The new draft form, which has been extensively redesigned, is intended to simplify the calculation of income tax withholding after the changes made by the law known as the Tax Cuts and Jobs Act.
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Reporting & Filing Requirements
Using R&D credits to reduce payroll taxes: An overlooked opportunity for startups
This article discusses who qualifies to take the credit, how to make the election, the calculation and allocation of the credit, and how to report it.
Social Security wage base set for 2019
The Social Security Administration said that the amount of wages subject to the old age, survivors, and disability insurance (OASDI) tax for 2019 will be $132,900, increased from 2018’s maximum of $128,400.
Small businesses and related-party transactions
A recent Tax Court case highlights pitfalls frequently encountered by small businesses that engage in related-party transactions without appropriate planning.
2018 wage base for Social Security taxes will increase slightly this year
The Social Security Administration said that the maximum amount of wages subject to the 6.2% Social Security tax in 2018 will rise a little more than 1%, after a much larger increase last year.
Farm rental payments not subject to self-employment tax
Tax Court held that rent payments to chicken farmers by their S corporation’s poultry farming operations qualified for the exclusion for rental payments from self-employment income.
Social Security Administration announces small increase in 2018 wage base
The SSA said that the maximum amount of wages subject to the 6.2% Social Security tax in 2018 will rise a little more than 1%, after a much larger increase last year.
Failure to Use S Corporation Correctly Results in Self-Employment Tax
Income earned by financial adviser was his, not the income of his wholly owned S corporation, and was therefore subject to self-employment tax.
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.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
