Mike's weekly post usually concentrated on tax saving strategies.
IRS Identity Theft Season Begins Now
Each year thieves try to steal billions in Federal Withholdings by stealing your identity. As the IRS focuses more attention on this quickly growing problem, now is the time of year to be extra vigilant.
Check the tax rules before lending money to relatives
There are many worthwhile reasons to lend money to a relative. For example, you may want to help a child or sibling continue their education or start their own business.
But lending money to relatives can have tax consequences.
As you review your filing requirements for 2013, make sure you don't overlook the so-called "nanny tax." If you have a household employee, you could be liable to pay state and federal payroll taxes.
First, you must determine whether you have a household employee. Generally, this is someone you hire to work in or around your house. It could be a babysitter, nurse, maid, housekeeper, or gardener. It doesn't matter whether they work part-time or full-time, or whether you pay them hourly, weekly, or by the job.
Early this year, review the amount of income tax you're having withheld from your wages to see if it should be adjusted. While you must meet minimum tax payment requirements, don't overwithhold or you'll be giving the IRS interest-free use of your money for a year. Don't underwithhold either, or you face penalty and interest charges on the underpayment.
Your children may need to file a 2013 income tax return. A return is needed if wages exceeded $6,100, the child had self-employment income over $400, or investment income exceeded $1,000. If the child had both wages and investment income, other thresholds apply. Contact us for more information or filing assistance.
