CPA

As a virtual accountant for creative business owners, I see a lot of really impressive remote employer/contractor relationships.  As my clients continue to grow their business, they often time seek virtual assistants and other talented contractors abroad.  One question that always comes up around tax time is “ Do I have to prepare a 1099-Misc for a foreign contractor? “. Answer: If the foreign contractor is not a U.S. taxpayer, and all of the contracted services were performed outside the U.S., a Form 1099 is not required. Instead, you will need to ask the contractor to complete a  Form W-8BEN .  The Form W-8BEN certifies that they foreign contractor is not a U.S. taxpayer.  The Form W-8BEN is never submitted to the IRS, however it needs to be held in your files in case of an audit.  If you are audited by the IRS, the Form W-8BEN will support your reasoning for not issuing a 1099.

What’s the deadline? The 1099 deadline (specifically 1099-MISC) is January 31, 2018 to send 1099s to the recipients AND file them with the IRS. This is a change from previous years, so take note! Who receives one? If you paid $600 or more to an unincorporated person or vendor for services related to your business using cash, check, or bank transfer (ACH) you need to issue them a 1099-MISC. What if I paid them with PayPal or credit card? If you paid an unincorporated vendor using PayPal, credit card, or other third party merchant, the payment service is responsible for reporting this information (usually by issuing a 1099-K). You don’t have to do a thing! How do I file a 1099-MISC? Make a list of those who meet the qualifications for receiving a 1099-MISC. Send them a  W-9  to collect their Taxpayer ID Number, address, and business name. Create an account with  1099Online.com . Create a payer which will be your business information. Create the p...

Simple Ways To Lower Your Taxable Income If you have “extra” money at the end of the year and want to do something with it besides rack up more expenses or pay the government taxes on the profits, here are my recommendations. Contribute to your retirement.  As a small business owner, you may consider contributing to a SEP IRA, solo 401k or a SIMPLE IRA.  All of these plans are great options for lowering your taxable income while saving for your (and your employees’) futures. Choose a SEP IRA if you are a small business owner who wishes to make a tax deductible contribution into an IRA for yourself and on behalf of your employees. Choose a SIMPLE IRA if you are a business owner with a workplace of 100 or less employees and will fund the bulk of their retirement. Choose a solo 401k if it’s just you. Contribute to a health savings account. This may not be the sexiest of options, but if you’ve ever experienced medical bills, you know how important it is to have an emerge...

WASHINGTON - The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances. The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed. The following examples illustrate these points. Example 1 : Assume County A assesses property tax on July 1, 2017 for the period ...