For many taxpayers—especially self-employed individuals, business owners, and retirees—the obligation to make quarterly estimated tax payments can feel like a minefield. The U.S. tax system requires you to pay as you go, and the IRS doesn’t wait until April to assess whether you’re meeting your obligations. If you’re short on those payments, you could be penalized at a rate that, while technically 7%, can feel closer to 11% once you factor in that penalties are nondeductible.
Fortunately, there’s a silver lining: you can often avoid or erase those penalties altogether with smart withholding strategies—even late in the year.
This article will explore how estimated taxes and withholding differ, what the IRS expects from taxpayers, and the savvy strategies you can use to avoid unnecessary penalties.
The U.S. operates under a “pay-as-you-earn” system, meaning taxes must be paid as income is earned. If you’re a W-2 employee, your employer handles this for you. But if you’re self-employed or earn income outside traditional employment—through a side hustle, rental property, investments, or a small business—you’re expected to pay taxes throughout the year in four estimated tax installments.
These quarterly payments are due on:
April 15
June 15
September 15
January 15 (of the following year)
Failing to pay enough during any quarter can lead to underpayment penalties, regardless of whether you pay in full by the tax filing deadline.
Withholding refers to the taxes automatically deducted from paychecks, Social Security benefits, pensions, or IRA distributions. Here’s the kicker: the IRS treats withheld amounts as if they were paid evenly throughout the year, even if they’re actually withheld in December.
That’s a powerful advantage over estimated payments.
The IRS provides three “safe harbor” rules that can help you avoid underpayment penalties:
90% Rule: You pay at least 90% of your total tax liability for the current year through withholding or estimated payments.
100%/110% Rule: You pay at least 100% of the prior year’s tax liability (or 110% if your adjusted gross income was over $150,000).
Annualized Income Installment Method: You pay based on actual income earned per quarter, useful for those with fluctuating income.
Using a withholding strategy late in the year can help you retroactively meet these rules—especially the second one.
The IRS allows you to manipulate the timing of your withholding in several legal and creative ways. Unlike estimated payments, which must be made on specific dates, withholding is treated as if it occurred evenly throughout the year unless otherwise allocated.
Let’s say you realize in December that you underpaid by $5,000 in estimated taxes. Rather than writing a large check (and still being penalized for the missed quarterly deadlines), you might:
Instruct your employer to withhold an extra $5,000 from your year-end bonus.
Take a qualified IRA distribution, withholding the full amount for taxes, then redeposit it within 60 days.
Adjust W-2 job withholdings or issue a special payroll draw through your own company with added withholding.
All these strategies work because of the way the IRS allocates withholding.
If you operate an S-corporation or C-corporation and pay yourself through payroll, consider issuing a year-end bonus. By withholding additional federal and state income taxes, you can “catch up” on any shortfalls without incurring penalties.
Quick and easy to implement
Helps reduce estimated tax penalties
Payroll taxes are deductible business expenses
Triggers additional Social Security and Medicare taxes
Must be run through payroll and properly documented
If you or your spouse still hold a W-2 position, simply adjust the W-4 form and increase withholding for the remainder of the year. Use the IRS’s Tax Withholding Estimator to find the right amount.
Suppose you’re short $3,000 on estimated payments. Instruct your employer to withhold an extra $1,500 from your final two paychecks in December.
This one is genius—but only for those who can follow the strict rules.
Take a distribution from your traditional IRA, withhold 100% of the withdrawal for taxes, and redeposit the gross amount back into your IRA within 60 days. You’ll avoid tax on the distribution but benefit from the large withholding.
You take a $10,000 distribution on December 15 and withhold the entire $10,000. Then, on January 30, you replace the $10,000 in the IRA. Result: no tax liability on the distribution, but the IRS treats the $10,000 withholding as if paid throughout the year.
Track your quarterly payments using IRS Form 1040-ES.
Set calendar reminders for all quarterly deadlines.
