Author Archives: Don R Walker

Are bookkeeping and accounting the same?

Close-up of accountant's desk.

Finding the Right Financial Help

Any business owner has bookkeeping to be done, and eventually, they need accounting services. From a non-financial aspect, you may wonder what is the difference between the two, it’s all numbers, right? As a business owner, it is important to know the difference between bookkeeping or accounting and the difference of the services provided. 

A “simple” way to define the difference between bookkeeping and accounting is the responsibilities. A bookkeeper is responsible for recording a company’s financial transactions, usually on a daily basis. An accountant is responsible for classifying and interpreting the financial data the bookkeeper has provided. The accountant has further duties that include analyzing, summarizing, and reporting that financial data provided from bookkeeping to accounting.

What makes bookkeeping different?

Basically, where bookkeeping ends, accountancy begins. The bookkeeping duties include classifying and entering the daily financial transactions for the company. This includes paying the bills, recording daily sales, and processing payroll. When it comes to the accounting rolls, there isn’t a definitive line, as both positions have some crossover in duties. 

The accounting process often requires the accountant to correlate and indemnify the bookkeeping records where the bookkeeper has recorded the company’s transactions. The accountant will review the records and statements and to expedite the analytical interpretations. An accountant typically has a bachelor’s degree in accounting whereas a bookkeeper often has on-the-job training, sometimes with higher-level education. 

Who does bookkeeping?

A bookkeeper is responsible for overseeing the financial data of a company. They make sure that the company complies with local, state, and federal laws by maintaining accurate books for accounts payable, accounts receivable, and payroll, in addition to the daily financial records. For a bookkeeper, the difference between bookkeeping vs record keeping is a matter of daily record-keeping for the bookkeeping process that will be handed over to the accountant. 

The bookkeeping duties include maintaining the daily entries and reconciliations in a general ledger format, which today all is computerized bookkeeping with excel or other types of bookkeeping software.

Why Bookkeeping Matters

If an accountant is needed to finalize the financial transactions of a company, is the bookkeeping process important? Bookkeeping is the method used for a company to maintain accurate records of their financial activity. This is an integral part of owning a business that will keep you in line with the law. Reasons why a company need bookkeeping are: 

1. Your Budget

Bookkeeping helps a business owner budget between their income and expenses by keeping the numbers organized. Organized numbers are easier to review and see a clear picture of where the company is financially. 

2. Tax Preparation

Every business has to file tax returns and bookkeeping provides the numbers needed to file those taxes. There are also local and state taxes to be filed that the bookkeeping process can make easier because the numbers are organized. 

3. Organization

Organization is important for a successful business, but not every business owner has that skill. By hiring a person to handle the bookkeeping, they are that organized person that business needs. There are other people that have an interest in a company’s financial standing like the IRS, investors, and lenders. With proper bookkeeping, those numbers they need are easily provided. 

4. Analysis

Bookkeeping helps a company with business analysis, a tool that management needs to analyze the performance of the business. Bookkeeping produces financial statements that can be used for that analyzing. Bookkeeping puts the cash flow in black and white, allowing a business to see where the money is coming in and where it is going out. 

5. Decision Making and Planning

Bookkeeping provides an analysis that can be used for decision-making like adding staff, purchasing equipment or inventory. By having the past financial performance presented from well-managed bookkeeping, the company can plan their path for growth going forward. It provides the accounting or CPA information they need to categorize revenues and expenses, and structure certain expenses in a favorable manner for tax benefits. 

7. Investor and Lender Reporting 

A company that has investors and lenders will need to provide a financial performance review from time to time. Bookkeeping will create a financial statement that contains the balance sheet, income statement, and cash flow to support their requests. 

8. A Peace of Mind

When the bookkeeping is disorganized, it can put weight on the business owner’s shoulders they don’t need. With proper bookkeeping, it is a peace of mind knowing that if the IRS or the state needs to see records of something, it is easily obtained. 

9. Strategy Focus

It is important for a business owner to have a strategy and planned tactics on maintaining the existing business and growth. Bookkeeping is the tool that makes that possible. 

Young woman working on a calculator.

In Closing 

There are other reasons why bookkeeping is so important to a business’ well-being. Just as important is for a business owner to know how bookkeeping works and how bookkeeping services work. Hiring the wrong type of service or the wrong person for the bookkeeping job can become a costly mistake. Just as it is important they know where bookkeeping ends and accountancy begins, because as a legitimate business, you’ll need an accounting service when it comes to payroll and sales taxes, as well as the IRS. If you need more information, contact Don R. Walker, C.P.A. today by calling 817-905-1040.

What Can The Irs Seize?

IRS Desk

What are Irs seizures? 

“The IRS”. Nobody likes them, yet we all give money to them, or most of us do anyway. Sometimes they believe we don’t give them enough and there are some folks that don’t give them any. Those are the times that IRS seizures can happen if a person doesn’t cooperate with them. 

A quick review of what or who the IRS is first. The Internal Revenue Service, commonly referred to as the IRS, oversees the federal tax laws enacted by the U.S. Congress. This government agency has three primary functions: 

  • Tax Return Processing
  • Taxpayer Service
  • Tax Enforcement

Additionally, the IRS operates criminal investigations and directs qualified retirement plans and tax-exempt organizations.  Within their realm to fulfill their primary functions, they are allowed by law to perform IRS seizures of all assets. Among those assets include things like: 

  • 401k accounts
  • IRA accounts
  • Vehicles
  • RVs
  • Boats
  • Primary residences
  • Rental properties
  • Jewelry

Any asset with a monetary value with equity can be subjected to IRS seizures and the value of those things will apply toward a taxpayer’s unpaid back taxes.

