Can You Establish a SEP Plan if you are a Sole Proprietor? What if that Sole Proprietorship Had Historically Passive Income?

Regardless of their nature or topic matter, off beat questions are one of the spices of life. When it comes to the realm of taxation generally speaking the answers frequently distill down to – it depends. These two questions were asked of me on my last trip to New York City and I couldn’t restrain…

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Worker Classification & the Colorado Department of Labor & Employment CRS 8-70-115

This post is about my experiences with C.R.S. 8-70-115 as they pertain to the Colorado Employment Security Act of 2013.  First off let me start by saying that there are some really good hard working bureaucrats paid by our tax dollars working inside the Colorado Department of Labor & Employment.  Unfortunately like most all organizations for every…

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IRS Publication 503 – Dependent Care Expenses

A taxpayer came to me today for verification on dependent care expenses. Their basic profile may be similar to yours. A husband and wife with two children in day care. The wife is a full time student that does not work outside of the house. The husband was laid off from his former job and…

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New IRS Form 8952 – Voluntary Worker Classification Settlement Program

I received an interesting call today from a small business employer who was reported to the IRS by a disgruntled past worker who claimed that he was paid as an independent contractor (and received IRS Form 1099) when in actuality he believed himself to be an employee (that should have received IRS Form W-2) for…

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How to Classify Worker – Independent Contractor or Employee

The IRS uses the common-law factors listed below to determine whether a worker is an independent contractor or an employee. All the factors below must be taken into consideration in determining worker classification Instructions. An employer should not tell an independent contractor how to do a job. Training. An employer should not provide substantial training…

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Tax implications of unemployment benefits

Taxpayers who received unemployment benefits in 2009 are entitled to a special tax break when they file their 2009 federal tax returns. This tax break is part of the American Recovery and Reinvestment Act of 2009.  Here are five important facts the Internal Revenue Service wants you to know about your unemployment benefits. Unemployment compensation…

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IRS Publication 4128 – Tax Impact of Job Loss

IRS Publication 4128 Tax Impact of Job Loss was released in August of 2009. The publication explains the job loss tax issues connected to severance pay, unemployment compensation, pension plans, IRAs, expenses for a job search, and possible moving costs. It also discusses self-employment issues for the newly unemployed. The IRS provides the following information to assist…

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Unemployed Tax Ramifications

The loss of a job may create new tax issues. Severance pay and unemployment compensation are taxable. Payments for any accumulated vacation or sick time also are taxable. You should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time. Public assistance and…

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