Use accounting software or a professional bookkeeper to monitor income spikes that may trigger the need for additional withholding.
Coordinate with your spouse to leverage W-2 income for joint withholding.
Assuming the penalty only applies at year-end – it’s calculated quarterly.
Forgetting to account for investment income or side gigs.
Missing the 60-day window on IRA rollovers.
Not communicating with your tax advisor until tax time.
John, age 74, discovers in December that his required minimum distribution (RMD) pushed him into a higher tax bracket. He hadn’t made any estimated payments during the year. His advisor recommends taking another IRA distribution of $15,000 and withholding 100% for federal taxes. Since the IRS treats it as evenly withheld throughout the year, John avoids penalties.
Maria, who owns an S-corp, is short $8,000 in tax payments. In December, she issues herself a $20,000 year-end bonus with 40% withholding. The IRS allocates that withholding across all four quarters, helping her avoid a penalty even though the bonus was paid in December.
Kevin and Lisa both earn income—Kevin is a freelancer, and Lisa works for a large firm. Instead of making quarterly estimated payments, Lisa increases her W-2 withholding each fall. By year-end, their withholding meets the 110% safe harbor based on last year’s return.
While many withholding strategies are simple to understand, implementing them correctly requires precision. A small mistake—such as failing to redeposit an IRA withdrawal—can result in unintended tax bills or penalties.
A tax professional can:
Help you run projections using actual year-to-date income
Calculate safe harbor thresholds
Coordinate timing and documentation for strategic withholding
Provide IRS forms and instructions tailored to your tax situation
The best tax strategy is one that keeps you in control—and nothing spells control like knowing how to avoid unnecessary penalties. Strategic withholding can be a game-changer for many taxpayers, offering flexibility and forgiveness that estimated payments don’t.
Whether you’re nearing year-end or simply planning ahead, use the tips and techniques in this guide to maximize your compliance, minimize penalties, and breathe easier come tax season.
When in doubt, talk to your tax professional about how withholding can work for you.
The Tax Cuts and Jobs Act (TCJA), passed in late 2017, has reshaped the U.S. tax landscape for businesses and individuals alike. With its seventh anniversary approaching, many of the TCJA’s most influential provisions are set to expire at the end of 2025. This creates an urgent need for taxpayers to reassess their financial strategies to adapt to potential tax increases and shifting opportunities. Here’s a comprehensive overview of the changes, their impact, and strategies to mitigate potential challenges.
Expiring Provisions: A Double-Edged Sword for Businesses and Individuals
Several of the TCJA’s temporary provisions brought significant benefits but are slated to sunset in less than two years. These changes will primarily affect individual taxpayers, small businesses, and pass-through entities.
1. Lower Individual Tax Rates
One of the hallmark features of the TCJA was the reduction in individual tax rates. For example:
However, without legislative action, the pre-TCJA tax rates will return after 2025. This means a top marginal rate of 39.6%, as well as higher rates in lower brackets. Upper-middle-income earners, who already straddle narrow thresholds for higher tax rates, will feel the pinch the most.
What to Do Now:
2. Qualified Business Income (QBI) Deduction
Small business owners and self-employed individuals currently benefit from the QBI deduction, which allows a 20% deduction on qualified pass-through business income. This provision effectively reduces taxable income, providing a substantial tax savings for millions of entrepreneurs.
The expiration of the QBI deduction will raise the effective tax rate for pass-through entities significantly, making business tax planning more complex.
What to Do Now:
3. Bonus Depreciation
The TCJA’s expanded bonus depreciation rules have been a boon for businesses, allowing them to write off 100% of the cost of qualifying assets in the year of purchase. This rule has encouraged investment in machinery, equipment, and other capital assets.
However, bonus depreciation began phasing down in 2023. By 2025, the first-year depreciation allowance will drop to 40%, and it will disappear entirely after 2026 unless Congress extends it.
