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federal and state taxes

Tax Deadlines To Note For Year-End 2023

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Tax season is just around the corner, and for many businesses, it means filing various forms, including Forms 1099-NEC, 1099-MISC, and more.  Staying on top of these tax deadlines is crucial to avoid penalties and ensure compliance with IRS regulations. This can be a daunting time for SMBs, and staying informed is the first step to staying compliant. In this article, we’ll go into the various tax deadlines that you have to be aware of as 2023 comes to a close. Stay On Top Of These Tax Deadlines Before 2023 Ends 1. Form 1099-NEC Form 1099-NEC replaced Form 1099-MISC for reporting non-employee compensation in 2020. If your business paid at least $600 in non-employee compensation in 2023, you must issue this form to the recipients and file it with the IRS. The deadline for providing Form 1099-NEC to payees and the IRS is January 31, 2024. However, if your company has experienced a catastrophic event, you may be eligible for an extension by filing Form 8809. 2. Form 1099-MISC Form 1099-MISC is one of the most common IRS 1099 forms and is used to report miscellaneous income payments. If your business made payments of at least $600 (or $10 in royalty payments) to a payee in 2023, you are required to provide them with Form 1099-MISC by January 31, 2024. The IRS electronic filing deadline for Form 1099-MISC is April 1, 2024, unless you file a 30-day extension with Form 8809. It's important to note that some states may have earlier deadlines for 1099 reporting, so be sure to check the specific requirements for each state you operate in. 3. Form 1099-K Form 1099-K is used to report payment cards, P2P (peer-to-peer) payments, and third-party network transactions. If your business received gross payment transactions of more than $600 in 2023 through payment card networks like PayPal, Venmo, or online marketplaces, you are required to file Form 1099-K. The deadlines for Form 1099-K mirror those of Form 1099-MISC. Even states like Florida and Tennessee, which do not tax …

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Unpaid Payroll Taxes: Avoid at All Costs

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Do you pay your payroll taxes on time? In this article, we’ll define what payroll taxes are, what it means when they are unpaid, and the penalties for not paying payroll taxes on time.  What are Unpaid Payroll Taxes? Payroll taxes are the federal and state taxes that an employer deducts from employees' wages. They are a subset of employment taxes that employers pay.  When payroll taxes are “unpaid,” it means the employer neglects to pay them to the relevant tax authorities. Types of Payroll Taxes Employers need to pay many types of payroll taxes on behalf of their employees, including: Federal Income Tax Withholding: Employers have a legal obligation to subtract federal income taxes from employees' wages, which is determined by their W-4 forms and the IRS tax tables. Social Security and Medicare (FICA) Taxes: Employers have the obligation to subtract Social Security and Medicare taxes from employees' wages, along with making a matching contribution on behalf of their employees. State Income Tax Withholding: In states that have income tax, it is the duty of employers to subtract state income taxes from their employees' earnings and submit them to the state tax authority. What about FUTA? Related to payroll taxes is another type of employment tax – Federal Unemployment Tax (FUTA). Employers are required by law to contribute towards federal unemployment taxes, ensuring the availability of financial support for eligible workers during periods of unemployment. However, FUTA is not considered a payroll tax because it is not paid by employees nor is it deducted from their wages. Penalties for Unpaid Payroll Taxes Employers may face severe penalties and repercussions if they fail to pay their payroll taxes. The following consequences are associated with non-payment: Failure to Deposit Penalty: Employers who do not meet the deadline for depositing payroll taxes can incur fines that correspond to a percentage of the outstanding tax sum. The …

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IRS National Tax Security Awareness Week 2022 Highlights

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The Internal Revenue Service (IRS) held its 2022 National Tax Security Awareness Week Security Summit from November 28 through December 2, 2022. This week was devoted to informing taxpayers of the latest tax security measures and ways to protect themselves from fraud. The Summit included daily webinars, workshops, and other activities designed to educate taxpayers on the most recent data security trends. In addition, IRS representatives provided guidance and advice on how to recognize potential scams and safeguard personal information. Here are some of the highlights from National Tax Security Awareness Week 2022. New Threats and Focus Areas National Tax Security Awareness Week 2022 had a wealth of great topics, and the IRS shared several insightful tips and tricks that we wanted to highlight here. The first one we wanted to talk about is the recent increase in IRS-related texting scams. These scams (also known as “smishing”) target mobile users and the text messages are made to look like official communication from the IRS. In 2022 alone, the IRS reported thousands of fraudulent domains included in these messages, all aimed at stealing personal and financial information. Protecting personal and financial information online was a theme throughout the week, and it’s important to remember that mobile devices (both professional and personal) are an often-overlooked online asset. Your smartphone is just a pocket-sized computer, and we often store more personal and financial information here than we do on our home or work computers. The IRS in their sessions continued to emphasize the importance of MFA (multi-factor authentication, strong passwords, and the installation of antivirus software on all devices that connect to the internet. Fake Charities Were a Big Topic on Day 2 of National Tax Security Awareness Week Because Day 2 of National Tax Security Awareness Week fell on Giving Tuesday, it was the perfect time to talk about the prevalence of fake …

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How Interstate Business Taxes Are Different

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With the rise of remote work and online access to professionals across the country and the world, there has been a significant rise in interstate business operations and practices. But how does that affect your taxes and what do you need to know to stay on track? We can help. What is an Interstate Business? Since the beginning of the pandemic, nearly 30% of US employees have been working outside the state or country they reside in. Many are doing this to cut expenses (including commuting and rental accommodations) and to reduce taxes. Living in one state and working in another causes some interesting tax challenges for employers. These interstate business setups often mean confusion, particularly around income taxes – which state and local taxes must be paid? What are the tax rates in these areas?   Interstate Business Taxes: Examples Each state’s tax code varies, and some are easier to decipher than others. For example, there are 7 states that have various types of the “convenience of employer” rule: Massachusetts, New York, Arkansas, Connecticut, Delaware, Nebraska, and Pennsylvania. This rule allows a state to continue to tax employees working out-of-state (anyone who lives in one state and works for a business with an address tied to a different state). For example, if someone is employed by a New York company but lives in Illinois, they are still considered a New York-based employee – it doesn’t matter where your home is that you’re working from, it only matters where the business you work for is located. Because each state is different, you have to be sure your business is compliant with the tax laws in the state that your business is headquartered in, as well as the state each of your employees is living in and working from. It’s not uncommon, especially for fully remote teams and companies, to have a mix of interstate and international employees on their teams. California, for example, puts the responsibility on the employer to withhold …

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IRS Forms 1098 & 1099 Instructions

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IRS Forms come with detailed instructions, but they can sometimes be hard to understand if you aren’t a tax expert. Let’s break down some of the general IRS Forms 1098 and 1099 instructions. General Instructions for Information Returns There are several information returns listed in this 31-page general instructions sheet from the IRS for the tax year 2022. And much like the Terms and Conditions pages, IRS instructions aren’t the most exciting or easy-to-read material. They do make it as straightforward as possible, but tax codes are long and tedious, and difficult for veteran tax experts to understand – so the first thing you should remember about how to file IRS forms is that they change often. That’s why having a dedicated resource like eFile360 can be beneficial: you’ll always have a real person to reach out to with questions. The 1098 and 1099 instructions also work for a number of other information returns, like 1096, 1097, 3921, 3922, 5498, and W-2G. You’ll find a table of contents that directs you to the latest changes, who, where, and what to file, and much more. This instructions sheet is now labeled for “continuous use,” which means you can click this IRS link and it should reflect the latest changes for those information returns and the filing process to use. Filing Instructions There are a few big 1099 instructions to pay attention to when you start the filing process for these IRS forms. The first thing to remember is that right now the electronic filing threshold is set at 250 forms. That means if you have 250 or more 1099s, 1098s, etc., to file for the tax year 2022, you must file them electronically. But that’s only for right now. If new instructions or updated articles are shared by the IRS, that threshold could change, which may affect your filing process. It’s best to use electronic filing and organization like the services eFile360 offers, both for accuracy and in case the threshold changes in a way that impacts you or …

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Information Return Penalties Quick Reference Guide for Businesses

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Filing and processing dozens, or even hundreds or thousands, of information returns can be daunting. Here is a quick reference guide for what to expect when it comes to information return penalties when filed on paper and/or electronically and how you can avoid those mistakes, and those bills. Information Return Penalties Information returns are the foundation for much of your business tax reporting, as well as the reporting of your vendors, employees, and more. They are used to verify tax return entries, identify all applicable non-filing conditions, and detect fraudulent activity.  Because your business does not exist in a vacuum, that means any missing or erroneous returns are penalized so that you can rectify your mistakes and hopefully learn from them in the future. Being able to receive and provide accurate tax-related information is imperative to the functionality and success of all businesses and the relationships they have established to further their operations. Each of the information returns that you file on paper or submit electronically are subject to scrutiny and can be the basis for several different fines and related penalties. Below, we’ve provided a quick reference guide for these penalties. There are separate penalties for failing to file correct information returns on time as well as failing to provide correct payee statements. The IRS has a quick and handy chart with the charges, organized by tax year. For the tax year 2021, the penalties include the following charges for each information return or payee statement: $50 for returns up to 30 days late $110 for returns 31 days late through August 1 $280 for returns after August 1 or not filed at all $560 for intentional disregard For the tax year 2022 (which will be due during the 2023 tax season), all penalty fees are the same except those falling into the intentional disregard category – which will be increased to $570 next year. Notice CP2100 & CP2100A – …

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