Is the IRS seizing property?

Yes, they are, and they can. If a taxpayer owes taxes and doesn’t set up an agreement of payment arrangements with the IRS, they can and will levy that taxpayer’s financial accounts, including and not limited to garnishing wages among other items becoming part of the IRS seizures. 

However, they don’t do it without warning. They send any taxpayer in this type of situations several notices about unpaid taxes. The notices will start out “friendly” and the message gets a little stronger with each notice, with the last few issuing a warning that you’re about to experience IRS seizures.  Those IRS seizures can and will include levied wages and confiscation of property of monetary value. 

What can the IRS seize?

We’ve all seen television shows where the Irs seized bank accounts of a character on the show. All of the sudden, their debit card is rejected as is any credit card they attempt to use for a cup of coffee. While the show may be taking a humorous approach to the matter, it is a real thing in real life and it isn’t humorous to the IRS, nor is it when it is happening to anyone. When back taxes are owed to the IRS, IRS seizures are allowed to legally seek payment from that person, and this can be done by seizing all bank and financial accounts as well as seizing any property that is of value. 

Does this mean if you owe for the taxes you just filed and didn’t send a check they can seize your home today? No. IRS seizures are an extreme measure that agency takes after repeated attempts to resolve the matter followed by several warnings. 

When IRS seizures of real estate doesn’t resolve the unpaid taxes, they begin the collection process of other assets with proper notice. IRS seizures can include any asset that isn’t essential to the taxpayer’s or their family’s shelter and survival including: 

  • Motor vehicles including boats, cars, motorcycles, RVs, and trucks.
  • Vacation home and/or properties.
  • All real estate owned by taxpayer, including primary residence.
  • Jewelry of value.
  • All life insurance policies.
  • Retirement and savings accounts.
  • Some government benefits.

What happens when the IRS seizes your business?

IRS seizures can include all assets like all business accounts, furniture , and inventory, then padlock the doors, which will effectively close your business operation by seizing all assets. Any size business with a tax debt will need to face the IRS and their daunting powers and various methods they are allowed for collection any back or overdue taxes. 

IRS seizures can be devastating for any business, but for a small business, it can mean ruin on a personal side too. For a small business with back taxes, working something out with the IRS isn’t as complicated as it would be for a larger company, if you know the ins and outs. This is where a tax professional can help. 

While the IRS is a collection machine, it starts off slow which gives a taxpayer some time to develop a strategy. A slew of computerized tax bills are received first with IRS phone calls, then it can take several months, sometimes years, before you’re actually confront by the IRS in a face-to-face session. 

While the IRS has limited staffing, and the pandemic of 2020/2021 has slowed things down as well, it is never recommended to relax and ‘not worry’ when it comes to IRS seizures. Things are always getting improved with their computers and process, all to make the process of generating tax liens, levies, and IRS seizures a real possibility. 

Can the IRS leave you homeless?

No, but maybe yes. The intention of the IRS is not to leave any American homeless; however, they do have a goal of collecting tax debts. While working with a taxpayer on their back or unpaid taxes, they could recommend the primary residence be sold and use the proceeds to pay the tax debt off. IRS seizures may result in taking the home if that is the last option they have. 

IRS plaque

How do I get an IRS seized property?

The Internal Revenue Code requires that properties from Irs seizures for sale be sold by Public Auction or Sealed Bid Auction. These auctions are open to the public with the bidding conducted by an auctioneer or through GSA Auctions. GSA Auctions is a web based solution for auctioning forfeited, exchange/sale, and surplus federally seized personal property .  Once the bid process is complete, sealed bids are opened and items are awarded to the highest bid. 

While it may not be “real” money to may, the list of allowed IRS seizures can include Irs bitcoin seizure. Yes, even any bitcoin funds you own can not be seized by the IRS in payment of any back or unpaid Federal taxes. It is recommended that if you owe the IRS any money or haven’t file your taxes, consult with a tax professional, the sooner the better. Call 817-905-1040 today for tax assistance in Fort Worth, TX.

What type of tax is sales tax?

calculating sales tax

What is an example of a sales tax?

In the words of Benjamin Franklin, “….nothing is certain except death and taxes…”, as he spoke about the then new and recently signed Constitution of the United States. While there wasn’t any income taxes, corporate taxes, or payroll taxes, seems that a form of sales tax did exist: excise and tariffs taxes. It was those two types of taxes that help foot the bill for the American Colonies. 

Today, it becomes more clear to us what he was saying when we consider the sales tax and more taxes that we pay today. Everything we touch or use today has sales tax attached at some point. Other taxes that affect anything and everything we touch, or use are the taxes that didn’t exist in Mr. Franklin’s time, income taxes, corporate taxes, or payroll taxes. Even the computer you’re using to read this has had these taxes involved somewhere along the way. 