What to Do Now:
Permanent Provisions: Long-Term Opportunities for Taxpayers
Not all of the TCJA’s changes are temporary. Several provisions were made permanent, creating stable opportunities for financial and tax planning well into the future.
1. Flat Corporate Tax Rate
The TCJA replaced the progressive corporate tax system with a flat 21% federal tax rate for C corporations, including personal service corporations. This has made the C corporation structure more attractive for many businesses, particularly those with significant retained earnings or reinvestment goals.
Planning Tip:
2. Section 179 Expensing
Enhanced Section 179 expensing rules, including higher deduction limits and expanded eligibility, remain in place. For 2024, businesses can deduct up to $1.22 million in capital expenditures, with phaseouts beginning at $2.73 million.
Planning Tip:
3. Repeal of the Corporate Alternative Minimum Tax (AMT)
The elimination of the AMT for corporations simplified tax compliance and removed a potential tax trap for businesses with substantial deductions or credits.
Planning Tip:
Winners and Losers: The TCJA’s Uneven Impact
The TCJA introduced provisions that created clear winners and losers among taxpayers.
Winners:
1. Businesses with Significant Capital Investments:
Faster depreciation rules and expanded Section 179 limits have incentivized capital investments, such as equipment and vehicles.
2. Vehicle Owners:
Liberalized depreciation rules for passenger vehicles have made it easier for businesses to claim larger deductions on company cars.
Losers:
1. Businesses Relying on 1031 Exchanges:
The TCJA restricted 1031 exchanges to real property only, eliminating a once-popular deferral mechanism for personal property transactions.
2. Companies with High Interest Expenses:
Limits on the deductibility of business interest expenses have increased tax burdens for leveraged businesses.
3. Entertainment-Heavy Businesses:
Disallowance of entertainment expense deductions has hurt companies that rely on client entertainment as a core business strategy.
How to Prepare: Proactive Tax Planning Tips
The combination of expiring provisions and legislative uncertainty makes it imperative to start planning now. Here are actionable steps to consider:
1. Anticipate Higher Individual Tax Rates
2. Maximize Expiring Benefits
3. Evaluate Your Entity Structure
4. Plan for Legislative Uncertainty
While Congress may extend certain provisions, relying on speculative extensions is risky. Focus on utilizing known opportunities and planning for worst-case scenarios.
The Road Ahead: Tax Planning in a Post-TCJA World
The expiration of key TCJA provisions marks a pivotal moment for taxpayers. By acting now, businesses and individuals can prepare for higher taxes, optimize their deductions, and adapt to the evolving tax landscape.
Consult with a tax professional to develop a personalized strategy, and stay informed about potential legislative changes. With careful planning, you can navigate these challenges and seize opportunities for growth and stability.
As 2025 approaches, the clock is ticking—are you ready?
As we approach the end of 2024, strategic tax planning can greatly impact your business’s financial health. Implementing smart tax deductions now can lead to significant savings when you file your return. Here, we’ll discuss six practical tax strategies that can help your business minimize its tax liability and, in some cases, defer income to the following year.
One of the most straightforward ways to accelerate deductions is by prepaying certain expenses. Thanks to the IRS safe harbor rule, cash-basis taxpayers can prepay qualifying expenses up to 12 months in advance without any challenge, adjustment, or change. This means that as long as the expenses don’t extend beyond the following tax year, you can claim them in 2024.
Examples of qualifying expenses:
Illustration: If you pay $3,000 per month for rent, prepaying the entire 2025 rent of $36,000 before December 31, 2024, allows you to claim that deduction on your 2024 taxes. The payment date is what determines the deduction, not when the landlord receives the check.
If you run a cash-basis business that operates on a calendar year, delaying invoices can effectively defer income to the next year. This approach is particularly useful for service providers like consultants, lawyers, or medical practitioners.
Example: Jake, a dentist who typically bills patients at the end of each week, can hold off on sending his December invoices until January 2025. By doing so, Jake shifts that month’s income into the next tax year, reducing his 2024 taxable income.
