Senior Tax Specialist

POSITION CRITERIA NEEDED:

You are in Austin, TX, a licensed CPA (or CPA-Candidate), and over the last 5 years you have prepared a large number of personal and/or business tax returns using SchC’s, SchE’s, SCorps and Partnership returns in a variety of industries. If you’re a top candidate, you’ll have over 10 years of tax extensive experience preparing these same returns.

HOW IS MY LIFE DIFFERENT AT INSOGNA CPA?

We just don’t like the ‘old way’ of managing someone’s time…We believe in a more trusting, ‘open architecture’ that allows more freedom and a less stressful environment. Our team is very happy and knows what is expected of them, and so…as long as criteria is being met they’re free to be flexible with their time. Insogna CPA is unique in that our technologies support job performance anywhere you work with weekly flex scheduling (even during tax seasons) in office and at home.

POSITION CRITERIA NEEDED:

You are in Austin, TX, a licensed CPA (or CPA-Candidate), and over the last 5 years you have prepared a large number of personal and/or business tax returns using SchC’s, SchE’s, SCorps and Partnership returns in a variety of industries. If you’re a top candidate, you’ll have over 10 years of tax extensive experience preparing these same returns.

HOW IS MY LIFE DIFFERENT AT INSOGNA CPA?

We just don’t like the ‘old way’ of managing someone’s time…We believe in a more trusting, ‘open architecture’ that allows more freedom and a less stressful environment. Our team is very happy and knows what is expected of them, and so…as long as criteria is being met they’re free to be flexible with their time. Insogna CPA is unique in that our technologies support job performance anywhere you work with weekly flex scheduling (even during tax seasons) in office and at home.

Since we started in 2011, our Tax Department continues to grow exponentially every year in volume of work. Our current team of 6, specializing in bookkeeping and tax, are always adding high-performing team members to serve our growing volume of valued customers.

Our team is friendly and eager to help everyone here succeed and adapt. You will get direct involvement with fellow team members to learn and work on various types of tax returns, which will continue accelerating your learning process. We will give you support and get you immediately involved understanding our technology, processes and hands-on experience with customer interaction.

A GROWING CAREER HERE LOOKS LIKE…

Insogna CPA offers you an exciting and flexible growth opportunity, ongoing training, and a great teamwork environment dedicated to helping one-another achieve personal career goals.

Understanding the tax code is a critical part of your role here to help people save money. As a tax expert, you’ll join our team of talented tax professionals to help clients analyze the tax effect of complex decisions, reduce overall tax rates, and pursue performance objectives – and, of course, help prepare returns. 🙂
Our Tax Department continues to grow in number and in volume of work, and we need a well-rounded Senior candidate to help us continue our excellent client service.

SO…ABOUT YOU?

We’re looking for people who are well-rounded, out-of-the-box thinkers, who are self-motivated, enjoy contributing as a high-performing team member, who embraces tech-savvy solutions, who understand the importance of professionalism, look to achieve technical excellence, are committed to the highest standards to assist providing expert tax services to our valued customers, and supporting our customers locally, regionally, nationally, and internationally.

You are a problem solver, with strong verbal and written English communication skills. You analyze and navigate tax code in order to be a valuable asset to your team and customers. You have a strong ability to prioritize tasks and work on multiple assignments in a fast-paced tax environment. You work both independently and as part of a team with professionals at all levels. And as you succeed in your role, you look forward to being met with increased challenges, responsibility, and promotion opportunities.

OTHER STUFF – Insogna CPA’s success is because of the gifted professionals who commit their careers to our firm. Our commitment to you includes:

  • Remote/Flexible Work Arrangements
  • Our tech-based solutions have allowed us to work anywhere since 2011
  • Business casual dress – always
  • Competitive compensation
  • 401(k) Plan with safe harbor matching
  • 15 days PTO time off – really more though…read above.
  • Nine paid holidays
  • Free Health & Dental Insurance benefits

Join a high-performing team offering a weekly flexible ‘open architecture’ culture. Contact us for more information. We can’t wait to hear from you!

You have requested that Indeed ask candidates the following questions:

  • How many years of tax preparation experience do you have?
  • What is the highest level of education you have completed?
  • Are you able to work in Austin, TX 78746?
  • Do you have the following license or certification: Certified Public Accountant (CPA)?

Data Entry Specialist

OVERVIEW:

A growing tech-based CPA firm offering weekly flex scheduling. We’re seeking a Data Entry Specialist who is technology-savvy and a high-performing team member to be a shining light to our valued bookkeeping department. We’re needing an independent, get-the-job-done person where your contribution helps support our valued clients and supports the bookkeeping team to help the company continue growing.

POSITION CRITERIA NEEDED:

You are in Austin, TX (available to be in office) who is looking for a career in accounting with this data entry position and looking to grow with Insogna CPA into more experienced positions within the bookkeeping department. A strong candidate will have a very strong knowledge of QuickBooks Online (QBO) and preferred 1-3 years of experience in a professional services environment.

OVERVIEW:

A growing tech-based CPA firm offering weekly flex scheduling. We’re seeking a Data Entry Specialist who is technology-savvy and a high-performing team member to be a shining light to our valued bookkeeping department. We’re needing an independent, get-the-job-done person where your contribution helps support our valued clients and supports the bookkeeping team to help the company continue growing.

POSITION CRITERIA NEEDED:

You are in Austin, TX (available to be in office) who is looking for a career in accounting with this data entry position and looking to grow with Insogna CPA into more experienced positions within the bookkeeping department. A strong candidate will have a very strong knowledge of QuickBooks Online (QBO) and preferred 1-3 years of experience in a professional services environment.

This position requires heavy data entry daily and maintaining excellent note taking as the team engages with you on-going about each client and their unique businesses. A strong candidate takes full responsibility for each clients’ daily bookkeeping entries and has a strong competency and technical skill set with a basic knowledge of accounting principles and standard accounting processes for recording a company’s business transactions and willingness to learn how the recording of every transaction affects the financials.

You also have a strong working knowledge of Microsoft Outlook, Excel and Word, with experience in accounting software (QuickBooks Desktop, QBO and Xero).

WHAT YOUR DAY LOOKS LIKE…

Your days will be filled as a key role helping our small business clients manage their daily accounting. You will be working side-by-side with our senior bookkeeping team, who will be a resource for you. Daily duties include data entry for many difference clients in various industries – It’s never boring here, or the same any day.

Daily activity typically includes helping with entry for AP/AR, recording transactions, creating rules, entering bills, updating loan balances, and communicating with the team regularly about issues discovered so we can communicate with the clients in real-time. We currently work almost exclusively in QuickBooks Online.

If your able to work independently, sometimes with little direction, but also love being a part of a team working together to make important things happen every day…You just might love this role! 🙂 We work efficiently smart during busy times, and like to have fun during slower periods, and we’re looking for someone who understands the importance of both – which is someone who will succeed at Insogna CPA.

HOW IS MY LIFE DIFFERENT AT INSOGNA CPA?

We just don’t like the ‘old way’ of managing someone’s time…We believe in a more trusting, ‘open architecture’ that allows more freedom and a less stressful environment. Our team is very happy and knows what is expected of them, and so…if criteria is being accomplished timely, team members are free to be flexible with their time. Insogna CPA is unique in that our technologies support job performance anywhere you work with weekly flex scheduling in office and at home.

Since we started in 2011, we continue to grow exponentially every year in volume of work. Our team is friendly and eager to help everyone here succeed and adapt. You will get direct involvement with fellow team members to learn and work on various types of bookkeeping clients, which will continue accelerating your learning process. We will give you support and get you immediately involved understanding our technology, processes and hands-on experience with customer interaction.

A GROWING CAREER HERE LOOKS LIKE…

Insogna CPA offers you an exciting and flexible opportunity, ongoing training, and a great teamwork environment dedicated to helping one-another achieve personal career goals.

Understanding that being a leader in your role is a critical part of your success here will help contribute to your continued growth here. You’ll join our team of talented professionals who provide excellence to our valued clientele.

Our next promotion from this entry-level position is to Junior Bookkeeping Specialist.

SO…ABOUT YOU?

We’re looking for a person who is well-rounded, out-of-the-box thinker, who is self-motivated, enjoys contributing as a high-performing team member, who embraces becoming expertly efficient with tech-savvy solutions, who understand the importance of professionalism, look to achieve technical excellence, is committed to the highest standards to assist our valued clients, and supports our customers locally, regionally, nationally, and internationally with a friendly smile and voice.

You are a problem solver, with strong verbal and written English communication skills. You are a valuable asset to your team and customers. You have a strong ability to prioritize tasks and work on multiple assignments in a fast-paced environment. You work both independently and as part of a team with professionals at all levels. And as you succeed in your role, you look forward to being met with increased challenges, responsibility, and promotion opportunities.

OTHER STUFF – Insogna CPA’s success is because of the gifted professionals who commit their careers to our firm. Our commitment to you includes:

  • Remote/Flexible Work Arrangements
  • Our tech-based solutions have allowed us to work anywhere since 2011
  • Business casual dress – always
  • Competitive compensation
  • 401(k) Plan with safe harbor matching
  • 15 days PTO time off – really more though…read above.
  • Nine paid holidays
  • Health benefits

Join a high-performing team offering a weekly flexible ‘open architecture’ culture. Contact us for more information. We can’t wait to hear from you!

Client Accounting Controller

OVERVIEW:

A growing tech-based CPA firm offering weekly flex scheduling. We’re seeking a Client Accounting Controller who is technology-savvy and a high-performing team member to be the shining light to our valued small business owners. We’re needing an independent, get-the-job-done person where your contribution helps support our valued clients and supports the team to help the company continue growing.

POSITION CRITERIA NEEDED:

This position is in Austin, TX (available to be in office), and requires a candidate who enjoys communicating with clients over the phone, video chat and in-person. You have at least 5 years of experience in a professional services environment, with a very strong knowledge of accounting principles, and the ability to manage a large volume of client small businesses monthly.

OVERVIEW:

A growing tech-based CPA firm offering weekly flex scheduling. We’re seeking a Client Accounting Controller who is technology-savvy and a high-performing team member to be the shining light to our valued small business owners. We’re needing an independent, get-the-job-done person where your contribution helps support our valued clients and supports the team to help the company continue growing.

POSITION CRITERIA NEEDED:

This position is in Austin, TX (available to be in office), and requires a candidate who enjoys communicating with clients over the phone, video chat and in-person. You have at least 5 years of experience in a professional services environment, with a very strong knowledge of accounting principles, and the ability to manage a large volume of client small businesses monthly.

A heavy client contact, communicating regularly with our valued clients over the phone, video chat and in-person is required to building excellent relationships by getting to know many different clients and their unique businesses.

A great part of this role is taking full responsibility, across multiple industry sectors, for a client’s accurate financial statements, budgeting, forecasting, advising on accounting and business processes and procedures, and consulting on other issues as needed. You have a strong competency and technical skill set with a very strong knowledge of accounting principles & processes to advise clients with their various controller needs.

This role requires a strong organizational skill set with an experienced working knowledge of Microsoft Outlook, Excel, Word, QuickBooks Desktop, QuickBooks Online and 3>sup>rd party solutions.

WHAT YOUR DAY LOOKS LIKE…

Your days will be filled as a key role helping our small business clients managing their controller needs. You will be working side-by-side with our senior team, who will be a resource for and with you. Daily duties include accounting for a large number of difference clients in various industries – It’s never boring here, or the same any day.

If your able to work independently, sometimes with little direction, but also loves being a part of a team working together to make important things happen every day…You just might love this role! 🙂 We work efficiently smart during busy times, and like to have fun during slower periods, and we’re looking for someone who understands the importance of both – which is someone who will succeed at Insogna CPA.

HOW IS MY LIFE DIFFERENT AT INSOGNA CPA?

We just don’t like the ‘old way’ of managing someone’s time…We believe in a more trusting, ‘open architecture’ that allows more freedom and a less stressful environment. Our team is very happy and knows what is expected of them, and so…if criteria is being accomplished timely, team members are free to be flexible with their time. Insogna CPA is unique in that our technologies support job performance anywhere you work with weekly flex scheduling in office and at home.

Since we started in 2011, we continue to grow exponentially every year in volume of work. Our team is friendly and eager to help everyone here succeed and adapt. You will get direct involvement with fellow team members to learn and work on various types of bookkeeping clients, which will continue accelerating your learning process. We will give you support and get you immediately involved understanding our technology, processes and hands-on experience with customer interaction.

A GROWING CAREER HERE LOOKS LIKE…

Insogna CPA offers you an exciting and flexible opportunity, ongoing training, and a great teamwork environment dedicated to helping one-another achieve personal career goals.

Understanding that being a leader in your role is a critical part of your success here will help contribute to your continued growth here. You’ll join our team of talented professionals who provide excellence to our valued clientele.

SO…ABOUT YOU?

We’re looking for a person who is well-rounded, out-of-the-box thinker, who is self-motivated, enjoys contributing as a high-performing team member, who embraces becoming expertly efficient with tech-savvy solutions, who understand the importance of professionalism, look to achieve technical excellence, is committed to the highest standards to assist our valued clients, and supports our customers locally, regionally, nationally, and internationally with a friendly smile and voice.

You are a problem solver, with strong verbal and written English communication skills. You are a valuable asset to your team and clients. You have a strong ability to prioritize tasks and work on multiple assignments in a fast-paced environment. You work both independently and as part of a team with professionals at all levels. And as you succeed in your role, you look forward to being met with increased challenges, responsibility, and promotion opportunities.

OTHER STUFF – Insogna CPA’s success is because of the gifted professionals who commit their careers to our firm. Our commitment to you includes:

  • Remote/Flexible Work Arrangements
  • Medical Insurance
  • Dental Insurance
  • Our tech-based solutions have allowed us to work anywhere since 2011
  • Business casual dress – always
  • Competitive compensation
  • 401(k) Plan with safe harbor matching
  • 15 days PTO time off
  • Nine paid holidays

Join a high-performing team offering a weekly flexible ‘open architecture’ culture. Contact us for more information. We can’t wait to hear from you!

You have requested that Indeed ask candidates the following questions:

  • How many years of accounting experience do you have?
  • How many years of monthly financial reporting to management experience do you have?
  • How many years of QuickBooks Online experience do you have?
  • How many years of tax planning experience do you have?
  • What is the highest level of education you have completed?
  • Are you able to work in Austin, TX 78746?
  • Do you have the following license or certification: A valid CPA or CPA candidate?
  • Are you authorized to work in the following country: United States?

July 2019 Business Due Dates

July 1 – Self-Employed Individuals with Pension Plans

If you have a pension or profit-sharing plan, you may need to file a Form 5500 or 5500-EZ for the calendar year 2018. Even though the forms do not need to be filed until July 31, you should contact this office now to see if you have a filing requirement, and if you do, allow time to prepare the return.

July 15 – Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in June.

July 15 – Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in June.

July 31 –  Self-Employed Individuals with Pension Plans 

If you have a pension or profit-sharing plan, this is the final due date for filing Form 5500 or 5500-EZ for calendar year 2018.

July 31 – Social Security, Medicare and Withheld Income Tax

File Form 941 for the second quarter of 2019. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until August 12 to file the return.

July 31 – Certain Small Employers

Deposit any undeposited tax if your tax liability is $2,500 or more for 2019 but less than $2,500 for the second quarter.

July 31 – Federal Unemployment Tax

Deposit the tax owed through June if more than $500.

July 31 – All Employers

If you maintain an employee benefit plan, such as a pension, profit-sharing, or stock bonus plan, file Form 5500 or 5500-EZ for calendar year 2018. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.

July 2019 Individual Due Dates

July 1 – Time for a Mid-Year Tax Check UpTime to review your 2019 year-to-date income and expenses to ensure estimated tax payments and withholding are adequate to avoid underpayment penalties.

July 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during June, you are required to report them to your employer on IRS Form 4070 no later than July 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

Issuing Credit Memos and Refunds in QuickBooks

You’re accustomed to money going in a certain direction, but sometimes you have to pay your customers. Here’s how it’s done.

QuickBooks is very good at helping you get paid by your customers. It comes equipped with customizable invoice templates for billing customers and sales receipts for recording instant sales. It supports online payments, so you can accept debit or credit cards and electronic checks. It simplifies the process of recording payments and it offers reports that let you keep track of it all.

There are times, though, when you have to issue a payment to a customer. QuickBooks provides forms that allow that transfer of funds: credit memos and refunds. Do you know when and how they should be used? Here are the basics.

Credit Memos

A credit memo is just what it sounds like. A customer returns an item for which they’ve already paid, and you have to credit him or her for its cost. This is the more complicated of the two and requires more bookkeeping, since you’re tracking the sale, its payment, and the return item. You can deal with the amount of the credit by:

  • Retaining the funds in the customer account.
  • Issuing a refund.
  • Applying it to the next open invoice.

QBO_Img1_July19.jpg

When you issue a credit memo to a customer, you have three options for returning the money they paid.

To create a credit memo, click Refunds & Credits on QuickBooks’ home page or open the Customers menu and select Create Credit Memos/Refunds. The Credit Memo window opens. Select the correct Customer:Job. In the line item section of the form, choose the merchandise returned in the Item column and enter a quantity. Repeat the process if more than one item was returned, then click Save & Close. The Available Credit window, pictured above, will open. Click the button in front of the option you want.

Select the first option if that’s what you want and click OK. The window will close, and the customer will have had that credit amount applied to his or her own account. You can see this in the Customer Center if you click on Customers in the navigation toolbar (or Customers | Customer Center). You can then either click on the Customers & Jobs tab and scroll down until you can highlight your customer’s record or click on Transactions | Credit Memos.

Click on Give a Refund to open the Issue a Refund window. Everything should be filled in here except for the payment method. If you select Cash from the Issue this refund via drop-down list and then pick the correct account from the list that opens, the refund amount will be subtracted from the account. Select Check and then the Account, and check the box in front of To be printed. That refund will be in the list the next time you open the File menu, then Print Forms | Checks. Choose a credit card and check the box in front of Process credit card refund when saving box to issue a credit card refund automatically.

Tip: Can’t work with credit cards because you don’t have a merchant account? We can help you set this up.

QBO_Img2_July19.jpg

The Issue a Refund window

If there is an open invoice, the Apply Credit to Invoices window will open, containing a list of unpaid bills. If there isn’t already a checkmark in front of the invoice you want to apply it too, click in the first column to create one. QuickBooks will tell you how much credit was applied and whether any remains. When you’ve checked the screen for accuracy, click Done.

Dealing with Overpayments

Let’s say a customer is catching up on multiple outstanding invoices and he or she sends you a check for the total but overpays you. Open the Receive Payments window by going to Customers | Receive Payments or clicking Receive Payments on the home page. Select the customer and enter the Payment Amount and Check #. QuickBooks will have put a checkmark in front of all the outstanding invoices listed to indicate they’ve been paid.

In the lower left corner, you’ll see a section titled Overpayment. The extra amount and your two options for dealing with it appear here. You can either credit the customer or issue a refund. Click the action you want to take, then save the transaction.

QBO_Img3_July19.jpg

If a customer overpays you, you can use QuickBooks’ built-in tools to credit him or her.

You can also issue refunds through the Write Checks window, but this is a more complicated procedure. It’s easier to process a credit memo.

If you’re at all unclear about what we’ve described here, please contact us for assistance. Refunds or credits that come through incorrectly (or not at all) can make customers very unhappy and may affect future sales. So, let us help you get it right the first time.

What If You Want To File Your Taxes But Can’t Afford To Pay Them?

It’s a common conundrum: You want to file your taxes on time, but you anticipate or already know that you will owe money you can’t afford to pay right now. As a result, you put off filing your tax return under the assumption that the IRS can only bill you if they receive your latest outstanding tax return that’s due.

If you want to file your taxes right now, you should!

Am I Required to File a Tax Return?

You may want to file a tax return, but you are not actually required to. Generally, the gross income filing requirement is based on the standard deduction plus personal exemption for your filing status. The IRS has a tool to determine if you are required to file a tax return based on your income alone. Notably, taxpayers who are married and filing separately have a gross income filing requirement.

Regardless of the total reported income on your tax return, there are other situations in which you must file a tax return. If you owe self-employment tax on net self-employment income of $400 or more, you are obligated to file a tax return. It’s easy to go past this amount if you drive for Lyft or Uber, are giving freelance work a try, or have any other form of self-employment income that nets out to $400 or more after your deductible expenses.

You also must file a tax return if you receive Affordable Care Act subsidies for your health insurance, and if you have any recapture payments such as the First-Time Homebuyer Credit. Any early distributions taken against an IRA or 401(k) also require you to file a tax return even if you had no other income, and the same is true if you reach age 70 1/2 during the tax year and were required to make required minimum distributions (RMDs) from your retirement plan, but did not actually start these payments yet.

Even if you are not mandated to file a tax return, you may still want to file one to get a tax refund. If you aren’t due a tax refund, it’s still a good idea to have a tax return on file with the IRS. Tax returns are commonly requested when applying for a lease or mortgage, or to show proof of income and demonstrate ability (or inability) to pay for higher education and other important aspects of life that may arise.

Filing a Tax Return vs. Paying Your Actual Tax Bill

A common misconception is that you need to pay all taxes due when you file your tax return. While it’s prudent to do so, you are not actually required to. Filing your actual tax return is still the very first thing you should do no matter how much you owe, even if you’re filing it late. Doing so will prevent steep penalties from being incurred if you were required to file a tax return. Additionally, if you put off filing your tax return for too long, the IRS can file a substitute return that won’t apply any tax benefits and will make their assessment against you larger than it actually should be.

Even if you can’t afford to put anything toward your tax bill right now, the very least you should do is file your tax return before the deadline every year. If you want to file your taxes despite being unable to pay your bill right now, you can still do so.

Receiving an Automated Tax Bill  From the IRS

If you are unable to pay your taxes, you should still file a tax return without including payment. You can also include a partial payment of any size, even if it’s a small amount like $20. The IRS will not issue a judgment that quickly after you file your return, and even a small payment can help you save some money on interest.

If you do not pay your entire tax bill upon filing your return, the IRS will send an automated bill by mail. You can pay your balance before the bill arrives if you have the money to do so, but getting the bill in the mail doesn’t mean you are facing a lien against your bank account.

Interest will accrue on the unpaid balance as long as it goes unpaid, but owing money is a separate concept from filing your tax return on time, so you can and should file even if you can’t pay.

Hobby or Business? It Makes a Difference for Taxes – Now More than Ever

Article Highlights:

  • For-Profit Businesses
  • Not-for-Profit Businesses
  • Nine Determining Factors
  • Profit Presumption

Taxpayers are often confused by the differences in tax treatment between businesses that are entered into for profit and those that are not, commonly referred to as hobbies. Recent tax law changes have added to the confusion. The differences are:

Businesses Entered Into for Profit – For businesses entered into for profit, the profits are taxable, and losses are generally deductible against other income. The income and expenses are commonly reported on a Schedule C, and the profit or loss—after subtracting expenses from the business income—is carried over to the taxpayer’s 1040 tax return. (An exception to deducting the business loss may apply if the activity is considered a “passive” activity, but most Schedule C proprietors actively participate in their business, so the details of the passive loss rules aren’t included in this article.)

Hobbies – Hobbies, on the other hand, are not entered into for profit, and the government currently does not permit a taxpayer to deduct their hobby expenses but does require the income from the activity to be declared. (Prior to the changes included in the Tax Cuts and Jobs Act of 2017, hobbyists were allowed to deduct expenses up to the amount of their hobby income as a miscellaneous itemized deduction on Schedule A. Being able to take this deduction is suspended for years 2018 through 2025.) Thus, hobby income is reported on Schedule 1 of their 1040 and no expenses are deductible.

So, what distinguishes a business from a hobby? The IRS provides nine factors to consider when making the judgment. No single factor is decisive, but all must be considered together in determining whether an activity is for profit. The nine factors are:

(1) Is the activity carried out in a businesslike manner? Maintenance of complete and accurate records for the activity is a definite plus for a taxpayer, as is a business plan that formally lays out the taxpayer’s goals and describes how the taxpayer realistically expects to meet those expectations.

(2) How much time and effort does the taxpayer spend on the activity? The IRS looks favorably at substantial amounts of time spent on the activity, especially if the activity has no great recreational aspects. Full-time work in another activity is not always a detriment if a taxpayer can show that the activity is regular; time spent by a qualified person hired by the taxpayer can also count in the taxpayer’s favor.

(3) Does the taxpayer depend on the activity as a source of income? This test is easiest to meet when a taxpayer has little income or capital from other sources (i.e., the taxpayer could not afford to have this operation fail).

(4) Are losses from the activity the result of sources beyond the taxpayer’s control? Losses from unforeseen circumstances like drought, disease, and fire are legitimate reasons for not making a profit. The extent of the losses during the start-up phase of a business also needs to be looked at in the context of the kind of activity involved.

(5) Has the taxpayer changed business methods in an attempt to improve profitability? The taxpayer’s efforts to turn the activity into a profit-making venture should be documented.

(6) What is the taxpayer’s expertise in the field? Extensive study of this field’s accepted business, economic, and scientific practices by the taxpayer before entering into the activity is a good sign that profit intent exists.

(7) What success has the taxpayer had in similar operations? Documentation on how the taxpayer turned a similar operation into a profit-making venture in the past is helpful.

(8) What is the possibility of profit? Even though losses might be shown for several years, the taxpayer should try to show that there is realistic hope of a good profit.

(9) Will there be a possibility of profit from asset appreciation? Although profit may not be derived from an activity’s current operations, asset appreciation could mean that the activity will realize a large profit when the assets are disposed of in the future. However, the appreciation argument may mean nothing without the taxpayer’s positive action to make the activity profitable in the present.

There is a presumption that a taxpayer has a profit motive if an activity shows a profit for any three or more years within a period of five consecutive years. However, the period is two out of seven consecutive years if the activity involves breeding, training, showing, or racing horses.

All of this may seem pretty complicated, so please call this office if you have any questions or need additional details for your particular circumstances.

Household Help: Employee or Contractor?

Article Highlights:

  • Household Employee Definition
  • Employee Control Factors
  • Self-employed or Employee
  • Withholding Requirements
  • Reporting Requirements

Taxpayers often will hire an individual or firm to provide services at the taxpayer’s home. Because the IRS requires employers to withhold taxes for employees and issue them W-2s at the end of the year, the big question is whether or not that individual is a household employee.

Determining whether a household worker is considered an employee depends a great deal on circumstances and the amount of control the hiring person has over the job and the worker they hire. Ordinarily, when someone has the last word about telling a worker what needs to be done and how the job should be done, then that worker is an employee. Having a right to discharge the worker and supplying tools and the place to perform a job are primary factors that show control.

Not all those hired to work in a taxpayer’s home are considered household employees. For example, an individual may hire a self-employed gardener who handles the yard work for that individual as well as some of the individual’s neighbors. The gardener supplies all tools and brings in other helpers needed to do the job. Under these circumstances, the gardener isn’t an employee and the person hiring him/her isn’t responsible for paying employment taxes. The same would apply to the person hired to maintain an individual’s swimming pool or to contractors making repairs or improvements on the home.

Contrast the following example to the self-employed gardener described above: The Johnson family hired Maclovia to clean their home and care for their 3-year old daughter, Kim, while they are at work. Mrs. Johnson gave Maclovia instructions about the job to be done, explained how the various tasks should be done, and provided the tools and supplies; Mrs. Johnson, and not Maclovia, had control over the job. Under these circumstances, Maclovia is a household employee, and the Johnsons are responsible for withholding and paying certain employment taxes for her and issuing her a W-2 for the year.

W-2 forms are to be provided to the employee by January 31 of the year following the year when the wages were paid and the government’s copy of the form – sent to the Social Security Administration – is also due by January 31.

If an individual you hire is considered an employee, then you must withhold both Social Security and Medicare taxes (collectively often referred to as FICA tax) from the household employee’s cash wages if they equal or exceed the $2,100 threshold for 2019.

The employer must match from his/her own funds the FICA amounts withheld from the employee’s wages. Wages paid to a household employee who is under age 18 at any time during the year are exempt from Social Security and Medicare taxes unless household work is the employee’s principal occupation.

Although the value of food, lodging, clothing or other noncash items given to household employees is generally treated as wages, it is not subject to FICA taxes. However, cash given in place of these items is subject to such taxes.

A household employer doesn’t have to withhold income taxes on wages paid to a household employee, but if the employee asks to have withholding, the employer can agree to it. When income taxes are to be withheld, the employer should have the employee complete IRS Form W-4 and base the withholding amount upon the federal income tax and FICA withholding tables.

The wage amount subject to income tax withholding includes salary, vacation and holiday pay, bonuses, clothing and other noncash items, meals and lodging. However, if furnished for the employer’s convenience and on the employer’s premises, meals are not taxable, and therefore they are not subject to income tax withholding. The same goes for lodging if the employee lives on the employer’s premises. In lieu of withholding the employee’s share of FICA taxes from the employee’s wages, some employers prefer to pay the employee’s share themselves. In that case, the FICA taxes paid on behalf of the employee are treated as additional wages for income tax purposes.

A household employer who pays more than $1,000 in cash wages to household employees in any calendar quarter of either the current or the prior year is also liable for unemployment tax under the Federal Unemployment Tax Act (FUTA).”

Although this may seem quite complicated, the IRS provides a single form (Schedule H) that generally allows a household employer to report and pay employment taxes on household employees’ wages as part of the employer’s Form 1040 filing. This includes Social Security, Medicare, and income tax withholdings and FUTA taxes.

If the employer runs a sole proprietorship with employees, the household employees’ Social Security and Medicare taxes and income tax withholding may be included as part of the individual’s business employee payroll reporting but are not deductible as a business expense.

Although the federal requirements can generally be handled on an individual’s 1040 tax return, there may also be state reporting requirements for your state that entail separate filings.

Another form that is required to be completed when hiring a household employee who works for an employer on a regular basis, is the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. By the first day of work, the employee must complete the employee section of the form by providing certain required information and attesting to his or her current work eligibility status in the United States. The employer must complete the employer section by examining documents (acceptable documents are listed on the I-9) presented by the employee as evidence of his or her identity and employment eligibility. The employer should keep the completed Form I-9 in his or her records and make it available upon request of the U.S. government. It is unlawful to knowingly to hire or continue to employ an alien who can’t legally work in the United States.

If the individual providing household services is determined to be an independent contractor, there is currently no requirement that the person who hired the contractor file an information return such as Form 1099-MISC. This is so even if the services performed are eligible for a tax deduction or credit (such as for medical services or child care). The 1099-MISC is used only by businesses to report their payments of $600 or more to independent contractors. Most individuals who hire other individuals to provide services in or around their homes are not doing so as a business owner.

Please call this office if you need assistance with your household employee reporting requirements or need information related to the reporting requirements for your state.

How Does Combining a Vacation with a Foreign Business Trip Affect the Tax Deduction for Travel Expenses of a Self-Employed Individual?

Article Highlights:

  • Primarily Business
  • Primarily Vacation
  • Special Circumstances
  • Foreign Conventions, Seminars and Meetings
  • Cruise Ships
  • Spousal Travel Expenses

Note: effective for years 2018 through 2025, the Tax Cuts and Jobs Act of 2017 suspended the deduction of miscellaneous itemized expenses that must be reduced by 2% of the taxpayer’s adjusted gross income. Employee business expenses, including travel expenses, fall into this category. Therefore, this discussion only applies to self-employed individuals for years 2018-2025.