Sales tax is added to the cost of any goods or services you purchase. Each state has their own percentage of sales tax added in addition to city sales tax. What is the formula for sales tax? An example of the way sales tax is calculated for a city and state, like Ft. Worth Texas, would be like this: 

  • Purchase a new computer:  $500.00
  • Sales tax of 8.25%:              $ 41.25
  • Total paid by consumer:       $541.25

For this example, the State of Texas is charging you 6.25 percent sales tax and the city of Ft. Worth is charging you 2 percent sales tax. Texas has established the 6.25 percent sales tax and cities, counties, transit authorities, and special-purpose districts are able to add up to 2 percent more in sales tax for their use.  This is considered “sales and use tax” that every business owner is required to collect on their sales of any product or any service they provide. 

Who pays sales tax buyer or seller?

In Texas, as in other states, both buyer and seller pay sales tax.  The seller of any product or service is responsible for collecting the sales tax from the buyer and then paying that collected tax money to the state. This is considered a hybrid sales tax. 

What is the sales tax in Texas?

The State of Texas collects 6.25 percent in sales and use tax and allows all taxing jurisdictions within the state, including cities, counties, transit authorities, and special-purpose districts, to impose up to 2 percent additional sales tax, bringing the total to 8.25% paid by consumers. 

Small business owner calculating sales tax

How do you add 6% sales tax?

Fortunately today, most cash registers are on a computer system and the sale tax percentage is programmed into the software to automatically add the correct amount. Prior to that, every business was given a tax chart to manually determine the sales tax amount and add to the sales ticket.  

Today, if you do find yourself having to manually calculate and add sales tax to a transaction, it is a straightforward method, basic math that is now taught in primary school: You multiply the cost of the product or service by the sales tax rate. An example would be: 

A customer purchases 4 chairs and a table for a total of $1000.00. State sales tax is 6%. Multiply the $1000.00 by the 6% is $60.00 and add that to the total sale amount, coming to a final extended balance of $1060.00 to be paid by your customer. 

As you pay that additional $60 in sales tax for the table and chairs, you may wonder exactly what is the purpose of sales tax.  Sales tax provides budgets for state and local items and needs like supporting public schools, the building and maintaining of public roads, and supporting the fire and police departments. In other words, sales tax can be classified a consumption tax. 

The sales tax in Texas compared to the sales tax to other states is in the middle of the road of who has the highest taxes.  Because Texas doesn’t have a state income tax like other states, they collect their tax money in property taxes and sales tax, which are one of the highest in this country. 

In the southern part of the country, Texas has the highest property taxes. The tax rates are low in Alabama, Arkansas, Oklahoma, and Tennessee. Still, there are states with higher taxes than Texas like Hawaii at 11.7%, Maine at 10.8% and New York State at 13%. 

When comparing the tax rates between these states, one should also look at the quality of things that Texas has such as protective services, public services, roadways, and special uses.  Texas has one of the highest rates of transplants from other states, and these are things that corporations consider when moving their headquarters from places like Washington State to Texas. Call 817-905-1040 today for your tax needs in Fort Worth, TX.

What Is a IRS levy?

IRS audit paperwork

Did you receive a levy?

Internal Revenue Service more commonly referred to as the IRS is not a name that any of us like to hear about and certainly don’t like hearing from them! They are seen as the financial enemy by most unless you’re one of the millions that gets an annual refund.  When you hear the term “IRS levy”, that is not good news and can be devasting for the person that has been notified of an irs levy on wages. 

What exactly is an IRS levy though?  The Internal Revenue Service is authorized to levy a taxpayer’s wages by authority of the Internal Revenue Code (IRC) in order to collect delinquent taxes. This  can include any property in addition to wages that belongs to a taxpayer.  The IRS has procedures and steps they must take before an IRS levy can be implemented, showing they have just cause for such action. 

IRS levy can take place when a taxpayer doesn’t pay their taxes or make payment arrangements to pay the tax debts. If the IRS determines that an IRS levy is an appropriate action, the IRS levy may include any of the following property or right to property that is in possession of others, not listed in any particular order: 

  • Wages
  • Retirement accounts
  • Bank account
  • Dividends
  • Licenses
  • Rental income
  • Accounts receivables
  • Cash loan value of life insurance
  • Commissions
  • Seizure of physical property like boats, cars, homes

Does the IRS have to notify you of a levy?

Yes, even though the IRS has a lot of legal power, an irs levy without notice is not legal.  The law requires that the IRS gives a taxpayer proper notice before an IRS levy can confiscate any bank account. According to IRC (Internal Revenue Code),  Section 6330, it is required of the IRS to notify the taxpayer in writing before implementing a levy. The notice must provide the taxpayer information on their right and the process of appealing the collection action. That appeal must take place within thirty days of the notice’s date, not thirty days of the taxpayer receiving the notice.

How much can the IRS levy from your paycheck?

When IRS levy is issued, the agency will send the taxpayer’s employer a notice with Form 668-W. This requires the business to send a determined amount of their wages direct to the IRS. That amount is determined from the taxpayer’s exempt amount using their filing status, pay period and the number of dependents they are allowed to claim. For instance, a single taxpayer with no dependents to claim with an income before withholdings of $1,000 every two weeks, as much as $538 can be garnished by the IRS. 

In addition to being able to garnish the taxpayer’s wages, an IRS levy can include any bank accounts and Social Security income as well as accounts receivable. The IRS determines the amount to be the levied toward paying on back taxes. The taxpayer is not given any options at point once an IRS levy has been implemented. 

