Archive for the ‘1099s’ Tag
Your MyFTB Account
Filed under: California | Tags: 1099s, access, Account, adjustments, balance owed, California, credit cards, direct bank transfer, FTB, installment agreement, interest, MyFTB, online, pay your balance, payments and credits, Penalties, tax withholdings, www.ftb.ca.gov
Leave a comment Originally published in the Cedar Street Times
June 14, 2013
Clip this out and save it in your tax file…did you know you (or your authorized tax professional) can get easy, instant, online access to a wealth of information about your California tax account as an individual or a business?
One of the most common issues I use this for as a professional is to confirm estimated tax payments when a client is uncertain how much they paid throughout the year. This can often save a lot of time searching through bank statements or checkbooks. Of course, the best practice is to track the information yourself to make sure the Franchise Tax Board (FTB) posted it to your account, but sometimes life does not fit within a nice, square box. To the credit of the FTB, I have found they do a pretty good job of tracking estimates paid, however, so I feel it is pretty reliable.
You can also see the past four years of your wage and California tax withholdings reported to the FTB by your employers. This would be great if you misplaced a W-2 and could not get access to it for some reason. If the FTB issued any 1099s to you for tax refunds or interest income, you can see that information for the past three years as well. Another feature is the ability to look at a summary of the core information of your tax returns for the past ten years such as total tax liability, taxes withheld, payments and credits, plus any interest, penalties, or adjustments made on the account. The system will also tell you if you have any outstanding balances still owed from the past ten years.
Besides historical tax reporting information you also have the ability to perform a variety of functions. For instance, you can change your address and telephone number, or you can check on the current status of your refund. You can also pay your tax balance or make estimated payments via direct bank transfer, Western Union, or credit cards (a fee applies for credit card payments). So no filling out vouchers and making unnecessary trips to the post office, and you have instant confirmation that the funds have been credited.
There are also quick links to key information on topics like penalties, interest, common fees, etc., as well as links to common forms to fill out and mail in such as applying for an installment agreement if you owe tax. Hopefully, some of these other processes will become automated online in the future as well. Another nice feature is that you can sign up for e-mail reminders to pay your estimates, for example.
To gain access to this information, you can set up an account online at http://www.ftb.ca.gov. Look for the link to “Access MyFTB Account” and click “Register.”
As telephone hold times seem to get longer and longer, having access to more information online is definitely handy. There are a lot of areas I could criticize the FTB about, but I think this is definitely a positive service they are providing. It also functions pretty much like any other commercially designed site online. I only wish the IRS had something as user friendly! They do have an electronic system for tax professionals to gain access to information, but I think it was designed when dinosaurs roamed the earth.
Prior articles are republished on my website at www.tlongcpa.com/blog.
IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.
Independent Contractor Vs. Employee: 1099s Due Jan. 31
Filed under: Employers | Tags: 1099s, 20 points, California Labor Commission, control, disability, employee, Form 8919, Form SS-8, FTB, independent contractor, IRS, labor laws, payroll taxes, Penalties, Revenue Ruling 87-41, W-2, workers' compensation
Leave a comment Originally published in the Cedar Street Times
January 25, 2013
By the end of this month, business owners will have sent 1099s to their independent contractors and W-2s to their employees. Many business owners think it is their choice, or perhaps a choice they can make together with the person performing the services on how they are to be treated. It is not.
Business owners certainly see the savings to treat workers as independent contractors – no payroll taxes, no overtime, no break periods, no meal periods, no workers’ compensation insurance, no benefits, or a myriad of other California laws to follow. Even if the worker gets higher pay to cover the extra taxes incurred as an independent contractor, he does not have to carry unemployment insurance or disability insurance on himself and sometimes thinks that is a personal benefit. Of course, not having insurance is problematic for the worker and for the system as a whole, which depends on people paying premiums.
At the end of the day, people who are employees wearing the cloak of an independent contractor, are usually getting the short-end of the stick, because they really are dependent on the employer, and no longer have the ordinary benefits afforded by labor laws. California knows this, and they come down hard on the employers when it is discovered that employees are misclassified as independent contractors. Unfortunately, even for business owners that treat a misclassified independent contractor well, it can come back to haunt them if the individual becomes disgruntled.
Misclassification can get extremely expensive, or even sink a small business. Besides legal fees, you could be hit with the tax liability, penalties, and interest from the IRS and FTB for all the back payroll taxes for the employee during the period misclassified. You may also have to pay back wages and benefits the employee would have been entitled to. The California Labor Commission can also fine you $5,000 to $25,000 per violation.
So, how do you know if someone is an employee or an independent contractor? According to law it comes down to the right to direct and control the details and means of the work. The IRS published Revenue Ruling 87-41 listing twenty points to consider as a guide. They have also published their own internal auditor’s training guide, which provides more insight. You can even file a Form SS-8 Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding to get an IRS determination in writing. This form is most often used by disgruntled workers along with Form 8919 when they feel the employer misclassified them and they now owe tax or cannot get unemployment or disability benefits. However, employers may also file the Form SS-8, or simply use it internally as a kind of double check to see if they feel they are classifying workers correctly. All of these documents mentioned are available free online with a simple Google search.
Here is a simplified rundown of the twenty points from Revenue Ruling 87-41 which would help in the determination process. You do not have to have all of them and no single one is decisive, but the first three are given a lot of weight. You may have an employee if: 1) you require the worker to follow specific instructions on when, where and how work is to do be done; 2) you provide formal or informal training for the worker; 3) the worker has predetermined earnings and always get paid for the work and does not have the ability to make a profit or incur a loss; 4) the services performed by the worker are highly integrated into your own and affect business success; 5) the worker is personally required to perform the services instead of having the option to have their own worker perform the services; 6) you hire, supervise, and pay for your worker’s assistants; 7) you have a continuous relationship with the worker – such as working with you every day; 8) you dictate the hours or days the worker performs services; 9) the worker works full-time for you; 10) you require the worker to perform services at your work site even though it could be done elsewhere;
11) you require the worker to perform services in a specific order or sequence; 12) you require written or oral reports regularly; 13) you pay hourly, weekly, or monthly versus by invoice or project completion; 14) you reimburse the worker’s travel and business expenses; 15) you provide the worker’s supplies, tools, computers, etc.; 16) you provide an office for the worker; 17) the worker does not provide the same services to anyone else; 18) the worker does not advertise his own services to the general public, have business cards, etc.; 19) you can discharge the worker at any time instead of having to honor contract terms; 20) the worker can terminate his services without having to honor any contract terms.
Ultimately, the determination is a legal issue. If you do not feel comfortable making the decision on your own, an attorney that focuses on employment practice matters should be consulted.
Prior articles are republished on my website at www.tlongcpa.com/blog.
IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.
Travis H. Long, CPA, Inc. Blog 