Attention Employees: This is the blog I promised you.
Here is a list of the important forms you need to know when you’re an employee. Always check with your tax adviser before filing!
You are required to attach your W2 to your tax return when you file this important once-a-year tax form. Every year you have the chance to “look yourself in the eye” and sign your tax return under penalty of perjury that it is correct and accurate.
If you don’t already have your W2 for 2012, you should be getting this important form very soon. Employers are required to issue their W2 forms by January 31st.
Common Issues
Did you move since you were first employed? Does your employer have your correct current address?
Did your employer go out of business during the year? Did they pay their accountant in advance to issue the year-end W2 forms? They probably did not.
On payday did you get a paystub showing the cumulative, or year-to-date income earned and taxes withheld? Did you keep track of these numbers yourself? Most people won’t but it is a good idea.
Did you have more than one job during the year? Do you have a W2 from EACH of your jobs? You must report your total income from all taxable sources. What can you do if you don’t have this required for filing form?
What if the W2 Doesn’t Arrive?
If you have not received your W2 by February 14th, you can call the IRS for assistance. When you dial 1-800-829-1040, be prepared to wait on hold. It could be a long wait. This is a toll-free number and they get a lot of callers.
The assistor at the Internal Revenue Service will ask you for your name, your address with zip code and your social security number. Remember YOU called them. Do NOT (NEVER!) give this confidential information to any one who calls you. Protect your identity. IRS will also ask for your employer’s name, complete address, phone number and your dates of employment. IRS will contact your employer for you (if that is possible) and will request the missing form for you.
Form 4852, Substitute for W2, was designed for just this purpose. When you call the IRS to request their help, they will send you this form. There are blanks for you to fill in your wages and withholdings. It will ask you how you determined the amounts you are entering. It will also ask you to describe what you did to try to obtain your W2.
Always Check It!
If you did receive a W2, was it correct? If you think it was not correct, contact your employer and request a corrected one, a W2-C.
If you filed your tax return using Form 4852 and then received a W2 or W2-C showing different amounts, then you must file Form 1040X to amend your return. This amendment may result in you owing more tax or it may result in you getting a refund. Consult your tax professional for help filing this more complicated form.
Always to your lowest legal tax,
Nellie T Williams, EA
0
December 31st marked the end of the fourth quarter of the calendar year. Not only do you have the fourth quarter employers reports due by January 31st. You also must give your employees their W2 forms by January 31st.
You must also give any independent contractors their Forms 1099 Miscellaneous by January 31st. Caution: Do NOT make the costly mistake of treating an employee as an independent contractor! Attention Employees – the next blog is devoted to YOU!
In addition to the W2 forms given to the employee, you must also send a copy to Social Security Administration (SSA) with the transmittal Form W3. If you withheld state taxes for the benefit of your employee, you must also send a W2 copy to your state (with your state’s W3 equivalent). Form W3 must be filed with SSA by the last day of February. I tell my employer clients there is no penalty for filing early. If you file the W3 at the same time as you issue the W2 forms, you are more likely to file it on time.
Most employers file the quarterly report Form 941 to report the taxes withheld from the employees’ paychecks. The taxes withheld include the employees’ federal income taxes, Social Security taxes and Medicare taxes. PLUS the employer matches the Social Security and Medicare taxes. If you are self-employed you are considered both employer and employee and you pay the full 15.3 percent of earnings.
IMPORTANT NOTE: The 2% “Payroll Tax Holiday” that employees enjoyed these past two years expired on December 31st. Effective January 1, 2013 the employees’ responsibility for Social Security and Medicare taxes returns to 7.65 percent of their wages. Medicare taxes are withheld on every dollar of pay, but the 2013 maximum earnings subject to Social Security tax is $110,100 for both employees and self-employed people.
According to the IRS, “Employers should start using the revised withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2013, but not later than February 15, 2013. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in workers’ pay as soon as possible, but not later than March 31, 2013.” So we have a little grace period here to “catch up” on the proper amount that should be withheld beginning January 1st.
You may be a small employer that has been given permission from the IRS to file an annual Form 944 instead of the quarterly Form 941. Form 944 is due by January 31st for the preceding calendar year wages paid.
In addition to Form 941 (or Form 944), Forms W2/W3 and state equivalent forms, you must also file (and pay) by January 31st, your 4th Quarter state income tax withholding report, file (and pay) your 4th Quarter state unemployment tax report, and file (and pay) your annual federal unemployment tax report Form 940. Unemployment tax is generally paid on the first $7000 of wages paid to a covered employee. Remember to take into account any deposits you made during the earlier quarters for federal unemployment taxes.