Does IRS notify you before garnishing wages?

It is of common opinion that the IRS has unlimited powers, and to some extent, that may be true. However,  there are tax laws that the IRS has to follow just as taxpayers must, including IRS levy and wage garnishment. The IRS must give a taxpayer an advance warning before they can begin garnishing their wages and if the outstanding balance of back taxes are paid in full during the given time frame, wage garnishment is stopped. 

Can the IRS garnish your entire paycheck?

In general, and IRS levy will not garnish a taxpayer’s entire paycheck, unless that taxpayer as multiple jobs, then an IRS levy may include garnishing all of the wages earned from one of the employers. They will also garnish any bonus, commission, or incentive pay that is apart from the taxpayer’s usual paycheck.

IRS desk

How do I stop an IRS levy?

If you know you owe back taxes, it is important to understand how irs levy works and what rights you have as a taxpayer.   The first crucial step in being a taxpayer is to file your tax returns on time and pay any IRS taxes when due. 

You can request an extension if you aren’t prepared to file your tax return and if you aren’t able to pay the amount owed,  pay what you are able and request a payment plan. Being proactive is key to keeping an irs levy and seizure notice out of your life. 

The IRS may seem like the enemy to taxpayers, but in reality they are not the enemy. The money that the IRS receives, our tax dollars, go to good use that we all receive. This money funds Medicaid, Medicare, and Social Security. Our tax dollars paid via the IRS also fund the country’s national defense, foreign affairs, and least but not last,  aid for the veterans that have served our country. Our tax dollars also pay for development in our communities, our local and state law enforcement and other services provided by the American government. Call 817-905-1040 today for your IRS levy help.

How much payroll tax do I pay?

payroll tax documents

Who has to pay payroll taxes?

It has been said there are two thing certain in this life: taxes and death.  For a business owner, that second one includes payroll taxes. As your accountant and bookkeeper are getting things together to file your business taxes, you may be surprised what you paid for 2020 payroll taxes and wonder what you’ll be paying for payroll taxes for 2021. 

What exactly are payroll taxes anyway?  Payroll taxes are paid on the salaries and wages a company pays their employees and are indicated on the employee’s paystub. It shows up as FICA and MEDFICA , with a certain percentage coming from each employees check. 

The money from those taxes finance government programs like social insurance programs, Medicate, and Social Security. Over 23% of the revenue the government receives comes from these payroll taxes. It is the American government’s second biggest source of money.  

For FICA, 12.4% is accounted for employee’s check and for MEDFICA, 2.9% is accounted for from every employee’s check. That is over 15%, but not all of that is paid by the employee.  Half of those percentages is deducted from payroll checks and employers must match that with the other half. 

Employers must make a federal payroll tax payment and file reports and returns.  Employers are to provide every employee with a W-2 and contractors a 1099 reports that breaks down the compensation paid and any withholding amounts. The rules are complex, even more so than filing your basic income tax return. Non-compliance from an employer is bet with fines and stiff penalties. This is why it is important to have your company’s books and taxes reviewed by a certified accountant.

How will a payroll tax cut affect me?

A payroll tax cut reduces how much is deducted from each employee’s paycheck. It also cuts back the amount of money paid into the federal programs that are supported by payroll taxes like Medicare and Social Security. While it makes an employed person’s check go up, a payroll tax cut doesn’t do anything for people that are retired, unemployed, and children. 

Which is an example of a payroll tax?          

Examples of payroll taxes that are deducted from employee paycheck are: 

  • Medicare tax
  • Social Security tax 
  • Federal unemployment tax
  • State unemployment tax
  • Local tax
  • Local taxes

Is payroll tax the same as income tax?

As an employee, all you know is a hunk of money called payroll taxes comes out of your paycheck every payday, and then you have to file, and sometimes pay, income taxes too. What is the difference between          payroll taxes vs income taxes?  

Payroll tax is a percentage that covers the Medicaid, Social Security, and other federal programs. Income tax is filed with the federal, some state, and local agencies for the amount of money you gross annually. The basic difference between income tax and payroll tax is what each of these taxes’ funds. 

There are several factors that come into play when determining income taxes. Some of the factors include the W-4 form your employer gives you and your selected filing status on one of the 1040 forms. 

There are the payroll taxes and employee benefits are different from payroll taxes and income taxes. Employee benefits that are deducted from an employee’s check is for thing like: 

  • Health Insurance
  • Dental Insurance
  • 401k Contribution
  • Stock Options
  • Uniforms
  • And many other possibilities
person reviewing payroll

How can I avoid paying payroll taxes?

For an employer, getting a payroll calculator without taxes is often a focus. With approximately 10 percent of what you pay employees, 10% of that goes to taxes. However, because the government makes it so complicated, there are loopholes that allow employers to reduce their payroll tax costs legally with some strategic planning that an accountant or CPA would know. A brief touch on those loopholes: 

  • Accountable plans for reimbursing employee’s cost of entertainment and travel, tools, and any cost related to their job. Certain requirements must be met, again, verified by your accountant or CPA. 
  • An accountable plan is one that meets three requirements, which your CPA can clarify if you need those requirements.
  • Instead of a raise, consider paying for benefits and be exempt from payroll taxes. 
  • Have paid corporate directors, which are required for any corporation, including holding a directors meeting once a year. 

Taxes of any sort are not to be taken lightly. They each have directed funding and the money is needed for these as the government sees fit. If you have concerns, issues, questions about how much you are paying payroll taxes, talk with your CPA or an accountant.  At the end of the day, week, month, and year, it is important that you have paid what is determined to be your fair share, especially when it comes to filing the Social Security taxes.  When those aren’t paid, it affects your employees later when they file disability or retire. Call 817-905-1040 today for payroll tax help in Fort Worth, TX.

Getting Ready for Tax Season

tax preparation

What is a tax preparation franchise?

Yes, it is December with Christmas near New Years Eve celebrations to abound, what’s next? You got it, for a business owner and individuals, tax preparation. Most individuals are simple filing, but businesses require a bit more work. Business owners often go to tax accountants or a tax preparation franchise. If you’re a new business owner, maybe you have questions about this process and wonder if your small business is worth paying for tax preparation franchise services.

The first two words are self-explanatory, tax preparation. Franchise on its own is self-explanatory as well, so as we put the three words together as a phrase, tax preparation franchise is being trained and experienced in tax preparation and owning or working for a franchise of a larger entity. Not to appear as promoting a specific business, but a tax preparation franchise would companies like H&R Block, Jackson Hewitt, Liberty Tax Services, and several others.

As an individual or a small business, approaching one of these companies will seem like you’re dealing directly with that company, and for the most part you are.  Each person in the building that you visit is working for the owner of that particular tax preparation franchise unit.  Where you can feel confident is that each of the tax preparation franchises are trained to follow the law in tax preparing, and they have the financial back on the main company.

Should I hire an accountant for my small business?

A tax preparation franchise is not company that will keep all your company record’s compiled, month, quarterly, or annual reports ran, or make sure you pay your local and payroll taxes.  So, yes, even if you find a tax preparation franchise to work with to file your annual IRS taxes, you may still need an accountant.

An accountant will assist with collecting, analyzing, and creating the reports needed regarding your company’s financial information. An experienced, trained accountant knows how to interpret financial data in way that will help you make the right business decisions regarding your company and the money it brings in (or doesn’t). A tax preparation franchise will take all the information that your accounting has collected and analyzed to complete and file your federal taxes.

Is it worth paying someone to do your taxes?

Filing federal taxes can get complicated, even for the smallest and simplest business. Hiring the services of a tax preparation franchise will give you a peace of mind know that a professional has combed over your company files and determined what can be deducted and at what rate.

Regardless how small your business is, there are different expenses that are deductible and some that are not. These are things that an employee of a tax preparation franchise will either know straight off or how to find out.  They are experienced in navigating tax returns so that the customer gets the maximum tax break without any errors.

How can I get maximum tax refund?

These are the types of questions that hiring a tax preparation franchise can answer for you!  Every person that owns or works for a tax preparation franchise is well informed and versed in tax preparation services and refunds. They often find things that you may not realized are tax deductible while other things you were ready to deduct aren’t.

How much does it cost to get small business taxes done?

There isn’t a cut and dry answer to that question. Why? Because every business has different issues with several factors that can affect how your federal taxes are completed.

Regardless the cost, you know your business has to file taxes, so hiring a tax preparation franchise is an expense that can be worthwhile to keep you out of hot water with the IRS. Over 40% of all small businesses in the United States struggle with filing their taxes because the federal tax code is complicated.

Basic accounting service fees can run as low as $175 and be as much as $800 to $900 or more. If you hire an accountant, you should confirm if they do the tax filing too or just the tax preparation. If they prepare and file, this can save you money.

calculating taxes

How do I find tax preparation services?

You can ask business associates who they use or do an internet search for tax preparation franchises and services. Starting around November, you’ll see tax preparation franchises opening up in small buildings and even inside large retail stores. Many start advertising on television and mailing out flyers.  Until the end of April, it is hard not to find a tax preparation franchise!

If you are still questioning do you need a tax preparation franchise, take some time to interview a few tax preparation franchises and see what they have to offer. Get their rates and what is included in those rates. Ask questions like:

  • Are they insured?
  • What is their experience level for your business style and industry?
  • Do you have a Preparer Tax Identification Number? Can I see a copy of it?
  • Do you know the requirements of where I am required to file taxes, federal, state, and local?
  • What are your fees and what is considered extras beyond those fees? 
  • Can I file my taxes electronically with you? 
  • Who signs my tax return, and will I get a copy of that return?
  • What support to you offer for audits?

For tax assistance in Fort Worth, TX, call 817-905-1040 today.

How Much Will the IRS Settle For?

tax settlement

How Much Will the IRS Settle For?

Tax settlement is a service that deserves discussion in the midst of tax season. If you are wondering how much money the IRS will settle for in an offer of compromise, there is an average number that is available. On average, the IRS settles for $6,629. In the year 2014, the IRS received 68,000 offers in compromise from American taxpayers. Of those offers, the IRS only accepted 27,000 of those offers. This means that the IRS rejected sixty percent of the offers that were made. The monetary amount that was accepted totaled $179 million.

How Does a Settlement Affect My Taxes?

Are you wondering how a settlement will impact your taxes? If so, please review the following list to discover more after-effects of a tax settlement.

  • To begin with, a debt settlement will appear on your credit report.
  • The debt settlement will hurt your credit score.
  • You will be required to pay taxes on the difference between what you paid and what you owed.
  • The amount of debt that was not paid will be reported to the IRS as income.

Can You Negotiate a Settlement With the IRS?

Are you wondering whether or not you can negotiate a settlement with the IRS? If so, it will suit you to know that the IRS can’t accept a settlement offer if the taxpayer can afford to pay what they owe. When applying for a settlement offer, taxpayers will need to make an initial payment. After that, the IRS will apply submitted payments to reduce taxes that are owed. For this process, the IRS has an Offer in Compromise Pre-Qualifier tool on their website.

What is the Fresh Start Program with the IRS?

Have you ever heard of the Fresh Start Program with the IRS? The Fresh Start program is intended for people who owe a tax debt of fifty thousand dollars or less to the IRS. They can start the Fresh Start repayment process at any time. If taxpayers are unemployed for thirty days or longer may be eligible to have their IRS penalties waived.

Does IRS Forgive Tax Debt After 10 Years?

Ten years may seem like a long time, but it is important to recognize that this increment of time can have consequences for your tax future. The Internal Revenue Service, also known as the IRS, has ten years in which unpaid tax debt can be collected. After the time increment of ten years, the debt is wiped clean from the books. At that time, the IRS will write it off. This process is what is known as the Ten Year Statute of Limitations.

Is Settlement Tax-Free

According to the Internal Revenue Service, if a person receives a settlement for personal physical injuries or physical sickness and does not take an itemized deduction with regard to medical expenses related to the injury, then the full amount is non-taxable. Because this is the case, you do not include the settlement proceeds in your income.

What is Tax Settlement Definition

The definition of what a tax settlement is is important is you are not already aware of the term. A tax settlement is an arrangement that is deemed acceptable to the IRS or state taxing authorities. It allows a taxpayer to retire an outstanding tax debt for less than the original amount that was owed. This is usually based on current tax regulations. It is also based on the circumstances of the taxpayer.

What is Income Tax Settlement Commission

The Tax Settlement Commission is a quasi-judicial body. It was apparently set up under section 245B of the Income-tax Act of 1961. It was actually set up as a recommendation that was made by the Direct Taxes Enquiry Committee. That committee is usually known as the Wanchoo Committee. The purpose behind setting up the Commission was to settle the tax liabilities in complicated cases. To this end, it would avoid endless and prolonged litigation and consequential strain on the resources of the Income-Tax Department.

tax settlement

What is Tax Equalization Settlement

Have you ever heard of the term, “Tax Equalization Settlement”? If not, it’s important to understand that tax equalization is essentially to equalize the amount of tax paid so that the taxpayer who is ostensibly living and working abroad will pay what he or she would have paid in tax domestically. This statement is applicable when an individual is working for an international company and is beginning to work abroad in his home country. It will always be important to follow up on the important process of one’s taxes. Hiring a qualified tax expert will be an excellent step in the right direction.

If you would like to discuss a tax settlement in Fort Worth, TX, please reach out to us at 817-905-1040.

Does my small business really need CPA services?

cpa hard at work

What is a CPA?

CPA is the abbreviation for a certified public accountant, a profession recognition that is licensed by the professional organization, American Institute of Certified Public Accountants. Persons that are awarded a CPA have passed the stringent Uniform CPA Examination after completed the education requirements and a level of work experience. That work experience is typically gained after employment of working with a CPA for small business taxes or other areas of business finance areas. Without the completed education along with work experience with a local CPA for small businesses, the official licensing cannot be attained.

These requirements established by AICPA gives the organization the ability to enforce and maintain professional standards within the accounting industry. A CPA becomes a trusted CPA small business services and a tax advisor for individuals. Once a person has been licensed by AICPA, they may hold the position of, or provide the services of these positions:

  • Accounting consultants
  • Auditors
  • Business advisers
  • Decision makers
  • Tax consultants
  • And more that coincides with the duties of a CPA for small business taxes and other financial matters. 

An accountant and a CPA have many of the same duties, but there are four major differences: 

  1. Professional Licensing: As we stated earlier, a CPA has completed educational requirements and passed the exam issued by the American Institute of Certified Public Accountants. The exam is based on the state law where the CPA will do business. Once a person has received their CPA, they are required to take continuing education classes to maintain their knowledge of changes and issues in the accounting industry.
  2. Fiduciary Responsibilities: Businesses are often required to have a monthly financial statement audit or review and must be completed by a CPA. A CPA has the legal duties with anything related to the company’s fiduciaries and has the authority to represent the company those fronts. A non-CPA accountant does not have that legal right.
  3. Taxes and Regulations: An accountant can prepare a tax return, but a licensed CPA has more tax code knowledge and has the legal right to represent their clients with the IRS. 
  4. Code of Ethics and State Requirements: In addition to having a CPA license, continuing education, but they are sworn to follow and uphold the strict code of ethics while meeting the profession’s high standards.

What do small business accountants do?

A small business accountant responsibility to verify data, analyze data, and use that data to generate reports, perform financial reporting records, and perform audits. They also complete balance sheets, income statements, and tax returns. The analysis the accountant has created can be used for the owners to create their forecast while looking at the current business trends, determining where their opportunity for growth. 

Can a CPA help you start a business?

Yes, a licensed CPA can be a great source of help and information for a small business. This should be one of the first people you should see before you get your business off the ground. A CPA for small business taxes is only one benefit of having a CPA on your team staring your new business. Other benefits in addition of having a CPA for small business taxes:

  • Evaluate Business Idea: Your CPA will evaluate the viability of the plan. What may sound good in your mind may not be profitable after figuring in the start-up costs and ongoing cost to run the business.
  • A Business Entity: A CPA for small business taxes will also help you determine that entity a small business should be set up under C corporation, S corporation, LLC, Sole proprietorship, Partnership
  • The business entity has to be right from the beginning, which will determine how the business needs to run. If liability protection is needed, are the business partners, how to budget for estimated taxes, and more. 
  • Tax Responsibilities: Where a CPA for small business taxes is most helpful in advising what various tax responsibilities are required, like payroll taxes, doing business taxes, sales tax to charge, and more. 
  • Set-Up Bookkeeping: A business’s transactions must be kept in a bookkeeping system, including expenses, sales, and returns. A licensed CPS will have the knowledge to set up the system, explain to the owner what their duties are in this regard. 
  • Deductions: A CPA for small business taxes will know what deductions a small business can take, both ordinary, necessary, and complicated.        

How do I choose a CPA for my small business?

Once the decision has been made to hire an accountant or CPA, use the following CPA small business checklist on what to look for from this person

  • Location: Today, a CPA’s location isn’t as important because more businesses are working online with their CPA and with the Cloud, it’s even easier and safer than ever. If you want a CPA that can be hands-on, location is important 
  • Certification:  Ask any CPA you’re considering if they have their current license, update with continuing education, and in good standing with the American Institute of Certified Public Accountants. 
  • Relative Experience Choose a CPA firm for a small business like yours, they’ll be better knowledgeable to with all things small business and not confused with other clients that are large. 
  • Dividing Duties: A CPA will either charge you by the hour or a flat monthly rate.  Don’t give them small daily duties to handle, you’re paying for their knowledge and experience, not daily bookkeeping.
small business with sign

How do I choose a business accountant?     

The following are basics to use to search for a business accountant. You may think of more things to check too. 

  • You need to understand what you need: an accountant or a CPA. What duties and responsibilities do you expect the accountant or CPA to handle – that could tell you that an accountant is sufficient.  
  • Avoid the big accounting firms, stick with an accountant or CPA that specializes in small businesses.  
  • Ask other small business owners for the recommendation of an accountant or CPA they use. 
  • Compare charges and fees, some charge by the hour, some by the month. 3
  • Use Social Media to find CPA firms and accountants.  
  • What accounting software do they use and what do you use? Are they compatible?  Do they use Cloud Technology?

Call 817-905-1040 today for quality CPA services from Don R. Walker, C.P.A.!

Which is an Example of a Payroll Tax?

payroll tax

Which is an Example of a Payroll Tax?

Generally speaking, there are four basic types of payroll taxes. Payroll taxes include federal income, Social Security, Medicare, and federal unemployment. It is important to consider that employees must pay Social Security and Medicare taxes. They do this through payroll deductions. As a matter of fact, most employers also deduct federal income tax payments.

What is the Current Payroll Tax?

The current tax rate is six percent on the first seven thousand dollars of each employee’s wages each year. Many employers can qualify for a five-point-four percent federal tax credit. They can accomplish this by paying their state unemployment taxes on that.

What is the Difference Between Payroll Tax and Income Tax?

Are you wondering what the difference is between a payroll tax and an income tax? If so, answers await. Please review the following bullet-pointed list to find out more.

  • Payroll tax. Payroll taxes are taxes that are paid on the wages and salaries of employees. 
  • Income tax. Income tax is a tax that governments impose upon income. This income is generated by businesses and individuals within their jurisdiction. According to the law, taxpayers must file an income tax return annually. This is in order to determine their tax obligations.

What do Employers Pay in Payroll Taxes?

If you need payroll tax preparation, it is important that you find the proper resources to assist. Are you wondering what employers pay in payroll taxes? It’s relevant to consider that both employers and employees pay FICA tax. FICA tax is Social Security and Medicare Taxes. It is split fifty-fifty. In order to determine each employee’s FICA tax liability, an employer must multiply their gross wages by 7.65 percent. If you are wondering whether an employer or an employee pays federal unemployment taxes, you may be surprised by the answer. Federal unemployment taxes, which are called FUTA taxes are paid by employers based upon the gross pay of employees. The FUTA tax percentage may change from year to year.

How Does a Payroll Tax Cut Work?

If you are wondering whether you would benefit from a payroll tax cut, it is critical for you to consider the advantages and benefits. A payroll tax cut could free up more cash for employees and employers. If Social Security and Medicare taxes aren’t taken out of paychecks, then workers and businesses could take home a little more money with each paycheck. A payroll tax cut would give employers more money, which in turn would reduce the need to lay off employees.

What Payroll Tax Relief

Payroll tax relief is an interesting concept. In basic terms, an employee and employer split payroll taxes. For Social Security, 6.2 percent of your wages, which are up to $137,700 for 2020, are withheld from your paycheck and sent to the IRS. Essentially, the IRS receives the equivalent of 12.4 percent of your wages to support social security.