Investing in new or used office equipment before year-end can yield substantial deductions. Thanks to Section 179 expensing and bonus depreciation, eligible purchases made and put into service by December 31 can be written off immediately.
Items eligible for these deductions include:
Benefit: This strategy can lead to a significant reduction in taxable income, allowing you to make necessary investments in your business while enjoying a tax break.
When running a business as a sole proprietor or single-member LLC, the date you charge an expense to your credit card is considered the date of payment. This means you can deduct qualifying expenses as soon as they are charged, even if you pay off the card later.
Key points to remember:
By making last-minute purchases with your credit card, you can maximize deductions for office supplies, marketing materials, or other business essentials needed for the new year.
It’s crucial to document all eligible business expenses, even if they result in a net operating loss (NOL). An NOL occurs when your deductions exceed your business income, which can be carried forward to offset taxable income in future years, providing a potential cash flow advantage down the road.
Advice: Always keep thorough records of your deductions, and don’t hesitate to claim legitimate expenses even if they create a loss. This can turn into valuable tax benefits for future years.
Qualified Improvement Property refers to improvements made to the interior portion of non-residential buildings, such as offices and retail spaces. QIP does not include structural enlargements, elevators, or internal structural framework.
Why it matters:
Deadline: To claim these deductions for 2024, improvements must be placed in service by December 31.
Implementing these tax-saving strategies can make a significant difference in your year-end finances. From prepaying expenses and delaying income to making strategic equipment purchases and handling QIP correctly, there are ample opportunities to reduce your taxable income. Keep meticulous records, consult with a tax professional for personalized advice, and take action before the year’s end to maximize your potential deductions.
Taking these steps now could be the difference between paying more than necessary or enjoying the financial flexibility that comes with effective tax planning.
The United States employs a “pay as you go” tax system, requiring individuals and corporations to make regular payments to the IRS throughout the year based on their income. Failure to meet these obligations may result in an estimated tax penalty, a non-deductible interest charged on the underpaid amount for each quarter. This article explores the nuances of the estimated tax penalty, its current implications, and strategies to avoid it.
Understanding the Estimated Tax Penalty:
Individuals and corporations face the estimated tax penalty if they fail to pay enough to the IRS during the year. The penalty rate is determined by adding three percentage points to the short-term interest rate, with the current penalty rate standing at 8 percent—the highest in 17 years. Notably, this non-deductible interest penalty can result in a net cost exceeding 8 percent due to the rise in interest rates.
Who is Affected?
Employees who have their taxes withheld by their employers need not worry about the estimated tax penalty. However, the self-employed and those receiving income without adequate tax withholding, such as retirees, individuals with dividends, interest, capital gains, rents, and royalties, and even C corporations, must be vigilant.
Avoiding the Estimated Tax Penalty:
Avoiding the estimated tax penalty is achievable through timely and strategic payments. Individual taxpayers have two options: pay 90 percent of the total tax due for the current year or 100 percent of the total tax paid in the previous year (110 percent for higher-income taxpayers). Corporations, on the other hand, must pay 100 percent of the tax shown on their return for the current or preceding year.
Quarterly Estimated Tax Payments:
To meet these requirements, most individuals and corporations opt for equal quarterly estimated tax payments. It’s important to note that the IRS assesses the penalty separately for each payment period, preventing the reduction of penalties for one period by increasing payments for subsequent periods. Even if a taxpayer is due a refund when filing their tax return, penalties for underpayment persist.
Alternate Methods for Computing Estimated Taxes:
While the majority follow the quarterly payment approach, some individuals and corporations can explore alternate methods, such as the annualized income method, for calculating estimated taxes. However, these methods can be complex, requiring a thorough understanding of tax regulations.
