The Purser's Office

Change to Earned Income Tax Credit Program

AdPursermin — Fri, 03 Sep 2010 15:20:10 +0000

Originally, the Earned Income Tax Credit was designed to assist single-earner families with their cash flow. The program reduced an employee’s federal income tax withholding. In effect, it gave the employee more cash without impacting a firm’s bottom line. The process wasn’t without paperwork.

Employers had to account for the tax credits, to keep supporting documentation, and to reconcile their filings. While public interest groups advertised the program, employers often did not know its benefits.

The IRS started automaing the annual process, with their computers determining elegibility, tax refunds, etc. Next year, the paycheck option disappears. Eligible families will not have the ability to have more disposable income with their pay check. Instead of providing relief for household expenses, the program shifts to end of year purchases of major end items.

Electronic payments common sense

AdPursermin — Tue, 29 Jun 2010 14:44:24 +0000

Do you have a payroll, investment, or insurance company pull tax payments, employee wages, investment funds, or insurance payments from your corporate bank account? Instead, set up an interest-bearing subsidiary account with your bank & transfer funds from your master account to the subsidiary before the payment due date.

Mistakes or fraud could wipe you out if your master account is drained. Fraud – technology is out there for thieves to wash the ink or toner off a check and to replace it with a much larger number. A half million dollar check might just clear your master account, but will bounce in a subsidiary. A bounced big check draws law enforcement faster than a cleared check.

Mistakes – you change insurance policies but forget to tell the previous company to stop collections. A computer crashes and restarts at the beginning of a client-withdrawal cycle. Mistakes are endless, but having a subsidiary account prevents serious damage. A double charge will not be collected.

Often payments are not due the date of funds deposit. Investment funds often have a 30 day window, payroll taxes may be accruing for 60 or 90 days before being due. By having the funds in an interest bearing subsidiary account, payments are reserved, visible, and cooking interest.

Why not pay employees on a 1099 basis?

AdPursermin — Tue, 30 Mar 2010 18:26:54 +0000

Why not pay employees on a 1099 basis? It saves you paying taxes, workers comp insurance, unemployment insurance, all you have to do is… Sounds familiar? Another All- You-Have-To-Do trip.

The IRS joined with the Department of Labor to audit firms with 1099 employees. They are looking for firms with 5 or more 1099 employees earning more than pocket money. When they find one, its compounded, interest, fines & penalties to the earliest day a similar person was hired. Then it’s a multiplier of number of employees in that job, overtime reviews, referrals to state agencies for more all expense trips, etc.

Additionally a disgruntled employee may complain to the IRS that he was misclassified; IRS Form 8919. That form cuts his self-employment tax in half, and encourages the IRS and Dept. of Labor to start their engines.