To recap:
By January 31, 2013:
1. File Form 941 for the 4th quarter 2012 OR Form 944 for the whole year 2012
2. File your state’s 4th Quarter 2012 income tax withholding tax reports
3. File your state’s 4th Quarter 2012 unemployment tax report
4. File Form 940 for the whole year 2012 federal unemployment tax report
5. Give Forms W2 to your employees
6. Give Forms 1099 to your independent contractors
By February 28, 2013 :
1. Send Form W3 with Copy A of all Forms W2 to Social Security Administration
2. DO not mail the W3/W2 to IRS, it goes to SSA
3. Mail Form 1096 with IRS copy of Forms 1099 to the Internal Revenue Service.
4. 1096 is the form that goes to IRS
5. I’s OKAY to file these transmittal forms in January. You don’t have to wait till February 28th.
Always to your lowest legal tax,
Nellie T Williams, EA 
January is the time of year when Americans start thinking about their tax returns. You may not do anything about it yet. But you start thinking about it. Television ads bombard us 24 hours a day.
Have you always gotten a refund? Are you going to get a refund again this year? Or will you owe taxes? Again?
One way to know for sure is to get all your tax documents together and do a “forecast” of your results. In order to have an accurate picture you’ll need to have as much of your information as you possibly can.
January 31 is the deadline for many of your “Important Tax Information” reports to be mailed to you. You may even have received some of them early. They truly are important for you. And they are important to the IRS.
IRS gets copies of these forms too. And if you happen to forget to include income on your return, IRS will certainly be contacting you.
W-2 is THE key form for employees. You need to report the wages you earned from each employer you worked for during the year. This form also reports the income taxes withheld from your earnings and other important information.
1099-MISC is THE key form for independent contractors or business owners. Much like the W-2 for employees, this is the form that businesses report total yearly payments of $600 or more to workers who are not considered employees. If you think you are an employee and get a 1099-Misc instead of a W-2, I’d like to consult with you. If your business has taken the steps to become a corporation or partnership, you may receive a W-2 or a K-1.
Form K-1 is used by various entities to report earnings and other tax return related information. S-Corporations, Partnerships, Trusts and Estates use this form to “pass through” income and expenses to owners, partners and heirs. Your tax return cannot be completed until this K-1 is reviewed. If the business has filed an extension of time to file the business return, you may not get this form until close to, or even after, the April filing deadline for individual returns. If this is the case for you, you will need to file an extension for your individual tax return.
1099-INT is sent to you when you earn $10 or more interest on a bank account or certificate of deposit. You should get one of these forms for each account that generated enough interest. If you have more than one account at a single branch, they may report each account separately on a single statement. Some banks show each account and provide the total earnings for all accounts. Whether or not you withdrew the interest, or had it in your hot little hands, this is taxable income that must be reported. If you earned less than $10 you are still required to report the interest earned, you just won’t get the Form 1099-INT to remind you. In this case, you’ll need to check your account statement that includes December 31st.
1099-DIV reports to you earnings of $10 or more in dividends paid on stocks, bonds and mutual funds. Like 1099-INT, you are responsible to report all earnings even if you had less that $10 and do not get this form. 1099-DIV also includes capital gains paid on these investments. These capital gains are for activity within you account, not for the sales of stocks from your account. Both ordinary dividend and capital gain dividend numbers are important in calculating your proper tax. Your tax professional will see that you don’t overpay your tax.
1099-B reports your sale of stocks, bonds or mutual funds. You receive Form 1099-B from your broker or mutual fund company. This form can be one page or multiple pages depending on the size of your account. For each sale this report will tell you the name of the stock or fund account, how many shares were sold, the date of the sale and the sales price. Some brokers issue a preliminary report to meet heir February 15th deadline to issue this Form 1099-B, but they will tell you to expect a corrected or final statement later in the tax season. Provide EVERY page of this report to your tax advisor.
1099-G is issued by states when you receive a tax refund of state or local taxes. This refund may or may not be fully taxable to you. Consult with your tax advisor. A separate form of this same number will also report unemployment benefits paid to you. Unemployment benefits received are income taxable and must be reported on your tax return.
1099-R is used to report distributions paid to you from your pension plan, your retirement plan or our Individual Retirement Account or IRA. If you have a distribution that is not taxable, it must still be taken into account in filing your proper tax return.
