Tax Tips

How to choose a tax accountant
tax tips and questions

• Be sure they are an Enrolled Agent, CPA or Tax Attorney – These are the only individuals regulated by the IRS. This means they must meet educational and competency requirements. Choosing one of these individuals means you are sure to be choosing someone who knows tax law.

• Get references – be sure the individual has the qualities you are looking for. Ask if they are: friendly, knowledgeable; do they return phone calls, do they ask a lot of questions (The best way to get the most deductions/credits is to ask a lot of questions).

• Meet with them yourself – be sure you feel comfortable working with them.

 

Tax Planning – Year End Meeting

Calculating year end taxes

• Hate to be surprised by an amount due to the IRS when you file your taxes?

• Meeting with your tax accountant before year end to do tax planning is an excellent way to avoid surprises and possibly reduce taxes at tax time. The tax planning allows you to understand your tax position before the year ends, when you still have time to do something to change it.

• This is especially important for self-employed individuals and those who do not do their accounting throughout the year.

 

Employee or Subcontractor?

How to tell if one is an employee or subcontractor for tax purposes

There are many misconceptions about what makes a person an employee or a subcontractor. The IRS uses three 'tests' to determine if a person can be considered a subcontractor. Note: A contract or other agreement that the worker is an independent contractor or responsible for their own taxes will not influence whether the IRS will consider the worker an independent contractor.

1 – Behavior – Does the company control or have the right to control what the worker does and how the worker does their job?

If yes, the worker is an employee.

2 – Financial – Does the worker have an investment in the equipment/tools/supplies he uses? Does the worker have unreimbursed expenses? Does the worker have an opportunity for profit or loss? Does the worker seek work from others?

If no, the worker is an employee.

How is the payment determined…..hourly or flat fee?

Typically, subcontractors are paid a flat fee per job rather than an hourly rate.

There are exceptions to this rule, such as attorneys.

3 – Type of Relationship

Does the worker receive benefits such as insurance, pension, sick days?

If yes, they are an employee.

Is the relationship expected to continue indefinitely or is it for a specific project or period?

If indefinite, they are an employee.

What types of services are provided?

If the services are a key aspect of the business, they are more likely an employee.

• Information taken from and more information available at:

http://www.irs.gov/

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