A group of tax professionals who have deep and diversified tax experience, a passion for technology, and the desire for helping others. We created Bullseye Tax Relief as a platform for helping businesses and individuals with their tax problems.
If you’ve been keeping up with our recent blog posts in the Bullseye Tax Relief Business Taxes blog series, you’ve been seeing all the different rules, requirements and tax responsibilities a business owner has to keep in mind depending on the types of employees their business employs. In some of our first posts in the series, Business Taxes: 1099 Independent Contractors and Business Taxes: Hiring W-2 Employees, we discussed the differences in the tax responsibilities for the two different main kinds of employees: W-2 employees and 1099 independent contractors. There are plenty of differences just between these two different groups. If you’re not caught up on that information yet, you can get started here: Business Taxes: Employment Taxes. Following that discussion, we looked into other types of employee categories and the tax responsibilities associated with these groups. For instance, to learn about the differences when it comes to hiring part time or seasonal help, you can check out our post on the subject: Business Taxes: Employment Tax Withholdings for Part Time or Season Help. Then, we got into another interesting facet of business and employment taxes: employing family. Depending on which direction the relationship is facing, i.e. who is employing who, there are a ton of different subsets of rules and IRS tax responsibilities. In our first post discussing the employment of family members, Business Taxes: Employing Family, as the title suggests, we discuss the tax responsibilities involved with a parent hiring a child. In the proceeding posts, we cover other family employment scenarios like when a child employs their parents (read more here: Business Taxes: Employing Parents), when one spouses employs another (Business Taxes: Employing Spouses) and spouses that have formed a business partnership or meet the requirements for a qualified joint venture (Business Taxes: Employing Spouses – Business Partnership). As you can see, there are many different possible employment scenarios and the IRS has different rules, requirements, responsibilities and stipulations for many of them. In this post, we’ll briefly discuss the rules, requirements, responsibilities and stipulations associated with employing members of the clergy. Employment Taxes & Members of the ClergyAs of February 26th, 2021, according to the IRS Page Members of the Clergy, “for services in the exercise of the ministry, members of the clergy receive a Form W-2 but do not have social security or Medicare taxes withheld. They must pay social security and Medicare by filing Form 1040 (Schedule SE), Self-Employment Tax. For additional information refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.” So as you’re hopefully starting to see from a few different examples, it’s important to pay attention to the different classifications your employees may fall under. When it comes to employing members of your family, there are very specific rules and requirements depending on the relationship. When it comes to hiring members of the clergy, as is indicated above, they are treated somewhat similar to W-2 employees, except they do not have social security or Medicare taxes withheld. What isn’t mentioned here are income tax withholdings, so remember to plan accordingly if your business employs members of the clergy. For a quick refresher on employing W-2 employees, check out our previous article Business Taxes: Hiring W-2 Employees. Sources:https://www.irs.gov/businesses/small-businesses-self-employed/members-of-the-clergy The post Business Taxes: Employing Members of the Clergy appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-members-of-the-clergy/
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In our recent posts in the Bullseye Tax Relief Business Taxes blog post series we’ve been discussing the different IRS tax implications associated with the different scenarios in which one employs or works with their family or spouse. To learn more about employing family members, check out our posts Business Taxes: Employing Family and Business Taxes: Employing Parents. Most recently, we’ve been going into detail about the different potential scenarios when two spouses work together. In Business Taxes: Employing Spouses, we discussed the two main scenarios: one employee works for another as a typical employee and the two spouses work together in a business partnership. In the posts, Business Taxes: Employing Spouses – Business Partnership and Business Taxes: Employing Spouses – Benefits of a Partnership, we discussed this business partnership scenario, and more specifically the qualified joint venture, in greater detail. In today’s post, we’ll talk a little bit more about the tax responsibilities associated with employing a spouse as an essentially normal employee. Employment Taxes Associated with Employing a SpouseAs of February 26th, 2021, according to the IRS Page Married Couples in Business, “if your spouse is your employee, not your partner, you must pay Social Security and Medicare taxes for him or her. The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and Social Security and Medicare taxes, but not to FUTA tax. For more information, refer to Publication 15, Circular E, Employer Tax Guide.” For those that have been paying close attention to our recent posts about employing family members and the subtle differences in the tax responsibilities, they may remember another recent scenario in which FUTA tax wasn’t required, while income tax withholding and Social Security and Medicare taxes were still required like usual – when a person is employing their parent! If you don’t remember, or you’d like a quick refresher, check out the blog post here: Business Taxes: Employing Parents. Although not having to pay FUTA taxes might seem like a miniscule victory, according to the IRS Page, Topic No. 759 Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return – Filing and Deposit Requirements, as of February 26th, 2021, “The FUTA tax rate is 6.0%. The tax applies to the first $7,000 you paid to each employee as wages during the year. The $7,000 is often referred to as the federal or FUTA wage base. Your state wage base may be different based on the respective state’s rules.” While these numbers could potentially vary by state, in general this means a savings of $420 for a business over the course of a year, which won’t necessarily turn things around, but it is money that can be invested elsewhere. If your business is struggling with the intricacies of IRS tax codes or concerned with recent notices or letters from the IRS, please feel free to contact one of our highly trained business tax resolution specialists today. We offer a free initial consultation and analysis for new clients so that they can learn about their tax resolution