In conclusion, navigating the “pay as you go” tax system and avoiding estimated tax penalties is crucial for individuals, the self-employed, and corporations alike. By understanding the rules, making timely payments, and exploring alternative computation methods if applicable, taxpayers can ensure compliance with IRS regulations and minimize financial implications. Stay informed, plan strategically, and make the most of the available options to navigate the complexities of estimated tax payments in today’s dynamic financial landscape.
You may have heard on the radio, TV, and online, that you can settle your tax bill for less than what you owe. But are these claims actually true? And can you really settle your tax debt without hurting yourself in the long run?
Some of these national tax resolution firms you hear advertising offer very little service, just look at their Google and Yelp Reviews. So it’s important to know who to trust and get educated on what your options are to resolve your tax problem.
As a local expert Tax Resolution Firm ourselves serving Virginia, we encourage all readers facing a tax problem to contact us for a free consultation https://calendly.com/premiersmlbus/consult.
The truth is that though it’s often harder than they claim to settle for less than you owe the IRS, it is possible and you must first learn if you qualify for the program. This is called an “offer in compromise,” but settling is not necessarily a bad thing.
An “offer in compromise” is a negotiated settlement between the taxpayer and the IRS that is intended to help taxpayers who owe more than they can pay. In a lot of cases, you can settle your entire tax bill for a fraction of what you owe, if you qualify. You can only get one if you genuinely can’t afford to pay back taxes or if doing so would cause extreme hardship. This can apply, for example, if you have become disabled.
You have to be current on all legally required income tax returns and must be current on any estimated tax payments if you are self-employed and you can not file for bankruptcy.
The IRS would rather take an offer in compromise than send you to collections and potentially get less money. Taking an offer in compromise will NOT affect your credit score.. Having your offer in compromise accepted is a far better financial decision in the long run.
However, working out what offer to make on your own and learning the whole process can be challenging. That’s like representing yourself in a court of law without a lawyer. Not smart. A better answer is to find a tax resolution specialist that can help you with the process to see if you qualify and determine what you will have to pay. A tax resolution specialist will also be a licensed CPA, Enrolled Agent or an Attorney.
One of the great things about working with a qualified and local tax resolution firm is that you get protection from the overbearing IRS, letting you sleep better at night knowing you’re on your way towards permanent tax resolution. They can head-off any impending garnishments of your paycheck or levies on your bank account.
Settling with the IRS is a good thing and is often the best answer to dealing with your back tax bill and moving on with your life.
If you want an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. https://calendly.com/premiersmlbus/consult
If you owe back taxes to the IRS, some amount of panic is understandable. After all, the Internal Revenue Service has the power of the federal government in its corner, something no other debt collector can claim. They are considered the most brutal collection agency on the planet.
It is easy to freeze up and just do nothing when you owe back taxes to the IRS, but hiding from, or doing nothing about your tax debt will not make it go away. In fact, ignoring the taxes you owe will only make the situation worse, since interest and penalties can really add up. You also, risk having your paycheck garnished (the IRS does not need a court order to do this) or your bank account levied. The IRS can also file a Notice of Federal Tax Lien making it all but impossible to obtain financing for a car or home.
So instead of panicking about your tax debt and hoping the problem will go away, you need to take some proactive steps. Now is not the time to panic and hide – now is the time to start taking action.
Some of these steps you can do on your own if you’d like, while others will likely require the intervention of an experienced tax resolution expert. Here are some proactive steps you can take to get a handle on your tax debt. If you need help resolving your IRS tax problem, contact us here https://calendly.com/premiersmlbus/consult. We help people with IRS problems every day.
Confirm the Amount Owed
When you owe back taxes, one of the first things you should do is make sure you really owe the money. The IRS has been known to make mistakes, a lot of mistakes, and the agency is far from foolproof. Contact the IRS or have us do an IRS transcript analysis to determine the amount the IRS claims you owe.
Seek Out Deductions You May Have Missed
At the very least, you may not owe as much as you think you do, and every dollar you can remove from the bill is one more dollar in your favor. Now is the time to scour your past and current tax returns, looking for deductions and tax credits you might have missed.