Which Payroll Taxes are Deductible

Social Security and Medicare taxes, also known as Payroll taxes, can be deducted when they are paid. It is important to remember that the company will deduct only the portion of the payroll tax that is paid by the company. That means 7.65 percent of the initial $97,500 of pay for each employee. That will be 1.45 percent of any payment in excess of $97,500. 

When are Payroll Tax Deposits Due

If you are wondering when payroll tax deposits are due, you can rest assured that you will discover the answer momentarily. Monthly deposits have to be made by the fifteen day of the month following the month when you paid the employees. For instance, if the employees were paid in July, the deposit has to be made by the fifteenth of August.

payroll tax

Why Payroll Tax is Bad

Suspending the Social Security payroll tax is apparently a very controversial idea. According to leading experts, eliminating the payroll tax sets a bad precedent, and messes unnecessarily with the program. Some experts stipulate that despite presidential support, it is best to put the idea to bed. To that end, eliminating the payroll tax has met with little enthusiasm from Congress. Cutting the payroll tax would involve a massive loss of revenues. The Congressional Budget Office reports that the total payroll taxes in 2019 was 1.2 trillion. In terms of people losing their jobs, a payroll tax cut wouldn’t be a salve. A payroll tax cut only helps workers currently employed versus employees who have been furloughed by the crisis. Furthermore, any relief that would come out of the tax cut would be measured in bits and pieces.

Would you like to discuss payroll tax in Fort Worth, TX? We have dedicated resources to assist. Please reach out to us at 817-905-1040.

What is a Return in Tax?

tax return

What is a Return in Tax?

Are you wondering what a tax return is? If so, you’ve come to the right place. A tax return is a form or multiple forms that are filed with a tax authority. A tax authority will report income, expenses, and other important tax information. For the most part, countries will have tax returns filed annually for a business or an individual with reportable income. This reportable income includes any wages, interest, dividends, capital gains, or any other profits that have been accumulated over the year.

When Should I Get My Tax Return?

According to recent reports, the Internal Revenue Service, also known as the IRS, stipulates that nine out of ten e-filed tax returns with direct deposit will be processed within 21 days of IRS e-file acceptance. If an individual has mailed a paper return, they should wait approximately four weeks before checking the status of the tax return. Generally speaking, the refund processing time is about six to eight weeks from the date the IRS receives the tax return.

Who Gets a Tax Return?

Are you wondering what types of people will receive a tax return? The answer is quite simple. Your refund will be determined by comparing your total income tax to the amount of income that was withheld for federal income tax. If the amount withheld for federal income tax was greater than the income tax for the year, then the individual will receive a refund for the difference. It’s important for people to realize that a refund is not actually free money given by the government, but is actually money that was already earned by the individual.

Do Presidents Pay Taxes?

This is a very interesting question. With regard to the question of whether former presidents pay taxes, the president, like many American citizens, must pay taxes and file a tax return. As a matter of fact, the same laws that govern taxpaying American citizens apply to the president as well because presidents are still considered citizens. It is interesting to note that the Secretary of the Treasury pays a taxable pension to the president. Former presidents receive a pension that is equal to the pay that the head of the executive department would be paid, which is over $200,000 a year.

What is the Maximum Tax Refund You Can Get?

Tax return services are a very beneficial service for many people. In terms of the maximum tax refund, it’s interesting to note that there are some variables. For individuals, $12,000 is the maximum tax refund that one can receive. If you file as head of household, it is $18,000, and it is $24,000 if you are a married couple filing jointly.

Why Tax Refund Take So Long

Are you wondering why a tax refund would take longer than usual? Please review the following reasons to find out more:

  • If you do not receive a tax refund within 21 days, the tax return might need further review.
  • If the tax return was not filed properly, it will need to be reviewed. The tax return could be incomplete or incorrect.
  • If you have claimed the Earned Income Tax Credit, you could experience delays.
  • If you have claimed the Additional Child Tax credit, you could experience delays.

Why Tax Return So Low

Are you wondering why your tax return is so low in 2019? Apparently it is due to withholding changes in early 2019. Some taxpayers began receiving larger paychecks, which means that they were paying less in tax as the year went on. For those taxpayers, such a change could result in a smaller tax refund than expected even if they paid fewer taxes overall.

Why Tax Return Over 100k

If an individual earns more than one-hundred thousand dollars annually, then they will need to file assessment tax returns with the HMRC. If for some reason the individual has not been sending in their tax returns, they should register by the fifth of October after the tax year in which the income was realized. If, for example, and individual is living in California and makes over one-hundred thousand dollars a year, they will be taxed $28,923. That means that the net pay will be $71,077 per year. This equates to roughly $5,923 per month. If the average tax rate is 28.92%, then the marginal tax rate is 40.95%.

tax return

Can Tax Return Be Double Sided

Surprisingly enough, this question is very pertinent to tax forms. It is important to note that while each form can be double-sided, different forms should not share the same page. To illustrate this idea, each page of a Form 1040 can be double-sided. However, to ensure that you don’t experience any issues with your tax return, the smartest way to move forward is to print single-sided pages.

Do you need help with your tax return? Our friendly staff at Don R. Walker, C.P.A. are ready to take your phone call at 817-905-1040. Receive quality help with your tax return in Fort Worth, TX!