We salute the brave troops who gave their lives for our freedom. May we never forget or take for granted the ultimate sacrifice they made for our country.
Students with summer jobs can be exempt from federal income tax withholding if they did not owe any tax last year and do not expect to owe any for 2013. Students with unearned income of $350 or less and total income not greater than $6,100 can be exempt from federal income tax withholding. If their investment income is more than $350, the total income cannot exceed $1,000 to be exempt from federal income tax withholding.
Employers re-hiring summer students claiming exemption need to have employees complete new W-4 forms. The W-4 forms completed last year cannot be re-used.
Sole proprietors or husband-wife partnerships can hire their kids under the age of 18 and not owe any FICA tax. The same rules apply to a one-person LLC that elects to be disregarded for tax purposes. Federal unemployment tax is not due on kids’ salaries until they hit the age of 21.
For those kids branching outside the family business to earn their money, read about these tax rules in the article, ”Kids and Summer Jobs: What to Know About Taxes“, from Fox Business by Bonnie Lee, a fellow Enrolled Agent.
Plan a great summer with these great tax tips!
Many of you heard the Senate passed the bill for sales tax on internet purchases. The bill now hits the House for an uphill battle with key members indicating they are not in a hurry. The House Judiciary Committee has jurisdiction over matter affecting state taxes and they will be taking their time with this matter. The word from House Members is they consider the exemption for small retailers on the Web to be too low and they want rules for sellers in states without sales taxes to be less stringent.
The proposed bill says the earliest collection could begin the first quarter that occurs six months after the bill is enacted. This tells us no purchases during 2013 will be affected. Stay tuned for updates as information becomes available.
Your Taxing Accountant wants to keep you informed and help make you successful. Here are some great tips for startup businesses for cutting costs, straight from Millionaire Entrepreneurs – Read all about it at Entrepreneur’s article, “7 Frugal Startup Tips from Millionaire Entrepreneurs”.
Use this tool to check on the status of your refund. It provides the most up-to-date information the IRS has. There’s no need to call us unless Where’s My Refund? tells you to do so. Where’s My Refund? is updated every 24 hours – usually overnight — so you only need to check once a day.
April 15th – Last day to file your personal income tax return or file an extension on form 4868.
Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember, this is an extension of time to file, not an extension of time to pay. However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief.
Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. Taxpayers should file, even if they can’t pay the full amount due. Here are further details on the options available.
More Time to File
People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.
Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.
By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.
Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly 10.7 million extension forms received by the IRS last year, almost 5.8 million were filed electronically.
Some taxpayers get more time to file without having to ask for it. These include: