31 Dec 2023
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The “Nanny Tax” Must be Paid for Nannies and Other Household Workers

Roger Rossmeisl, CPA
Individual Tax Briefs
The Nanny Tax Must be Paid for Nannies and Other Household Workers

You may have heard of the “nanny tax.” But if you don’t employ a nanny, you may think it doesn’t apply to you. Check again. Hiring a housekeeper, gardener or other household employee (who isn’t an independent contractor) may make you liable for federal income and other taxes. You may also have state tax obligations. If you employ a household worker, you aren’t required to withhold federal income taxes from pay. However, you may choose to withhold if the worker requests it. In that case, ask the worker to fill out a Form W-4. However, you may be required to withhold Social Security and Medicare (FICA) taxes and to pay federal unemployment (FUTA) tax. Threshold increasing in 2024 In 2023, you must withhold and pay FICA taxes if...

26 Nov 2023
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Filing a Final Return for a Deceased Taxpayer

Roger Rossmeisl, CPA
Individual Tax Briefs
Filing a Final Return for a Deceased Taxpayer

As reported via IRS Tax Tip 2023-51 4/17/2023 After someone with a filing requirement passes away, their surviving spouse or representative should file the deceased person's final tax return. On the final tax return, the surviving spouse or representative should note that the person has died. The IRS doesn't need a copy of the death certificate or other proof of death. Usually, the representative filing the final tax return is named in the person's will or appointed by a court. Sometimes when there isn't a surviving spouse or appointed representative, a personal representative will file the final return and attach Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Things to know about filing the final tax return Generally, the final individual income tax return of a deceased...

26 Nov 2023
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Individual Home Energy Tax Credits for 2023

Roger Rossmeisl, CPA
Individual Tax Briefs
Individual Home Energy Tax Credits for 2023

Taxpayers who make home energy improvements in 2023 may be able to benefit from tax credits for a portion of the qualifying expenses. The credit amounts have been increased, and types of qualifying expenses were expanded, by the Inflation Reduction Act of 2022. This post is intended to assist taxpayers in comparing the tax credits available for making energy home improvements.  Who can claim energy credits There are two energy-related credits available to taxpayers who make qualifying improvements to their home: the Energy Efficient Home Improvement Credit,or the Residential Energy Clean Property Credit. A taxpayer may claim these credits in the year the qualifying improvement has been made to their primary home. Ordinarily, a taxpayer's primary home is where the taxpayer spends most of their time. Additionally, qualification...

26 Nov 2023
0

Tax Tips for New Parents

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax Tips for New Parents

As reported via IRS Tax Tip 2023-89 in October 2019 Kids are expensive. Whether someone just brought a bundle of joy home from the hospital, adopted a teen from foster care, or is raising their grandchild. There are several tax breaks that can help. Here are some tax tips for new parents Get the child a Social Security or Individual Tax Identification number To claim parental tax breaks, the taxpayer must have their child or dependent's Social Security number, Adoption Tax Identification Number or Individual Tax Identification number. Confirming a child's birth is the only way the IRS can verify that the parent is eligible for the credits and deductions they claim on their tax return.   Check withholding A new family member might make taxpayers eligible for new credits...

26 Nov 2023
0

Is Your Side Hustle a Hobby or a Business?

Roger Rossmeisl, CPA
Individual Tax Briefs
Is Your Side Hustle a Hobby or a Business?

As reported via IRS Tax Tip 2023-61  on 5/3/2023 Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies and businesses are treated differently when it's time to file a tax return. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation. Whether someone is having fun with a hobby or running a business, if they accept more than $600 for goods and services using online marketplaces or payment apps, they could receive a Form 1099-K. Profits from the sale of goods, including personal items, and services is taxable income that must be reported on tax returns. There are a few other things people should...

25 Nov 2023
0

An Offer in Compromise Can Help Certain Taxpayers Resolve Tax Debt

Roger Rossmeisl, CPA
Individual Tax Briefs, Small Business Tax Briefs
An Offer in Compromise Can Help Certain Taxpayers Resolve Tax Debt

As reported via IRS Tax Tip 2023-58  on 4/27/2023 When a taxpayer can't pay their full tax liability or if paying would cause financial hardship, they may want to consider applying for an Offer in Compromise. This agreement between a taxpayer and the IRS settles a tax debt for less than the full amount owed. The goal is a compromise that's in the best interest of both the taxpayer and the agency. The application fee for an offer in compromise is $205. Low-income taxpayers don't have to pay this fee, and they should check if they meet the definition of low-income in the instructions for Form 656, Offer in Compromise. When reviewing applications, the IRS considers the taxpayer's unique set of facts and special circumstances affecting their...

25 Nov 2023
0

Understanding Digital Asset Reporting and Tax Requirements

Roger Rossmeisl, CPA
Individual Tax Briefs
Understanding Digital Asset Reporting and Tax Requirements

As reported via IRS Tax Tip 2023-45  on 4/5/2023 All taxpayers that filed a 2022 tax year Forms 1040 and 1040-SR were required to check a box indicating whether they received digital assets as a reward, award or payment for property or services or disposed of any digital asset that was held as a capital asset through a sale, exchange or transfer. Examples of digital assets transactions include: A sale of digital assets. The receipt of digital assets as payment for goods or services provided. The receipt or transfer of digital assets for free, without providing any consideration, that does not qualify as a bona fide gift. The receipt of new digital assets as a result of mining and staking activities. The receipt of new digital assets...

25 Nov 2023
0

How to Treat Tips for Tax Purposes

Roger Rossmeisl, CPA
Individual Tax Briefs
How to Treat Tips for Tax Purposes

As reported via IRS Fact Sheet 2022-37  in October 2022 Tip income is taxable and must be reported People who work in restaurants, salons, hotels and similar industries often receive tips for the customer service they provide. Tips can be taxable income, but it's important for people working in these areas to understand important details involving tips. What are tips?  Tips are optional cash or non-cash payments that customers make to employees. Cash tips include: those received directly from customers, electronically paid tips distributed to the employee by their employer and tips received from other employees under any tip-sharing arrangement. All cash tips must be reported to the employer. Non-cash tips are those of value received in any other medium than cash, such as: tickets, passes or other...

25 Nov 2023
0

Key 2024 Inflation-Adjusted Tax Amounts for Individuals

Roger Rossmeisl, CPA
Individual Tax Briefs
Key 2024 Inflation-Adjusted Tax Amounts for Individuals

The IRS recently announced various 2024 inflation-adjusted federal tax amounts that affect individual taxpayers. Most of the federal income tax rate bracket thresholds are about 5.4% higher than for 2023. That means that you can generally have about 5.4% more income next year without owing more to the federal government. Standard deduction  Here are the inflation-adjusted standard deduction numbers for 2024 for those who don’t itemize: $14,600 if you’re single or use married filing separate status (up from $13,850 in 2023). $29,200 if you’re married and file jointly (up from $27,700). $21,900 if you’re a head of household (up from $20,800). Older taxpayers and those who are blind are entitled to additional standard deduction allowances. In 2024 for those age 65 or older or blind, the amounts will be: $1,550...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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