day of the tax year. For example, a single taxpayer who is age 65 and blind would be entitled to a basic standard deduction and an additional standard deduction equal to the sum of the additional amounts for both age and blindness.
If you or your spouse were age 65 or older or blind at the end of the year, be sure to claim an additional standard deduction by checking the appropriate boxes for age or blindness on Form 1040A (PDF) or Form 1040 (PDF). You may not use Form 1040EZ (PDF) to claim an additional standard deduction.
Certain taxpayers are not entitled to the standard deduction. They are:

1. A married individual filing a separate return whose spouse itemizes deductions;
2. An individual who was a nonresident alien or dual status alien during any part of the year (note that residents of India may be able to claim the standard deduction if they meet certain criteria. Refer to Publication 519, U.S. Tax Guide for Aliens, for more information);
3. An individual who files a return for a period of less than 12 months due to a change in his or her annual accounting period; or
4. An estate or trust, common trust fund, or partnership.
5. More info click here  http://www.irs.gov/taxtopics/tc551.html

Business Accounting Services Milwaukee and Waukesha | Edith Christian CPA

Weather your business is just starting up or well established, We can work with you to handle your accounting needs in Milwaukee and Waukesha areas.
When your accounting tasks are too much to bear, don’t lose heart. Just call on Edith I Christian, CPA. We’ll help you maximize your earnings in a fast, efficient and economical fashion. With our peerless personnel, we can handle virtually any accounting and income tax need in a timely and efficient manner.

• Tax Consulting for Individuals / Business
• Tax Preparation and Consulting
• New Business Start-Ups

You can benefit from our wide-ranging knowledge and expertise. Contact us today and learn more about our unique capabilities.




  Edith Christian CPA
262-646-2008
N9 W29360 Thames Road
Waukesha, WI 53188
http://www.edithchristiancpa.net

Waukesha Accountant | Edith Christian CPA | Itemize

Should I itemize?

You should itemize deductions if your total deductions are more than the standard deduction amount. Also, if your standard deduction is zero, you should itemize any deductions you have if:

• You are married and filing a separate return, and your spouse itemizes deductions,
• You are filing a tax return for a short tax year because of a change in your annual accounting period, or
• You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.

NOTE: If you are a nonresident alien who is married to a U.S. citizen or resident at the end of the year, you can choose to be treated as a U.S. resident. (See Publication 519, U.S. Tax Guide for Aliens.) If you make this choice, you can take the standard deduction.
When to itemize
You may benefit from itemizing your deductions on Schedule A (Form 1040) if you:

• Do not qualify for the standard deduction, or the amount you can claim is limited,
• Had large uninsured medical and dental expenses during the year,
• Paid interest and taxes on your home,
• Had large unreimbursed employee business expenses or other miscellaneous deductions,
• Had large uninsured casualty or theft losses,
• Made large contributions to qualified charities, or
• Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.

Helpful Publications

• Publication 17, Your Federal Income Tax
• Publication 463, Travel, Entertainment, Gift, and Car Expenses
• Publication 501, Exemptions, Standard Deduction, and Filing Information
• Publication 502, Medical and Dental Expenses
• Pub 526, Charitable Contributions
• Pub 529, Miscellaneous Deductions
• Publication 530, Tax Information for First-Time Homeowners
• Pub 535, Business Expenses
• Publication 544, Sales and Other Dispositions of Assets
• Publication 547,Casualties, Disasters, and Thefts
• Publication 561, Determining the Value of Donated Property
• Pub 584, Casualty, Disaster, and Theft Loss Workbook
• Pub 2194 Disaster Losses Kit for Individuals
• Publication 936, Home Mortgage Interest Deduction
• Publication 970, Tax Benefits for Education
• Form 2106, Employee Business Expenses
• Form 2106-EZ, Unreimbursed Employee Business Expenses
• Instructions for Form 2106
• Form 8283, Noncash Charitable Contributions
• Inst 8283, Instructions
  

Tax Tips

Waukesha Accounting | Tips for People Who Pay Estimated Taxes

Tips for People Who Pay Estimated Taxes

If you have income that is not subject to withholding you may need to pay estimated taxes to the IRS during the year. Whether you need to pay estimated taxes is dependent upon your financial circumstances, what you do for a living (if you're self-employed for example), and the types of income you receive. Here are six tips from the IRS that explain estimated taxes and how to pay them.

If you have income from sources such as self-employment, interest, dividends, alimony, rent, gains from the sales of assets, prizes or awards, then you may have to pay estimated tax.

As a general rule, you must pay estimated taxes in 2012 if both of these statements apply:

1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and tax credits, and 2)You expect your withholding and credits to be less than the smaller of 90 percent of your 2012 taxes or 100 percent of the tax on your 2011 return. Special rules apply for farmers, fishermen, certain household employers and certain higher income taxpayers.

Sole Proprietors, Partners, and S Corporation shareholders generally have to make estimated tax payments if they expect to owe $1,000 or more in taxes when they file a return.

To figure estimated tax, include expected gross income, taxable income, taxes, deductions and credits for the year. You'll want to be as accurate as possible to avoid penalties and don't forget to consider changes in your situation and recent tax law changes.

For estimated tax purposes the year is divided into four payment periods or due dates. These dates are generally April 15, June 15, Sept. 15 and Jan. 15 of the next or following year.

The easiest way to pay estimated taxes is electronically through the Electronic Federal Tax Payment System, or EFTPS, but you can also figure your tax using Form 1040-ES, Estimated Tax for Individuals and pay any estimated taxes by check or money order using the Estimated Tax Payment Voucher, or by credit or debit card.

