Do you know what the minimum wage is for your state? Federal minimum wage requirements are enforced by the department of labor, but there often state requirements as well and who enforces these depends on the state your employees are located in.
Would your business be safe from the reclassification of independent contractors to employees if the IRS or Department of Labor (DOL) decided to audit your use and classification of independent contractors? As the cost of having employees has increased over the years, more and more businesses are trying to avoid those costs by replacing services performed by employees with services provided by independent contractors. However, simply calling someone an independent contractor does not necessarily make them an independent contractor.
Misclassification can become very expensive when challenged by the IRS or the DOL. The result can be responsibility for uncollected taxes, penalties, even disallowance of pension plans and health insurance costs.
To help you better understand the proper classification of independent contractors and employees, we have just released a new publication “Can You Pass an IRS or DOL Audit of Independent Contractors vs. Employees?” It’s available free. To download a copy, simply click here.
First time home buyers can take up to $10,000 from an IRA without being subject to the 10% early withdrawal penalty. Beware that this exemption to the early withdrawal applies only to IRAs and not to 401(k)s or other retirement plans. This was recently confirmed by the U.S. Tax Court in the following case (Soltani-Amadi, TC Summary Opinion 2019-19).
If you don’t have an IRA but do have a 401(k), or another employer plan, all is not lost. All you have to do is set-up an IRA and roll $10,000 from the employer plan you have to that IRA before you make the distribution. But be careful. You have to be sure the rollover is made before the distribution. If you are under 59½, doing this could save you $1,000.00 in early distribution penalties.
For help with this or any other tax strategy, just give us a call.
By: Steven J Weil, PhD, EA, President RMS Accounting
Did you know that the IRS can have your U.S. passport revoked if you have delinquent tax debt of $52,000 or more? The Fixing America’s Surface Transportation Act (FAST -P.L. 114-94), enacted on 12/4/2015, gave the IRS the authority to have the passports of those with seriously delinquent tax debt revoked.
The good news is that if your address is up to date with the IRS, you should receive a letter notifying you of the IRS’s intent to request that the U.S. Department of State revoke your passport. That means that you won’t have to face finding that out when trying to reenter the country from a business trip or vacation.
To prevent the IRS from taking this action, you can pay the tax or (if this is not possible) enter into an installment agreement and make payments over time.
For more information see IRS Information Release IR-2019-141 or call us at 954-563-1269.
By: Steven J Weil, PhD, EA, President RMS Accounting
School Won’t Teach Your Children About Money. That’s your job as a parent, and if you fail at it, or just avoid it, your children will lack the skills to be successful adults. Worse yet, they might just end up living in your house until the end of time.
When do you start teaching them that money is a tool and how to deal with it? For my wife and I, the lessons started early when our children were in elementary school. In those days, money was tight and we had to spend wisely, which meant the kids could not have everything they asked for every time we went to the store. We needed a way for them to understand that buying things was about choices.
Our solution was the creation of the “Bank of Mom and Dad.” Each week they got an allowance, and it was deposited to the Bank of Mom and Dad. We kept running balances for each child, and when they wanted us to buy them something at a store, we would tell them how much they had in the bank of mom and dad. If they had enough, they could buy it with their money. If not, they could save up for it, and buy it when they had enough money.
An interesting development was that often, if they had to spend their own money, they did not think it was worth it. This had never occurred to them when they were spending our money.
Over the years the amounts they received increased, and they had chores to do in order to earn some of the money that ended up in their accounts. At age thirteen, we opened real checking accounts for them. They could not sign, of course; but they had checkbooks and had to keep track of how much was in their account as well as learn to write checks and record them. They also became responsible for more of their expenses, such as school supplies, school lunches and other small items.
I will never forget the look on my oldest son’s junior high school band teacher when she told me that he needed a band uniform and the cost was $25.00. I told her that he had his own money and that it was his responsibility, not mine. She looked even more surprised when the kid got out his checkbook.
Yes, our children learned early about money, and they did not all learn at the same rate. My oldest saved his money and bought a TV for his bedroom while his sister, just a year younger, bought toys and junk until she realized that she could not buy a TV since she had not saved her money.
All three of my children are now self-supporting with high credit scores and their own homes. They range in age from 24 to 31 and understand the importance of work and money management.
All three went to college on a budget where they controlled their own money (and some that their parents contributed) so they had to make tuition payments, pay for housing and food, dating and other personal expenses. They knew that running out of money was not an option. They were expected to budget for their expenses, and they knew how to do that.
I am proud of all three of my children and hope that they will pass on the knowledge they gained about money to their children. I know that the ability to deal with money is one of the best things I did for them, and it gave them a skill that many of their friends don’t have.
If you want to know more about The Bank of Mom and Dad drop me a line at steve@RMSAccounting.com.