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Continuing our effort to provide you with valuable, practical tax information, we will periodically update this page with useful income tax tips and income tax advice from the best sources — information on issues that you commonly deal with. Be sure to check our newsletter from time to time to stay on top of the latest and most effective tax strategies.
CompleteTax will provide income tax tips that will help you save money when it's time to file your tax returns. It's a good idea to use a well planned strategy so that you aren't surprised in April. Using CompleteTax Income Tax Preparation Software and keeping good records could mean the difference between paying a large chunk of money in April and receiving a big refund check. Use our income tax tips as part of your ongoing preparation.
Business-Related Mobile Phone Use Is Tax-Free Fringe Benefit
In September 2010, the Small Business Jobs Act of 2010 relieved business owners and employees of the onerous task of detailed substantiation of mobile phone usage in order to claim a deduction for these expenses. While this was a definite victory for all concerned, it was unclear how an employer-provided phone or reimbursement should be treated.
This September—in another victory for small business owners and employees—the IRS announced that employer-provided cell phones were a tax-free fringe benefit for the employees, provided that the phones were given to the employee for a reasonable business purpose. In addition, the IRS instructed its agents the reimbursements for the business use of an employee's personal mobile phone was not taxable income.
It makes sense to periodically review your withholding statement and make any necessary adjustments. If you have too little withheld, you will have an unpleasant surprise when you calculate your final tax liability in April. In fact, you might end up with a penalty for underpayment of estimated tax! If you have too much withheld, you will get a large refund, but you have lost the use of your money for all the months you gave it to Uncle Sam as an interest-free loan.
Our article, Use of Employer-Provided Mobile Phones Is Non-taxable Fringe Benefit provides additional information on the new policy.
Employees generally have it easy when it comes to properly reporting income: just take the information from the Form W-2. However, it helps to understand what types of fringe benefits you will find reported. Employment Income.
Reimbursing Employees' Expenses
If you have employees and you reimburse them for expenses that they incur, you need to know the rules for reporting these reimbursements. Reimbursing Employees' Expenses.
Investment Interest Deduction
Interest you pay personal loans (other than for your home mortgage and some student loans) is generally non-deductible. However, you may well be able to deduct the interest on loans you take to produce income through investments. Investment Interest Deduction.
Child Tax Credit
If you have children, you will want to make sure to learn about the Child Tax Credit which can provide a credit of up to $1,000 per child—although it does phase out at higher income levels. Child Tax Credit.
Voluntary Classification Settlement Program Can Save Dollars and Headaches
The IRS is on a mission to track down employers who misclassify workers as independent contractors, instead of employees. However, the Service is willing to make a deal with employers who voluntarily step forward to correct the misclassification. A new program provides for greatly reduced payments, takes penalty and interest charges off the table and promises peace of mind from future audits. If you have workers, make sure to read, IRS Makes Voluntary Reclassification of Workers Less Costly
Employers Can Not Avoid Responsibility by Outsourcing Payroll Tasks
Employers are required to withhold and pay-over employment taxes for each of their employees. This tedious recordkeeping is often out-sourced to a third-party. However, outsourcing the work does not shift the responsibility for accuracy and timeliness from the employer. Learn more in our article, Outsourcing Payroll Relieves Workload, But Not Tax Responsibilities
Protect Yourself by Following the Rules When Mailing Tax Documents
If you are mailing documents to the IRS or to the Tax Court, you want to make sure that they are delivered to their destination. New Regulations spell out how you should mail documents in order to have delivery presumed in your favor. Deviating from the exact methods can prove disastrous. Learn what delivery methods to use in our article, Protect Yourself When Mailing Tax Officials
Employers Can't Be Sued for Obeying an IRS Levy
When the IRS asks you to do something, you are better off obeying—even if that means withholding money from an employee's wages. Although the situation is uncomfortable, the employer can take comfort in immunity from lawsuits by the employee, even if it turns out that the levy was wrongfully issued. See Employers Protected from Lawsuits When Honoring IRS Levies
Past Tax Tips Newsletters
Each month, CompleteTax sends out the informational Tax Tips Newsletter.
Read past Tax Tips Newsletters.