How to tax 2008 bonuses (even $5 bonuses)

December 14, 2008

Taxing a cash (or cash equivalent) bonus You are required to treat any cash bonus as wages and to apply FITW, FICA, FUTA, and state and local payroll taxes. If you give the bonus separately from regular wages, or with regular wages but identified as separate, the supplemental withholding rate-25% for 2008-can be used. [26 [...]

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Tax tips: Gifts to employees and company parties

November 24, 2008

Nontaxable gifts. Fruit baskets, hams, turkeys, wine, flowers and occasional entertainment tickets, such as to a show or sports event, generally are nontaxable as de minimis fringe benefits. Taxable gifts. Gift certificates (“cash in kind”) are wages subject to FIT, FITW, FICA, and FUTA—even for a de minimis item. For example, a gift certificate for [...]

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How to reduce or eliminate your company or client’s bad debt

November 11, 2008

A credit application is a great way to avoid granting credit to bad risks–but only if it asks the right questions and all the blanks are filled in. The application is given during “the honeymoon period,” the most friendly period, so this is the best time to ask important, revealing questions. Credit is based on [...]

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How to tell which customers will pay

November 9, 2008

A TRW Business Credit Services and Credit Research Foundation study found the following indicators of which customers or prospects are likeliest to pay: · The most powerful predictor of payment performance is payment record (current and past). · Credit ratings based on financial strength have no bearing on future payment performance. · Revenue is not [...]

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Important Federal December 2008 Due Dates

November 5, 2008

In addition to your responsibilities at year-end, you have to deal with the usual last-minute crises. By Dec. 1, 2008 Remind employees that if there has been a change in their filing status (marriage or divorce) or number of dependents (birth, adoption, child turning 21), that they may want to file a new W-4 for [...]

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People Can Avoid Common Errors that Delay Stimulus Payments

October 28, 2008

People who are awaiting an economic stimulus payment or who have yet to file can avoid common errors that may delay their payment. They also can use the IRS Web site to answer most common questions. The Internal Revenue Service, which is still issuing economic stimulus payments, has been studying trends and common issues in [...]

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Remind employees about the FSA use-it-or-lose it deadline

October 15, 2008

Contributions to flexible savings accounts (FSAs) face the “use it or lose it” rule: Balances not spent by the deadline are forfeited by the employee. Balances used to reimburse qualified medical expenses are tax free. Traditionally, FSA balances had to be spent by the end of the plan year (usually December 31) to avoid forfeiture. [...]

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Is Your Hobby a For-Profit Endeavor?

September 28, 2008

The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is engaged in for profit, such as a business or investment activity, or is engaged in as a hobby. Internal Revenue Code Section 183 (Activities Not Engaged in for Profit) limits deductions that can be claimed when an activity is [...]

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Booking cancelled debts

September 27, 2008

When your company’s debt is forgiven, you include the cancelled amount in gross income for tax purposes. The exception is cancellation of a debt to the extent that the payment would have been a deduction. Problem: SmallCo uses a consulting firm from it which it obtains services on credit. SmallCo has trouble paying its debts, [...]

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Is your auto worth more than your loan balance?

September 25, 2008

Is your auto worth less than the loan balance you have to repay on it?  If so, you are “upside down” in the world of the auto trade.  And that’s not a good place to be. Unfortunately, that situation has become more common as consumers sought longer-term loans in order to get their monthly payments [...]

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