1099-C reports Cancellation of Debt income which must be reported on your tax return. This income may or may not be taxable to you. It can be issued because you were unable to pay a debt, perhaps credit card or mortgage debt. Be sure to share this information with your trusted tax advisor.
W-2G is used to report Gambling Winnings. There are different reporting requirements depending on the type of game you won. Just because you were the WINNER does not mean are ahead “of the game.” and had a profit. It means you had a WIN. To avoid an IRS inquiry, report ALL gambling winnings, whether or not you received a W2G. See my blog on Gambling Winnings and Losses for more information.
The US Tax Code states all income is reportable except that which is specifically exempt from tax. Protect yourself from IRS audit by reporting all of your income.
Many Happy Return$,
Always to your lowest legal tax,
Nellie T Williams, EA 
FIRST: Do you use your car for business? If you have not already done so, go out right now, or as soon as safely and reasonably possible, make a note of your odometer reading.
Why? Because if you do this like I do, every New Year’s Day, you will have an accurate reading of your car miles at the very BEGINING of the year. This beginning reading is also the reading for the END of the previous year. This will allow you to prove the TOTAL number of miles driven on your car. And then each trip you drive for business purposes you will enter into your AUTO LOG, the date, where you went and the number of miles driven to get there. Remember, commuting is not deductible.
(as soon as possible). Set up your account to generate statements on the last day of each month. Keep your bank statements for EVERY MONTH so you can match your business income with your bank deposits. It will also allow you to see the debits, the checks written. You will have a clear picture of your money in and your money out.
THIRD: 
get their copy of your W2s and your 1099 forms. If you are a homeowner and pay a mortgage, you should be getting a Form 1098 showing how much interest you paid on your mortgage. Do you have interest and dividend income? If so, you’ll get a 1099INT or 1099DIV. If you bought or sold stocks, you will get a statement from your broker. Depending on the size of your portfolio, this statement can be many, many pages per account.
Your tax adviser is going to want you to bring EVERYTHING in to your appointment. If they are good, they want to save you money just like I do.
Always to your lowest legal tax,
Nellie T Williams, EA
This is the end of the year, not the end of the world. I thank my God every morning I awake.
Before we rush away from this festive season, I hope you all had a very Merry Christmas, a happy holiday, and I wish you all a very happy New Year!
Time marches on whether we plan for it or not. And TOMORROW is THE last business day of the year!
Did you ever play the game “telephone” as a child? Do you know you might still play it today? I’m not talking about gossip. I’m talking about misunderstanding.
One person hears something and shares it with someone else. That person shares what they think they heard and by the time you get to the end of the “line” the last story bears no resemblance to the original story.
Tis the season for gifts. Are you a gift giver? Is your gift giving deductible?
I have talked before about contributions on my blog in 
Did you buy a ticket? Did your ticket win? It’s all that was on the news lately!
I live in Arizona. One of the two BIG winning Powerball lottery tickets was sold right here in Fountain Hills. I’ve been past that corner many times. But the winner does not live in Arizona. He lives in Maryland. (We saw him verifying his ticket on the TV news.)
There are more than the two big winners. I don’t know how many smaller winners there are across our nation. Powerball is a multistate lottery game. It is played in 42 of our 50 states plus the US Virgin Islands.
$508 Million. FIVE HUNDRED AND EIGHT MILLION DOLLARS!!! How many hours would you stand in line to buy a ticket? Some people from California and from Nevada and stood in line over three hours just to get inside the little store on the border that sells the tickets. We play Powerball in Arizona, but they don’t offer this game in those neighboring states.
When you see that word do you smile knowing it is one of the few words with three double letters in a row? Or does it make you shudder?
Do you think, oh, “I’m not good with numbers, I’m not good at math.”? Do you realize that is just a mindset? You can change your belief about yourself and your abilities.
Numbers don’t lie. When you know your numbers you can make better decisions. You can make better business choices. Are you spending too much money on one thing and not enough money on another? Are you devoting enough money to marketing to help your business grow and thrive? Are you wasting your money on something else that is not returning enough of a benefit?
All of these questions can make your head spin. But I have some great news. And in line with Bullet Proof Your Taxes, good bookkeeping can help you Bullet Proof Your Business, too. I heard it said that building a business is a lot like building a house. You need planning. And planning to set up your bookkeeping system for profits can help you protect against a tax audit, too.