The IRS Newsroom has a section of their website dedicated to IRS Tax Tips, and we’ve compiled the best ones from 2022 related to business taxes.
Non-employee Compensation & Backup Withholding
In an IRS Tax Tip from July 2022, the agency reminds businesses that if they hire independent contractors, they aren’t responsible for withholding the employer portion of income, Social Security, or Medicare taxes.
But any compensation equal to or more than $600 paid to these non-employees must be reported on Form 1099-NEC.
In order to file this information return, you must know the nonemployee’s TIN, which can be one of the following numbers: Social Security Number (SSN), Employer Identification Number (EIN), individual taxpayer identification, or adoption taxpayer identification.
Because of this nonemployee relationship to the business, these businesses are sometimes stuck in situations where the payer (your business) is required to withhold taxes from payments known as backup withholding (the current rate is 24%).
Business Taxes & Travel Deductions
Another July post from the IRS tax tips page talks about the importance of knowing what business travel expenses are tax deductible.
Generally, these travel expenses must be “ordinary and necessary.” For example, it would be considered tax-deductible to stay in a regular hotel room for an industry conference but booking a penthouse suite or other luxury room will not be.
Travel tickets and fares – Uber, train rides, plane tickets, and the like – are deductible. Lodging, business calls, and even laundry or dry cleaning are included, and these deductions aren’t just reserved for corporate employees – self-employed individuals can take advantage as well!
For a more thorough list of the deductions, check out this IRS article. And for a bonus explanation about enhanced business meal deductions, check out this article.
Spear Phishing Threats
Some of our favorite IRS tax tips come in the form of cybersecurity news and insights. Spear phishing is a type of scam where thieves target tax pros and tax preparation businesses to obtain their clients’ information and identities.
These and other similar threats continue to be a great reason to partner with someone you trust, like eFile360, to safeguard your information returns and sensitive data regarding your business taxes.
Tax-Exempt Status Applications
Are you starting or currently running a business that you plan to apply for tax-exempt status? The IRS tax tip from May 2022 talks about the process, and the most important things to know when you are considering using the status.
For example, the effective date of the organization’s tax-exempt status can be its formation/established date if Form 1023 is submitted and approved within 27 months of the business’s formation.
Why Businesses Should File Payroll Taxes Electronically
This May 2022 entry on the IRS Tax Tips list is a great example of the agency’s push to create better and more advanced technology-based solutions for business taxpayers.
The main benefits of filing electronically include saving time, saving money, keeping digital tax assets secure and accurate, and email confirmation of receipt from the IRS within 24 hours.
Tips for Choosing a Third-Party Payroll Provider
The IRS used this May 2022 article to talk about the importance of hiring a trustworthy and reputable third-party payroll service provider.
The IRS highly recommends that businesses partner with a payroll service that is familiar with and already using the EFTPS – Electronic Federal Tax Payment System – to handle their business taxes as they’re related to payroll and other similar expenses. This method is safe and free for all involved, and it offers the employer a way to access their tax and payment history for all deposits made under their Employer Identification Number.
Filing Season and How the IRS Contacts You
Individuals and businesses, corporations and nonprofits – no one is immune to scammers. Combatting tax scammers is easiest when you, your employees, and your contractors and colleagues are educated on how the IRS contacts people.
This IRS Tax Tips article shares a lot of great information about how and when the IRS will communicate with taxpayers, and learning this can help you from getting lost in a stressful tax scam that could cost you time and money.
Letters and written notices are common forms of communication from the IRS. Any calls that the IRS or related private debt collectors only call taxpayers after they have sent them written notices. Also, when visited by an agent of the IRS, you should always ask for credentials – true agents are required to show you, and taxpayers are encouraged to ask for verifying information like a badge number or email address.
The Best Tax Tip – Partner with eFile360 for Information Return Filing
The IRS Tax Tips page is a treasure trove of helpful tax tips and information, done in the style of short blog articles. And just like these insights from real people are infinitely helpful, so is eFile360’s information return filing.
Because there are so many things to remember and include in your tax filings, eFile360 wants to offer targeted assistance on all your business’s 1099, 1098, ACA, and W-2 information return filing, whether it’s done through paper and mail or e-filing.
With two options for form creation – manual entry and bulk upload – we can help you save time on the tedious tax tasks that keep you from getting back to growing your business and creating strategies for the future. We’ve got the files saved for you, and we are here to help you with everything from quick questions to TIN checking.
For business tax reporting made easy, sign up for a free eFile360 account today.