Income earned by financial adviser was his, not the income of his wholly owned S corporation, and was therefore subject to self-employment tax.
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Reporting & Filing Requirements
Check Signer Was Not a Responsible Person
The wife of a partial owner of a corporation that owned a restaurant signed payroll checks yet was determined to be not a responsible person for purposes of the Sec. 6672 trust fund penalty.
Social Security Administration Announces Large Increase in 2017 Wage Base
The SSA announced that the maximum amount of earnings subject to the Social Security tax will increase by more than 7% in 2017, after remaining flat in 2016.
Tax Court Needs to Do More Work in Interpreting Totalization Agreement
The meaning of the terms “amend” or “supplement” must be determined in light
of the full text of a social security totalization agreement and the shared expectations of the
contracting governments.
Scrappy Taxpayer Off the Hook for Self-Employment Taxes
A taxpayer’s proceeds from sales of scrap steel over a seven-year period were not considered self-employment income.
Mary Kay Sales Consultant’s Retirement Payments Subject to Self-Employment Tax
The Eleventh Circuit Court of Appeals held that payments a retired Mary Kay sales consultant received from the cosmetics company were subject to self-employment taxes because they were payments of deferred compensation.
Current Issues Involving Deferred Compensation and Employment Taxes
Employers in the for-profit, tax-exempt, and public sectors may overlook a number of issues involving the application of the employment tax rules.
IRS Disagrees With Tax Court on Ability to Designate Employment Tax Payments as Income Tax Withholding
The IRS announced in that it will not follow a Tax Court holding that an employer may designate payments of its employment taxes to the income taxes of specific employees.
Are Severance Payments Subject to FICA?
The definition of wages for purposes of income tax withholding and for the Federal Insurance Contributions Act has often been a point of contention. The Supreme Court recently reversed an appellate decision and held that severance payments to employees who were involuntarily terminated were taxable wages for FICA purposes.
Help for Self-Employed Clients Who Owe Taxes They Cannot Pay
In tax practice, CPAs occasionally encounter self-employed clients who have difficulty keeping up with their quarterly estimated tax payments. The problem of making adequate estimated tax payments is particularly difficult for the self-employed because they generally do not have taxes withheld and remitted to the government, as do most employees with wages reported on Form W-2.
Severance Payments Subject to FICA Withholding
The Supreme Court, reversing a decision of the Sixth Circuit, held that severance payments to terminated employees are subject to FICA withholding.
Director Fees May Be Subject to Self-Employment Tax
The Tax Court in Blodgett, T.C. Memo. 2012-298, provided useful information to determine corporate directors’ income classification when the initial answer may be unclear.
Supreme Court Rules Severance Payments Are Subject to FICA
The Supreme Court held in an 8–0 decision that severance payments to terminated employees are taxable wages for FICA tax purposes.
0.9% Medicare Surtax Final Regulations Issued
Regulations contain guidance for employers and individuals on the implementation of the tax, including the requirement to file a return reporting the tax, the process for employers to make adjustments of underpayments and overpayments of the tax, and the processes for employers and employees to file claims for refund for an overpayment of the tax.
Delegating Authority Does Not Allow Taxpayer to Avoid Responsible Person Status
The Fourth Circuit held that a taxpayer who was chairman of the board and vice president of a company with actual authority over the company’s financial affairs could not avoid responsible person status by delegating her authority to control the company to her husband.
Withholding Rules for U.S. Citizens and Resident Aliens Working for a U.S. Employer in a Foreign Country
For income tax withholding purposes, the wages of U.S. citizens and resident aliens include all remuneration for services performed as an employee for an employer, regardless of whether the services are performed in the United States.
Heightened Emphasis on Worker Classification
Worker classification has been a major concern for many years. While it is clear that government agencies recognize that worker misclassification is a significant problem, how to classify workers remains unclear.
Final Rules Released on 0.9% Medicare Surtax
The IRS issued final regulations governing the 0.9% Medicare surtax. The regulations contain guidance for employers and individuals on the implementation of the tax.
Additional 0.9% Medicare Tax on Earned Income
Beginning in 2013, individuals must pay an additional 0.9% Medicare tax on earned income above certain thresholds.
Final Regs. on Indoor Tanning Tax
The IRS issued final regulations on the 10% excise tax that has been in effect for amounts paid for indoor tanning services since July 1, 2010.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
