Small businesses need to pay federal unemployment taxes, known as FUTA tax. These taxes fund the federal oversight of unemployment programs in all 50 states, plus US territories. FUTA is paid quarterly, although there are exceptions. This article leads you through FUTA, how to calculate and pay it, and how to file IRS Form 940,…
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IRS Form 1099 Reporting for Small Business Owners in 2020
As of 2020, businesses are required to send copies of Form 1099-NEC to the IRS and contractors if they pay $600 or more in compensation to non-employees throughout the year. In prior years (2019 and before), this was reported on 1099-MISC. Form 1099-NEC is due Feb. 1, 2021 to report payments made during the 2020…
Top 20 Realtor Tax Deductions
Independent real estate agents have several potential tax deductions available to help them lower their taxable income, which could put them in a lower tax bracket and save money. To find out which tax bracket you fit into before deductions, download our 2019 Federal Income Tax Bracket charts. If you’re in a bracket with a…
Home Office Tax Deduction: What It Is, the Formula & How to Qualify
If you work from a home office, you may qualify for a tax deduction. For example, if you use 15% of your home as an office, you can write off up to 15% of your household bills like utilities, insurance, and general repairs. It is easy to qualify for the deduction, but you need to…
Payroll Taxes and Employers: What Employment Taxes Are You Legally Responsible For?
As you consider hiring employees to help with your business, you’ll need to take into account the additional employment tax responsibilities that come along with it. You need a good grasp of what your business and your employees are responsible for paying. Legally, you’re the collector and gatekeeper of both payroll and income taxes, and…
Section 179 Deduction for Property, Equipment & Vehicles
The Section 179 deduction allows business owners to immediately deduct up to $1,020,000 of the cost of qualifying property and equipment purchases for the 2019 tax year. The advantage of the deduction is you immediately receive the tax savings from an equipment purchase rather than gradually saving taxes through depreciation in future years. What Is…
IRS Schedule C Instructions Step-by-Step
Schedule C, also known as “Form 1040, Profit and Loss,” is a year-end tax form used to report income or loss from a sole proprietorship or single-member LLC. You must file a schedule C if the primary purpose of your business is to generate revenue/profit and if you’re regularly involved in your business’s activities. Schedule…
IRS Business Expense Categories List [+Free Worksheet]
Due to the vast number of industries that exist, it is impossible to list every single business expense. However, there is a comprehensive list of common IRS business expense categories applicable to most businesses. In addition, streamlining the process of tracking your business expenses will ensure that you don’t miss out on any tax deductions….
Standard Mileage Rate for 2019 and 2020
If you use your vehicle for business, medical, or charitable purposes, you may qualify for a tax deduction. The deduction is calculated based on a mileage rate times the number of miles you drive. You must keep accurate records of your miles to qualify for the standard mileage rate deduction. Mileage Rate for 2019 The…
Small Business LLC Taxes & LLC Tax Returns (+ Free Checklist)
LLC taxes are generally reported as a sole proprietor (one owner) or a partnership (multiple owners). Sole proprietors and partnerships are flow-through entities, so the income is taxed on the owner’s tax return. However, it may benefit you to elect for your LLC to be taxed as a C corporation or S corporation. Limited liability…
Self-employment Tax Rates 2020 & Step-by-Step Instructions
Self-employment tax rates have remained constant for many years, but the amount of income subject to the tax increases slightly every year for inflation. Self-employment tax is the equivalent of payroll taxes paid by employees and is due on income earned by sole proprietors, freelancers, and independent contractors. Self-employment tax is due regardless of whether…
Form 1065 Instructions in 8 Steps (+ Free Checklist)
Partnerships and certain LLCs must file Form 1065 every year to report their income and expenses. Income and expenses reported on Form 1065 flow through to partners and are taxed on their tax return. While Form 1065 does not generate a tax liability, it is very important to complete it on time and accurately. The…