College students are making the most of the gig economy. The ability to sell stuff on Etsy or E-bay or make some extra cash using their vehicle with Uber or Lyft. Although these side gigs can result in some serious side income, they also can make tax obligations more difficult to navigate. Here are three reasons why: classification, withholding and different tax forms.
Self-employed? First quarterly tax payment due April 15, 2019.
Tax Day signifies a payment due date for more than just individual’s income tax returns. The Internal Revenue Service (IRS) also expects payment of the first quarterly tax payment for 2019 on April 15.
What are quarterly tax payments? The IRS often requires quarterly tax payments for taxpayers who do not have withholdings taken out of paychecks throughout the year. The IRS states the most common taxpayers that are required to file quarterly tax payments include the self-employed, investors and retirees.
Local tax preparer’s office shut down by feds
The United States Department of Justice (DOJ) continues to crackdown on tax preparation fraud. The government takes the threat so seriously that the Internal Revenue Service (IRS) has listed return preparer fraud as one of its Dirty Dozen Tax Scams.
What is the most recent case? The DOJ recently filed a case against a Texas tax return preparation office. As part of their case, the government filed for and received a permanent injunction against the business. The injunction effectively shut down the office.
IRS changes rules for tax penalties
The Internal Revenue Service (IRS) recently expanded the penalty relief for taxpayers who owe taxes for the 2018 tax year. In the past, the agency would charge a penalty on taxpayers who failed to pay at least 90 percent of their tax obligation during the tax year. Employers generally take these tax payments as withholdings from the taxpayers’ paychecks paid directly to the IRS.
This year, the agency announced it will relax its requirement and lower the expected payment to 80 percent of the taxpayers’ tax obligation.
Tax surprises: Options for an unmanageable bill
Recent data shows that only 16 percent of United States taxpayers adjusted their withholdings after the new tax law passed. Without a change to one's withholding status, taxpayers could find themselves facing an unexpected tax bill this tax season.
Two options for taxpayers struggling with their tax bill: Installment plan and offer in compromise
What does the PTIN case holding mean for tax professionals?
The Internal Revenue Service (IRS) requires tax preparation professionals use a Preparer Tax Identification Number (PTIN). The number serves in a similar manner as a Social Security Number, providing a tax preparer with a unique identifier. The IRS states these numbers help tax preparers avoid using their own Social Security numbers when serving clients. Tax preparers take issue with these numbers as they are costly.
The dispute resulted in a recent court case that challenged whether or not the IRS should continue using and charging for PTINs.
IRS reminder: Overdue tax bill can lead to passport issues
The Internal Revenue Service (IRS) has a number of tools it can use to demand tax payment from taxpayers. Those who fail to make their payments can face additional fees and have the government take the money directly from their paycheck through levies. Another tool available to the IRS: they can limit your ability to travel.
How can the IRS limit a taxpayer’s ability to travel? The agency will notify the State Department when a taxpayer has “seriously delinquent tax debts.” This is allowed under a provision within the Fixing America’s Surface Transportation (FAST) Act, the State Department would use this information to deny a renewal or initial application for a passport.
4 FAQs on the IRS whistleblower program
Whistleblowers who inform the IRS about noncompliant tax behavior by others are eligible for financial awards in certain circumstances.
In most cases, the taxpayer in question is the whistleblower’s employer. The IRS operates a program that makes the awards.
Own foreign assets? Tips to protect your investment.
We live in a world where global investments are common. Flights can get us from country to country in a matter of hours. This ability to travel has resulted in the ability to become global citizens — putting large quantities of time and money in different countries.
United States citizens that choose this lifestyle may consider ownership of property and other assets in foreign countries. If done wisely, such ownership can not only lead to personal enjoyment but also diversify one's financial portfolio. If not, those aiming for a global experience could find themselves facing serious penalties in the United States.
Are expenses related to your side gig tax deductible?
One of the benefits of owning your own business is the ability to take advantage of certain tax savings. In some cases, space in your home used as an office could result in a deduction as well as computer expenses and the like. These more traditional expenses are well defined by the Internal Revenue Service (IRS). For example, a home office deduction requires the taxpayer uses the space regularly and exclusively for business and that the space is the principal place of business.
