The tax season is underway! Before you stress, consider the following information to help prepare you for the season ahead.
In January 2020, the Internal Revenue Service (IRS) confirmed that the nation’s tax season will start for individual tax return filers on Jan. 27, 2020, and the IRS will be accepting and processing 2019 tax year returns beginning on this date.
Wednesday, April 15, 2020, is the deadline to file 2019 tax returns and pay any tax owed.
Employees: Here’s what you can do.
If you are an employee and want to ensure you are prepared and ready to start filing on Jan. 27, consider the following tips:
The IRS suggests that you file your taxes electronically to avoid common errors that can be made when filing on paper. There are plenty of resources on the IRS website that encourages tax filers to utilize available assistance when filing! If you are interested in filing electronically, the IRS provides a tool called IRS Free File.
However, there are other options for filing electronically.
Find a Qualified Tax Professional
If you are interested in finding a tax professional, you want to find a tax professional who you can trust with sensitive information, including your income and social security number. The details of your financial life are important to you which is why you should expect your preparer to be skilled in tax preparation and able to accurately file your income tax return.
There are plenty of tax return preparers out there, with various titles including certified public accountants (CPAs), enrolled agents, attorneys and many others who don’t have a professional credential.
Be sure to pick the right tax return preparer for you. One way to ensure you are choosing wisely is to check out the IRS’s tips for choosing a tax preparer.
Employer’s: How to make tax season smoother for you & your employees.
As an employer, preparing your employees for tax season involves multiple factors. The most important factor is ensuring you are compliant with the IRS.
1. Apply for an Employer Identification Number.
If you have not done so already, apply for an Employer Identification Number (EIN). If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. The nine-digit EIN the IRS issues must be used on the items you send to the IRS and the SSA.
Some additional information on how to apply are as follows:
- Navigate to IRS.gov/EIN and click “Apply Online Now”.
- Additionally, you can register for an EIN by faxing or mailing Form SS-4 to the IRS.
- See IRS Publication 15 for more details.
2. Properly classify your employees.
When it comes to taxes, it is crucial that you properly assess whether individuals providing services for your business are independent contractors (self-employed) or employees.
This is important when it comes to withholding income taxes, Social Security and Medicare payments, and paying unemployment taxes on wages paid to an employee. Employers generally do not have to withhold or pay any taxes on payments to independent contractors.
3. Fill out Forms W-2 & 1099-MISC.
Form W-4, also known as the Employee’s Withholding Certificate, is filled out by an employee, and Forms W-2 are completed by employers. The IRS requires employers to provide employees copies of their Form W-2 by no later than January 31.
By contrast, if you have any other individuals (or companies) that are doing work for your business, but they are not a W-2 employee, have them complete a Form W-9 prior to doing work for you. Remember when independent contractors were mentioned above? This is a common example of who would fill this form out for you.
This is where Form 1099-MISC comes into play. Just like Form W-2, Form 1099-MISC must be filled out by the employer and provided to the individual or entity by January 31. This form will report what is paid to the individual or entity, as well as their reporting details (such as name, address, SSN or TIN), but all of the tax payments are up to the payee of this form.
I know tax forms can be overwhelming. To help you distinguish the differences between the most common forms you will use in business, read our previous blog titled “What Is the Difference Between Forms W-4, W-2, W-9 & 1099-MISC?”
It is important to seek assistance when you need it during tax season! Below are some additional resources to consider:
When in doubt, let PrimePay help!
PrimePay’s All-Inclusive Payroll bundle includes federal and state tax filing for your business, and it can also handle the distribution of your Forms W-2!
Fill out the form now to learn more from our team:
Disclaimer: Please note that this is not all-inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding the specific application of the information to your own plan.