Unless you are a seasoned tax expert, you will probably need some professional assistance to make this happen. If you are already working with a CPA or tax expert, you can ask them to look at your past tax returns but only a tax resolution expert, who helps people like you for a living, can protect your income and assets as you go through the process.
If you missed a few deductions and tax credits along the way, your tax professional can file amended returns on your behalf, lowering the amount of tax debt you owe – and possibly eliminating it altogether. However, you usually can’t go back more than 3 years to amend returns.
Look for Special Programs You May Qualify For
The bad news is the IRS wants its money and has the power to collect it.
The good news is the tax agency also offers several programs tax filers can use to make the repayment process easier. In some cases, the IRS may even be willing to settle for less, possibly much less, than the total amount of back taxes you owe.
These programs are not available to everyone, and if you have the resources needed to pay your back taxes, the IRS is unlikely to give you much of a break. But if your resources are limited, the tax agency may decide that a small amount of tax repayment is better than none at all.
The first step in the process is finding the programs for which you might qualify, and that will probably require the help of an experienced tax resolution expert. Most CPAs do not have this experience. Negotiating with the IRS is not an easy thing to do, and you may need help to drive the best bargain and reduce your back taxes. In the end, it may be well worth paying a tax relief expert to negotiate on your behalf, especially if you end up with a much lower tax bill.
It is easy to panic when you owe back taxes, but you should not let fear get in your way. The longer you ignore the problem, the worse it is likely to get, and the sooner you act, the better off you, and your finances, will be. There is a solution to every IRS problem. Let us see what IRS tax debt settlement programs you qualify for today. https://calendly.com/premiersmlbus/consult
Working at a tender age is an American tradition. What isn’t so traditional is the notion of kids contributing to their own IRA, especially a Roth IRA. But it should be a tradition, because it’s a really good idea.
Here’s what you need to know about IRAs for kids. Let’s start with the Roth IRA option.
Roth IRA Contribution Basics
The only federal-income-tax-law requirement for a child to make an annual Roth IRA contribution is to have enough earned income during the year to cover the contribution. Age is completely irrelevant.
So if a child earns some cash from a summer job or part-time work after school, he or she is entitled to make a Roth contribution for that year.
For both the 2021 and 2022 tax years, your working child can contribute the lesser of
While the same $6,000 contribution limit applies equally to Roth IRAs and traditional IRAs, the Roth option is usually better for kids.
Key point. A contribution for your child’s 2021 tax year can be made as late as April 15, 2022. So, there’s still time for that.
Modest Contributions to Child’s Roth IRA Can Amount to Big Bucks by Retirement Age
By making Roth contributions for a few years during the teenage years your kid can potentially accumulate quite a bit of money by retirement age.
But realistically, most kids won’t be willing to contribute the $6,000 annual maximum even when they have enough earnings to do so.
Say the child contributes $2,500 at the end of each of the four years. Assuming a 5 percent return, the Roth account would be worth about $82,000 in 45 years. Assuming an 8 percent return, the account value jumps to a whopping $259,000. Wow!
You get the idea. With relatively modest annual contributions for just a few years, Roth IRAs can be worth eye-popping amounts by the time your “kid” approaches retirement age.
If you would like to discuss earned income and IRS options for your child, please call me on my direct line at (757) 410-8030
If you are running a small business, you have one unwanted partner that will dig into your pocket every year, it’s the IRS. The IRS wants to know what you are doing, how much you are earning and most importantly how much you are paying in taxes, and the tax agency is becoming increasingly aggressive in this regard. While the audit rate for individual returns has been hovering at far less than 1%, the audit rate for small businesses can be as much as 10 times higher.
It does not matter if you operate as a sole proprietor and use Schedule C to claim your income or if you are set up as a C-corp, S-corp or LLC – the IRS is watching what you do, and if they think you are not paying your fair share they will certainly come calling. When that demand letter from the IRS arrives, knowing what to do next can make all the difference, and the more you educate yourself the easier it will be to deal with, and eliminate, the tax debt.
