The Reintroduction of Form 1099-NEC

What is Form 1099-NEC? It’s simple; it’s the 1099 given to those that receive non-employee compensation, also known as independent contractor income. Non-employee compensation used to be represented in box 7 of Form 1099-MISC. It’s interesting to note that Form 1099-NEC is actually not new, but hasn’t been used since 1982, being first introduced as [...]

Are you an injured spouse under Form 8379?

This article is about the somewhat strangely named Form 8379 – Injured Spouse Allocation. I say that it’s an odd name for a form because when you hear the word injury, the idea of physical injury pops into one’s head. However that is not the purpose surrounding this form. What the IRS means by injury [...]

What are Supplemental Wages and What Methods are Used to Withhold Their Taxes?

Supplemental wages include, but are not limited to: bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, reported tips, retroactive pay increases, and payments for nondeductible moving expenses. As you can probably gather, supplemental wages more or less function as a catchall for income paid by your employer or [...]

IRAs, Roth IRAs, and 401(k)s – What can you contribute?

This post has to do with what you can contribute in the realm of the three most common types of retirement accounts, those being the traditional and Roth individual retirement accounts (IRAs) and 401(k) plans. Generally, people that rely on an IRA to save for retirement aren’t covered by a 401(k). Conversely, those that rely [...]

Businesses Owned by Spouses and Employee Family Members

(Note: When this article mentions the term “employment,” it means formal employment arrangements where a worker receives a Form W-2 at the end of the year, and therefore, as used in this article, does not include independent contractors that receive Forms 1099-MISC. If you want to keep things in the family, and I suggest that [...]

Employer Obligation to Obtain Employee Name and Social Security Number

(Note: The tax treatment discussed herein pertains to employees who receive Forms W-2 and does not apply to hired contractors who receive Forms 1099-MISC at year’s end.) As an employer, you’ll need to get a lot of information from your employees in order for them to start work. Besides their names, for tax purposes the [...]

Form W-4 and Employee Tax Withholding

This article deals first with Form W-4, Employee’s Withholding Certificate, and then gets into the specific types of taxes that are withheld in regards to employee wages, salaries, and tips. As usual, there’s the disclaimer that this article is not an exhaustive treatment of this subject. Specifically, this article primarily goes into the purpose of [...]

Who is an Employee as Defined by the IRS?

When people say the word “employment” they mean that they work for a living. That’s the colloquial definition. When people talk about their employer, they mean the person or company from which they derive income due to labor. However, these colloquialisms don’t necessarily correspond to the tax definition of what an employee is. This differentiation [...]

What is the self-employment tax and who pays it?

The self-employment tax seems to lend itself to an intuitive definition. What is the self-employment tax? It’s a tax on the self-employed. Who pays the self-employment tax? The self-employed pay, clearly. However, there’s more to this than meets the eye due to the nuance associated with the nexus of real life and arbitrary rules. This [...]

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