Taxpayers receiving certain types of income typically reported on certain Forms 1099 and W-2G may need to have backup withholding deducted from these payments. Here are three tips to help taxpayers understand backup withholding:
1. Backup withholding is required on certain non-payroll amounts when certain conditions apply.
The payer making such payments to the payee doesn’t generally withhold taxes, and the payees report and pay taxes on this income when they file their federal tax returns. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income.
2. Backup withholding is set at a specific percentage. For 2020, it is 24 percent.
Payments subject to backup withholding include:
As more and more Baby Boomers are caring for elderly parents, the question often arises: “Can I claim my parent(s) as dependents on my taxes?” The answer to that is, “It depends.”
The IRS does allow parents to be claimed as dependents if certain requirements are met. The IRS always has requirements.
To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover 51% or more of their support costs. These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs. Read More
Have you suddenly become the unhappy target of an audit for allegedly under-reporting income to the IRS? Maybe you did under-report. Maybe you didn’t. Whether you did or not, your tax returns have waved some red flags at the IRS and you are now in their line of sight.
With the economy in the slump it has been for the last several years we are seeing more clients in financial straits. One of the most prevalent results of this economy is repossessions and foreclosures being on the rise. Over the next several days I will explain the ins and outs of this process and how it effects your income taxes.
Let’s start with some definitions:
A foreclosure is the legal process by which a lender deprives the debtor of the property that the loan is secured by. Foreclosure is most often seen in reference to a mortgage on real property. And when talking about foreclosures in this text, unless otherwise identified, you Read More
Phil Mickelson has been roundly castigated for daring to comment on the amount of taxes he pays. He calculates it at 63 percent. Others have said that he really only pays 53 percent (btw, I note that KPMG is his sponsor — couldn’t they tell him what percent of tax he pays?). Others say he should stop the “whining.” Apparently, it got so bad, he felt he had to issue an apology.
Where have we come to as a country that a person can’t complain that more than 50 percent of his income is skimmed by the government?
How Much Is Too Much?
Let’s go with 53 percent as the correct number. That’s just the tax on income. It doesn’t take into account sales taxes, property taxes, fuels taxes, and the list goes on. How much is too much? And what about the “tax” imposed on individuals and companies that must hire accountants (like PJCo) just to help them navigate the complicated tax world. It’s really getting to be ridiculous.
Federal taxes account for the biggest bite when it comes to income taxes. But state income taxes are a significant part of the overall income tax picture. And it’s not all about rates either. State income taxes present a much bigger level of complexity than the federal. Individuals and businesses have to also figure out where they should be filing tax returns. They may have nexus in another state by virtue of their own travels or by employee activities or even by Read More