Note: As a tax resolution firm, we always recommend that you reach out to a professional who knows how to aggressively negotiate and defend you against the IRS on your behalf. If you owe back taxes or are under audit, our firm can help negotiate with the IRS and potentially settle your tax debt. Call us today. Our tax resolution specialists can navigate the IRS maze so that you have nothing to worry about. Set a meeting here.
Small business owners are increasingly the target of enforcement efforts by the IRS, but the IRS does have some programs in place to make paying what those business owners owe easier. In some cases those small business tax relief and tax resolution programs let you settle for less than what you owe but qualifying is not as straightforward as you might think.
For businesses that may be eligible, the assistance of a tax resolution specialist is absolutely critical. These experts can help guide you through the process and make sure you qualify, so you can rest a little easier and get back to building your business.
Payment Plans/Installment Agreements
If the amount your small business owes to the IRS is relatively small and you do not want to deal with additional hassles, it may make sense to pay the entire bill in full. If paying in full would be a hardship, the IRS does offer payment plans, and setting one up can make paying back what you owe easier and more financially palatable.
Keep in mind that interest will continue to accrue while the debt remains outstanding, and that is something to think about.
Offer In Compromise
If you’re under a lot of financial hardship, it may make more sense to try for
an offer in compromise (OIC), a special IRS program that could allow you to pay back less than you owe.
The offer in compromise program is a popular one with individual taxpayers and small business owners. If paying the entire amount would create a financial hardship for you, your family or your business, a tax resolution specialist can help you make the case to the IRS that you deserve a break.
What’s the best option?
Each of these options has its pros and cons, and it is important to understand how these programs work and who qualifies to use them. If your small business is in trouble with the IRS, taking the right action right away could reduce the amount you owe, give you some breathing room and allow you to focus on your clients – not on your taxes.
Running a small business has its challenges, but those difficulties are nothing compared to the stress and anxiety small business owners feel when dealing with the IRS. With so many small business owners now in IRS crosshairs, it has never been more important for freelancers, gig workers and the self-employed to have an advocate in their corner.
If you find yourself on the wrong end of an audit, a tax bill or an enforcement action from the IRS, the steps you take next are absolutely critical. Trying to take on the IRS on your own is a dangerous, and potentially expensive, thing to do, and you should always contact a tax resolution firm.
By working with an expert, you can gain access to vital information about small business settlement programs the IRS offers. You can gain access to the expertise you will need to settle your tax bill for less than you owe and get back in the good graces of the IRS. Time is of the essence when the IRS comes calling, and with the interest and penalty clock ticking you do not have one second to waste. So call us, your tax resolution expert, for a case evaluation. Set a meeting here.
If you hire an employee for your Schedule C business, you can qualify for several valuable tax credits. Each credit is different, and certain limitations apply to all or most employer tax credits. Remember, tax credits are the best. They beat deductions. Note the difference below (using the 32 percent bracket):
Many tax credits are not available if you hire a person related to you, including children, stepchildren, a spouse, parents, siblings, step-siblings, nephews, nieces, uncles, aunts, cousins, or in-laws.
Eight Valuable Tax Credits for Business Owners
Below are listed the eight non-refundable tax credits that Schedule C business owners can claim when they hire employees.
The second option is more realistic for smaller businesses. Businesses often partner with childcare companies such as the Learning Care Group, Bright Horizons, and KinderCare to offer this benefit.
Key point. You might be surprised which places the government designates as having high poverty and unemployment. It’s worth checking out.
You can claim a credit equal to 20 percent of the first $15,000 in wages you pay to full- or part-time employees who both live and work in an empowerment zone.
Thus, the maximum credit is $3,000 per employee (20 percent x $15,000). The employees must work for you for at least 90 days.
If you would like to discuss how to take advantage of these or other tax credits, please call us at 757-410-8030.