Milwaukee Accountant | Edith Christian | Employement Taxes

Federal Income Tax and Social Security and Medicare Taxes

You generally must withhold federal income tax from your employees' wages. You withhold part of Social Security and Medicare taxes from your employees' wages and you pay a matching amount yourself. To figure how much to withhold from each wage payment, use the employee's Form W-4 and the methods described in Publication 15, Employer's Tax Guide and Publication 15-A, Employer's Supplemental Tax Guide (PDF).
The Internal Revenue Service recently released instructions to help employers implement the 2011 and 2012 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011 and 2012.
Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011, but not later than Jan. 31, 2011.
Notice 1036 (PDF) contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes. Publication 15, (Circular E), Employers Tax Guide (PDF), contains the percentage method tables and the wage bracket tables that some employers use.

Federal Unemployment (FUTA) Tax

You report and pay FUTA tax separately from Federal Income tax, and Social Security and Medicare taxes. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay. Refer to Publication 15, Employer's Tax Guide and Publication 15-A, Employer's Supplemental Tax Guide (PDF) for more information on FUTA tax.
Employers in some states may owe more tax under the Federal Unemployment Tax Act (FUTA) than they expect if they operate in a credit reduction state. Employers in credit reduction states must increase the FUTA tax rate on wages subject to taxes under that state’s Unemployment Insurance (UI) program when they prepare their Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

Self-Employment Tax

Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.

Depositing Employment Taxes

Beginning January 1, 2011, taxpayers must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010. See Treasury Decision 9507 for more information.

Reporting Employment Taxes

In general, employers must report federal income taxes withheld, and the employer’s and employees’ shares of social security and Medicare taxes (collectively “employment taxes”) on either Forms 941, Employer's QUARTERLY Federal Tax Return (PDF) ( Instructions (PDF) available here), or Form 944, Employer’s ANNUAL Federal Tax Return (PDF) ( Instructions (PDF) available here). Form 943, Employer's Annual Federal Tax Return for Agricultural Employees (PDF) ( Instructions (PDF) available here) is used by employers who pay wages to farmworkers.

If you have been filing Forms 941 and believe your employment taxes for the calendar year will be $1,000 or less, and you would like to file Form 944 instead of Forms 941, you must contact the IRS to request to file Form 944 rather than Form 941. You must receive written notice from the IRS to file Form 944 instead of Forms 941 before you may file this form.  Refer to Certain Taxpayers May File Their Employment Taxes Annually for more information.

Conversely, if you received notice from the IRS and have been filing Form 944 but would like to file Forms 941 instead, you must contact the IRS to request to file Forms 941.  You must receive written notice from the IRS to file Forms 941 instead of Form 944 before you may file these forms.  Refer to Certain Taxpayers May File Their Employment Taxes Annually for more information.

Report FUTA taxes on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return (PDF) ( Instructions (PDF) available here).

e-file for Business and Self-Employed Taxpayers

Whether you're a business, big or small, or are self-employed you'll find an e-file for business filing option that meets your needs. Use IRS e-file for Employment Tax Returns, Information Returns, Partnerships, Corporations, Estates & Trusts, plus Exempt Organizations.

Preparing and Filing Form W-2

At the end of the year, the employer must complete Form W-2, Wage and Tax Statement (PDF) to report wages, tips and other compensation paid to an employee. A copy of this form must be given to the employee by January 31st after the end of the year. You must also send a copy of the W-2 to the Social Security Administration (SSA). Employers can prepare and file up to 20 W-2s at a time at the Social Security Administration’s Web site. Using SSA’s online W-2 filing, employers can also print out all the necessary copies of the W-2 for their employees, state taxing agencies, etc.

Correcting/Adjusting Employment Taxes

If correcting employment tax errors on previously filed employment tax returns is required, refer to Correcting Employment Taxes.

Voluntary Classification Settlement Program

The Voluntary Classification Settlement Program (VCSP) is a new optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future tax periods for employment tax purposes with partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat their workers (or a class or group of workers) as employees. To participate in this new voluntary program, the taxpayer must meet certain eligibility requirements, apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.

Outsourcing Payroll Duties

If you outsource your payroll, refer to Outsourcing Payroll and Third Party Payers.

Independent Contractor (Self-Employed) or Employee?

Which workers are considered employees? Before you can know how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. Refer to Independent Contractor (Self-Employed) or Employee? for more information.

Combined Annual Wage Reporting (CAWR)

Combined Annual Wage Reporting (CAWR) is a Document Matching Program that compares the Employee Wage Information reported by the employer to the Internal Revenue Service (IRS) and the Social Security Administration (SSA). If the amounts reported to the IRS do not match those from SSA, you may receive a notice asking for the reason for the discrepancy. If you do not respond timely, IRS may compute the additional taxes and/or penalties due and send you a bill. If you receive a notice CP253 or Letter 99C regarding missing Form(s) W-2, refer to Combined Annual Wage Reporting Missing Form W-2 Inquiries. If you receive a notice CP251 or Letter 99C regarding underreported employment taxes refer to Combined Annual Wage Reporting Employment Tax Problem Inquiries.

Additional Medicare Tax

Beginning January 1, 2013, the Additional Medicare Tax applies to an individual’s Medicare wages, Railroad Retirement Tax Act compensation, and self-employment income that exceeds a threshold amount based on the taxpayer’s filing status.
Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual’s wages and compensation paid in excess of $200,000 in a calendar year. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages and compensation in excess of $200,000 to an employee.
There is no employer match for the Additional Medicare Tax.

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