When a self-employed individual makes a business trip outside of the U.S. and the trip is 100% devoted to business, all of the ordinary and necessary business travel expenses are deductible, just as if the business trip were within the U.S. On the other hand, if the trip also incorporates a vacation, special rules determine the deductibility of the travel expenses to and from the destination; when the other business travel expenses, such as lodging, meals, local travel and incidentals, can be deducted; and when they must be allocated. So, whether you are just visiting one of our neighboring countries or traveling to Europe or even more exotic locales, here are some travel tax pointers:

Primarily Vacation – If the travel is primarily for vacation and only a few hours are spent attending professional seminars or meeting with foreign business colleagues, none of the expenses incurred in traveling to and from the general business location are deductible. Other travel expenses must be allocated on a day-by-day basis, and only the business portion is deductible.

Primarily Business – If the trip is primarily for business and meets one of the conditions listed below, the expenses incurred in traveling to and from the business destination are deductible in full (same as for travel within the U.S.).

(1) The travel outside the U.S. is for a period of one week or less (seven consecutive days, excluding the departure day but including the day of return). In addition, all other ordinary and necessary travel expenses are fully deductible.

(2) Less than 25% of the total time outside the U.S. is spent on non-business activities. In addition, all other ordinary and necessary travel expenses are fully deductible. (If 25% of more of the total time is spent on non-business activities, a day-by-day allocation of all travel expenses between personal and business activities is necessary and only the business portion is deductible.)

(3) The individual incurring the travel expenses can establish that a personal vacation or holiday was not a major consideration. In addition, all other ordinary and necessary travel expenses are fully deductible.

(4) The taxpayer did not have “substantial control” over arranging the trip. (For self-employed taxpayers, who would generally have substantial control over the trip arrangements, this provision likely won’t apply.) In addition, all other ordinary and necessary travel expenses are fully deductible.

When determining what constitutes business and non-business time, business days include: days en route to or from the business destination by a reasonably direct route without interruption; days when actual business is transacted; weekends or standby days that fall between business days; and days when business was to have been transacted but was canceled due to unforeseen circumstances.

Nonbusiness days are days spent on nonbusiness activities as well as weekends, holidays and other standby days that fall at the end of the business activity, if the taxpayer remains at the business destination for personal reasons.

Foreign Conventions, Seminars or Meetings – Tax law does not permit a deduction for travel expenses to attend a convention, seminar or similar meeting held outside of the North American area unless the taxpayer establishes that:

(1) The meeting is directly related to the active conduct of the taxpayer’s trade or business, and
(2) It is “as reasonable” for the meeting to be held outside of the North American area as it is within the North American area.

The IRS defines “North American area” quite broadly and includes not just the U.S., Canada and Mexico, as you would expect, but also Bermuda, several countries in the Caribbean basin, U.S. possessions such as American Samoa and other Pacific island nations, and some Central American countries as well.

Cruise Ship Conventions – In order for a taxpayer to deduct the cost of attending a convention related to his or her trade or business on a cruise ship, the ship must be a U.S. flagship, and all the ports of call must be within the U.S. or its possessions. In addition, the maximum deduction is limited to $2,000 per attendee. Substantiation requirements include certain signed statements by both the taxpayer and an officer of the convention sponsor.

Spousal* Travel Expenses – Generally, deductions are denied for travel expenses for a spouse, dependent or employee of the taxpayer on a business trip unless:

  1. The spouse is an employee of the taxpayer, and
  2. The travel of the spouse, etc., is for a bona fide business purpose, and
  3. The expenses would otherwise be a deductible business travel expense for the spouse.*These rules also apply to a dependent or employee of the taxpayer.

Since a spouse, dependent or other individual who is an employee will be denied a deduction for business travel expenses in years 2018 through 2025, condition #3 can’t be met. This means that “spousal” travel expenses won’t be deductible for years 2018 through 2025.

However, the law allows a deduction for the single rate for lodging on qualified business trips, and frequently, there is no rate difference between one and two occupants. Thus, virtually the entire lodging expense for an accompanying spouse will be deductible. When traveling by car, the law does not require any allocation because the spouse is also traveling in the vehicle. Thus, if traveling by vehicle, the entire cost of the business-related transportation would be deductible. This would generally also apply to taxis at the destination.

As you can see, determining the tax deduction for a foreign business trip of a self-employed individual that is combined with a vacation can be complicated. If you need additional tax guidance or help planning such a trip, please give this office a call.