Reporting & Filing Requirements
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.
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.
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.
The Supreme Court, reversing a decision of the Sixth Circuit, held that severance payments to terminated employees are subject to FICA withholding.
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.
The Supreme Court held in an 8–0 decision that severance payments to terminated employees are taxable wages for FICA tax purposes.
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.
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.
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.
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.
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.
Beginning in 2013, individuals must pay an additional 0.9% Medicare tax on earned income above certain thresholds.
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.
Determining proper classification of workers, either as independent contractors or employees, can be subjective and a challenge for employers.
A totalization agreement is intended to eliminate dual social taxation and to provide additional benefit protection for workers who have worked in both the United States and another country.
The IRS issued final regulations on the 10% excise tax on amounts paid for indoor tanning services.
The IRS released proposed regulations under Sec. 3504 that would govern the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy all employment tax obligations.
The applicability of self-employment tax to amounts paid to off-duty police officers continues to create questions for CPAs.
There are various types of PTO donation and leave-sharing programs, not all of which are disaster-related. The tax treatment to the donating employee differs based on the type of program.
The IRS issued proposed regulations concerning the 0.9% Medicare surtax, which took effect Jan. 1, 2013.