Where Can I Find Due Dates for Tax Payments and Filings?
This week’s question comes from Julian, a sole-proprietor. After being laid-off from my job, I have decided to open my own business as a sole proprietor. Where can I find due dates for tax payments and filings? Answer: Each year, the Internal Revenue Service (IRS)
releases Publication 509, Tax Calendars
, for use during the following tax year.
Publication 509 Gives Due Dates for Many Items
A tax calendar is a 12-month calendar divided into quarters. The calendar gives specific due dates for the following.
- Filing tax forms.
- Paying taxes.
- Taking other actions required by federal tax law.
Publication 509 Is not Just a Tax Calendar
Though the title of Publication 509 is Tax Calendars, it includes more than just a single tax calendar. It contains:
- A section on how to use the calendars.
- A general tax calendar.
- An employer’s tax calendar.
- An excise tax calendar.
- A table showing the semi-weekly deposit due dates for 2011.
Four Advantages of Using a Tax Calendar
- You do not have to figure the due dates yourself.
- You can file or pay timely and avoid penalties.
- You do not have to adjust the due dates for Saturdays, Sundays, and legal holidays.
- You do not have to adjust the due dates for special banking rules if you use the Employer’s Tax Calendar or Excise Tax Calendar.
Vision Payroll Has Implemented the 2011 Due Dates in Its Tax Calculation Software
Contact Vision Payroll for further information on Publication 509.
This week’s question comes from Cliff, a sole proprietor. I am forming a corporation and will be converting from a sole proprietorship to a corporation. Do I need a separate EIN for my corporation? Answer: The new corporation is a distinct entity from the sole proprietorship and will require the corporation to apply for a new employer identification number (EIN). Taxpayers may use Form SS-4, Application for Employer Identification Number, to apply for a new EIN or visit the IRS website to apply online. Contact Vision Payroll if you have any further questions on the payroll tax implications of forming a corporation.
This week’s question comes from Lynn, a business owner. I recently hired my spouse to work in my sole proprietorship. My spouse qualifies using Form W-11, but I’m not sure if my spouse is considered my relative. Can my spouse’s wages qualify for payroll tax forgiveness? Answer: Under the Hiring Incentives to Restore Employment (HIRE) Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. Certain relatives of the taxpayer, as defined in §152 of the Internal Revenue Code of 1986 (IRC) are not eligible for the payroll tax forgiveness or the credit. They are:
- A child or a descendant of a child.
- A brother, sister, stepbrother, or stepsister.
- The father or mother, or an ancestor of either.
- A stepfather or stepmother.
- A son or daughter of a brother or sister of the taxpayer.
- A brother or sister of the father or mother of the taxpayer.
- A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
- An individual (other than an individual who at any time during the taxable year was the spouse, determined without regard to [IRC] §7703, of the taxpayer) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.
Since a spouse is not on the list of ineligible employees, wages paid to spouses of sole proprietors who otherwise qualify are eligible for payroll tax forgiveness and potentially the retention credit. Contact Vision Payroll if you have any further questions on HIRE Act.
This week’s question comes from Kevin, a sole proprietor. I am forming an LLC and will be converting from a sole proprietorship to a single member LLC, but still taxed as a sole proprietor. Do I need a separate EIN for my single member LLC? Answer: As explained earlier, in TD 9356, the IRS announced that single member LLCs would be treated as corporations for employment tax purposes, but that the single member would still be treated as self-employed and not an employee of the LLC. Therefore, sole proprietors forming an LLC should apply for and obtain a new Employer Identification Number (EIN) using Form SS-4, Application for Employer Identification Number. Contact Vision Payroll if you have any further questions on single member LLCs.
This week’s question comes from Debbie, a sole proprietor. I read that children under age 18 are not subject to federal employment taxes. My children are now in college and work part-time year-round. I know they are now subject to FICA taxes. Do FUTA taxes apply to children of sole proprietor who are age 18 or older? Answer: Sole proprietors who hire their own children under age 21 are not required to pay Federal Unemployment Tax Act (FUTA) tax on those children’s wages. Once the children reach age 21, the exemption no longer applies. Contact Vision Payroll if you have any questions on payroll taxes on children.
This week’s question comes from Brad, a sole proprietor. My 16-year-old daughter will be out of school soon and I’d like to hire her for the summer in my sole proprietorship. Does a sole proprietor have to pay payroll taxes on children’s wages? Answer: Sole proprietors who hire their own children under age 18 do not have to pay federal employment taxes on the children’s wages. The children are exempt from having to pay social security and Medicare taxes on their wages. These taxes are sometimes known as FICA (Federal Insurance Contributions Act) or OASDI (Old-Age, Survivors, and Disability Insurance). The employer is also exempt from paying the matching portion of these taxes. Additionally, the employer is not required to pay FUTA (Federal Unemployment Tax Act) tax on these wages. Most states also exempt such wages from state unemployment tax (SUTA). Depending on their expected income, children of sole proprietors may be subject to federal and state income tax withholding. Contact Vision Payroll if you have any questions on payroll taxes on children.
In TD 9356, the Internal Revenue Service made final the regulations on disregarded entities effective August 16, 2007. In order to allow taxpayers sufficient time to make the changes required by the regulations, the IRS delayed the effective date for the payroll tax changes until January 1, 2009. Under the new regulations, qualified subchapter S subsidiaries (QSubs) (under §1361(b)(3)(B) of the Internal Revenue Code of 1986) and single-owner eligible entities (under §301.7701-1, §301.7701-2, and §301.7701-3 of the Procedure and Administrative Regulations) that are treated as disregarded entities for most federal tax purposes will be treated as corporations for employment tax purposes. Therefore, owners of single-member LLCs who are treated as sole proprietors for income tax purposes must treat their LLCs as separate entities for employment tax and related reporting purposes. The final regulations clarify that an owner of a disregarded entity will continue to be treated as self-employed and not as an employee of the entity. The regulations also clarify that disregarded entities that are owned solely by a §501(c)(3) organization will maintain the organization’s exemption from federal unemployment tax or FUTA. Contact Vision Payroll if you have questions on changes to the payroll tax reporting procedures for single-owner eligible entities and QSubs.
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This week’s question comes from Denise, a sole proprietor. I just hired my husband to work for me in my business. I’m a sole proprietor. Can I pay my husband through payroll? Answer: If your husband (or wife) is a bona fide employee of you in your trade or business, you can pay him though payroll. He would be subject to all regular taxes except federal unemployment and, in most cases, state unemployment. He should also be eligible for most benefits that any other employee would receive, including health insurance, if he works enough hours. Spouses employed in non trade or business situations, e.g., domestic care of a child, follow different rules for taxation. Contact Vision Payroll for your state’s rules or further information on employing your spouse.
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This week’s question comes from Jon, a sole proprietor: I run my business as a sole proprietorship. Can I pay myself wages and withhold taxes? Answer: Sole proprietors are considered self-employed and are not employees of the sole proprietorship. They cannot pay themselves wages, cannot have income tax, social security tax, or Medicare tax withheld, and cannot receive a Form W-2 from the sole proprietorship. They may receive a draw from the sole proprietorship and must pay quarterly federal estimated tax payments to cover the amount of federal income tax and self-employment tax liability they will have, unless covered by withholding on other income. Vision Payroll can work with you and your CPA to determine an appropriate draw and estimated tax payment schedule. You can then receive the draw as a check or direct deposit with each payroll and schedule appropriate deductions such as retirement plan contributions. Contact Vision Payroll today to get started.
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