With the â€œgig economyâ€ on the rise, more and more taxpayers are becoming
self-employed. It was reported that 30% of the nations workforce,
including their workers, is self-employed. With being self-employed you
are typically treated like other business owners when it comes to taxes.
Self-employed taxpayers need to be aware of these tax areas.
Just like all other businesses, self-employed taxpayers will pay federal
income tax as well as state income tax. But self-employed businesses do
not have to pay the full amount on their â€œprofitâ€. Maximizing the
available deductions can help reduce both federal and state income tax.
Self-employment tax is equal to the Social Security and Medicare tax
that is paid by both the employee and the employer. Self-employed
businesses effectively pay twice as much as an employee does since they
are both the employee AND the employer. Self-employment tax rate is
15.3% on the first $132,900 and 2.9% on the income about that threshold.
One the positive side a self-employed individual can deduct half of the
self-employment tax on their annual tax return.
If they employ other workers, which most do. Self-employed business
owners must pay half of their employees Social Security and Medicare
taxes, plus unemployment tax, and possibly temporary disability tax.
They are also responsible for withholding the payroll taxes and
depositing those amounts to the IRS.
With the â€œgig economyâ€ on the rise, more and more taxpayers are becoming
Some changes you are going to see for the 2019 tax prep year:
* You’ll notice major changes to the 1040 form. Some changes include
adding capital gain section, going from 6 Schedules to 3, and moving the
signature lines to the final page.
* Penalties for not having health insurance expired at the end of 2018.
So there is no question about having health insurance in the 2019 tax forms.
* Medical expense deduction threshold has been raise back to 10%.
* Alimony is no longer deductible for the payer or taxable to the payee.
* 2019 is the last year for the employer credit for family and medical
leave created by the Tax Cuts and Jobs Act.
* 1040-SR: Congress mandated a new tax form for seniors. It is easier to
read and includes a standard deduction chart.
Taxpayers with significant tax debt, currently $52,000 or more , could
start seeing some issues traveling outside of the United States. Under
the Fixing Americaâ€™s Surface Transportation (FAST) Act, the IRS notifies
the State Department (State) of taxpayers certified as owing a seriously
delinquent tax debt, then requires State to deny their passport
application or renewal. If a taxpayer currently has a valid passport,
State may revoke the passport or limit a taxpayerâ€™s ability to travel
outside the United States. The IRS will send Letter 6152, Notice of
Intent to Request U.S. Department of State Revoke Your Passport, to the
taxpayer to let them know what the IRS intends to do and give them
another opportunity to resolve their debts .
Taxpayers who have immediate travel plans, and had their passports
denied by the State, need to call the IRS immediately. The IRS can help
expedite reversal and could possibly shorten the process from 30 days to
14 to 21 days. Taxpayers will need to inform the IRS that they have
travel scheduled within 45 days or that they live abroad. They need to
show proof of travel, this can be a flight itinerary, hotel reservation,
cruise ticket, international car insurance or other document showing
location and approximate date of travel or time-sensitive need for a
passport. Along with Copy of letter from State denying their passport
application or revoking their passport. State has sole authority to
issue, limit, deny or revoke a passport.
Taxpayers with significant debt will receive a Notice CP508C from the
IRS. The notice explains what steps the taxpayer needs to take to
resolve the debt. The IRS has multiple ways to help resolve major debt
including payment plans, and offer in compromise. But there are many
reasons for the IRS to not expedite reversal. Taxpayers who are in
bankruptcy, identified by the IRS as a victim of identity fraud, and
more. Calling the IRS will help explain what options are available.
August 2nd-4th is Missouri’s Tax Holiday weekend, and before this
weekend arrives, business’s need to be knowledgeable of where their
retail falls in respects to the tax holiday. Check with local
governments, special circumstances, proper ways of recording and
reporting their sales on this tax holiday weekend. Businesses with an
online presents need to be aware of how online tax free sales apply, and
be sure to let consumers know of online shopping options as well. Tax
holiday weekends are a busy weekend for businesses, but it’s a very nice
boost, and a way to benefit from those purchases that typically would
not be made as frequently.
Consumers this weekend, do not have to be a Missouri resident or student
to take advantage of the tax holiday. State sales tax will not be
applied to products such as school supplies, computers, computer
accessories (monitors and printers), computer software, and clothing. On
the other hand, sales tax will still be applied to accessories like
sunglasses, scarfs, hats, and purses. Even some local governments waived
local taxes may be waived as well to be sure consumers get the most
However, tax free does not have to stop after Sunday. There are so many
tax free benefits that taxpayer’s can take advantage of. Section 529
(Qualified Tuition Programs) provides up to $10,000 per beneficiary.
This includes tuition for elementary, secondary, post-secondary trade
and vocational schools, 4-year colleges, and postgraduate programs.
Post-secondary, Â§529 can be used to pay for tuition, room and board
(with limitations), books, supplies, fees, computers (including
accessories software), internet access and related services.
No dependents for a Â§529? No problem! There are still many tax free
options, such as 401(k)/403(b), Traditional IRA/Roth IRA, Health Savings
Account (HSA), 1031 Exchanges, Charitable Donations/Gifting, and much
more! Check with your financial advisor to see how tax free options can
be beneficial for you and your taxes.
The President has declared that a major disaster occurred in the State
of Missouri. Following individual assistance issued by FEMA, the IRS
announced that taxpayers in certain areas will receive tax relief if
qualified. Individuals who reside or have a business in Andrew,
Atchison, Boone, Buchanan, Carroll, Chariton, Cole, Greene, Holt,
Jackson, Jasper, Lafayette, Lincoln, Livingston, Miller, Osage, Pike,
Platte, Pulaski, and St. Charles counties may qualify for tax relief.
The declaration permits the IRS to postpone certain deadlines for
taxpayers who reside or have business in the disaster areas. This
includes the quarterly estimated income tax payment due on June 17,
2019, as well as the employment and excise tax returns due on April 30
and July 31, 2019. It also includes tax-exempt organizations that
operate on a calendar-year basis and had a Form 990 due on May 15, 2019.
In addition, penalties on payroll and excise tax deposits due on or
after April 29, 2019, and before May 14, 2019, will be lessened as long
as the deposits were made by May 14, 2019. If an affected taxpayer
receives a late filing or late payment penalty notice from the IRS that
has an original or extended filing, payment or deposit due date that
falls within the postponement period, the taxpayer should call the
number on the notice to have the IRS lessen the penalty.
The IRS automatically identifies taxpayers located in the covered
disaster area and applies automatic filing and payment relief. But
affected taxpayers who reside or have a business located outside the
covered disaster area must call the IRS disaster hotline to request this
tax relief. Individuals who worked with a recognized government or
philanthropic organization assisting in the relief activities in the
covered disaster area and any individual visiting the covered disaster
area who was killed or injured as a result of the disaster are entitled