options worry and cost-free. Give us a call at (844) 582-3323! Sources:https://www.irs.gov/businesses/small-businesses-self-employed/married-couples-in-business https://www.irs.gov/taxtopics/tc759 The post Business Taxes: Employing Spouses – One employed by another appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-spouses-one-employed-by-another/ In our most recent post, Business Taxes: Employing Spouses – Business Partnership, we began to discuss the relatively recent changes afforded to married couples not officially working together in a state entity like a partnership or a Limited Liability Corporation in the Small Business and Work Opportunity Tax Act of 2007. For a quick recap, the requirements to qualify as a joint venture are as follows, according to the IRS Page Married Couples in Business (as of February 26th, 2021): “A qualified joint venture is a joint venture involving the conduct of a trade or business, if (1) the only members of the joint venture are a married couple who file a joint tax return, (2) both spouses materially participate in the trade or business, (3) both spouses elect to have the provision apply, and the business is co-owned by both spouses and (4) isn’t held in the name of a state law entity such as a partnership or limited liability company (LLC).” H2: Employment Taxes and The Benefits of a Qualified Joint VentureFor couples curious what they have to gain if they meet the requirements of a qualified joint venture, the same page, Married Couples in Business, as of February 26th, 2021, goes on to say that “under the provision, a qualified joint venture conducted by a married couple who file a joint return is not treated as a partnership for Federal tax purposes. All items of income, gain, loss, deduction and credit are divided between the spouses in accordance with their respective interests in the venture. Each spouse takes into account his or her respective share of these items as a sole proprietor. Thus, it is anticipated that each spouse would account for his or her respective share on the appropriate form, such as Schedule C. For purposes of determining net earnings from self-employment, each spouse’s share of income or loss from a qualified joint venture is taken into account just as it is for Federal income tax purposes under the provision (i.e., in accordance with their respective interests in the venture). “This generally does not increase the total tax on the return, but it does give each spouse credit for social security earnings on which retirement benefits are based. However, this may not be true if either spouse exceeds the social security tax limitation. Refer to Publication 334, Tax Guide for Small Business, for further information about self-employment taxes. For more information on qualified joint ventures, refer to Election for Married Couples Unincorporated Businesses.” So as you’ve just learned, generally speaking, if your business partnership with your spouse meets the requirements of and files as a qualified joint venture, there are some benefits to be gained. More specifically, the qualified joint venture gives both spouses credit for social security earnings, rather than just one, which can help to increase retirement benefits in the long term. Like the title says, in our next blog post, Business Taxes: Employing Spouses – One employed by another, we’ll discuss the tax implications associated with one spouse employing the other. Check back soon! H4: Sources:https://www.irs.gov/businesses/small-businesses-self-employed/married-couples-in-business The post Business Taxes: Employing Spouses – Benefits of a Partnership appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-spouses-benefits-of-a-partnership/ Welcome to our Bullseye Tax Relief Blog! If you’re new to the site and this is the first blog post you’ve stumbled on, we recommend you get started at the beginning of our Business Taxes blog series here: Business Taxes: Employment Taxes. In the Business Taxes blog post series, we’ve been discussing the different business taxes a business might encounter if they have employees. We started with the general, discussing the differences between W-2 employees and 1099 independent contractors, and have gradually gotten more specific, as we discuss other business tax elements associated with employing employees. In our more recent posts, we’ve been discussing the tax responsibilities, paperwork and other requirements stipulated by the IRS associated with employing family members. In our first post on the topic, Business Taxes: Employing Family, we discussed the IRS’s requirements surrounding parents employing their children. After that, in our post Business Taxes: Employing Parents, we discussed the converse of that situation, going into detail about the different requirements associated with a child employing a parent. Finally, in our most recent blog post, Business Taxes: Employing Spouses, we discussed one of the potential scenarios that could arise when one spouse employs another. In this post, we’ll discuss another one of the possible scenarios when a spouse employs another: a business partnership. Employment Taxes & The Spouse Business PartnershipAs of February 26th, 2021, according to the IRS Page Married Couples in Business, “on May 25, 2007 the Small Business and Work Opportunity Tax Act of 2007 was signed into law and affect changes to the treatment of qualified joint ventures of married couples not treated as partnerships. The provision is effective for taxable years beginning after December 31, 2006. The provision generally permits a qualified joint venture whose only members are a married couple filing a joint return not to be treated as a partnership for Federal tax purposes. A qualified joint venture is a joint venture involving the conduct of a trade or business, if (1) the only members of the joint venture are a married couple who file a joint tax return, (2) both spouses materially participate in the trade or business, (3) both spouses elect to have the provision apply, and the business is co-owned by both spouses and (4) isn’t held in the name of a state law entity such as a partnership or limited liability company (LLC).” As you can see from the very last requirement, qualified joint ventures in this case do not include entities like a partnership or an LLC. Since this provision has been in effect since 2007, it’s likely that if your business falls into this category, your accountant has already guided you towards the correct set of actions. However, if this is new information and you might have filed tax returns for yourself, your business or your spouse incorrectly, you should give one of our tax resolutions specialists a call today to make sure everything is in order. Here at Bullseye Tax Relief, we offer a free consultation and transcript analysis for new clients, so you can learn your options risk-free. Call us today at (844) 582-3323! Sources:https://www.irs.gov/businesses/small-businesses-self-employed/married-couples-in-business The post Business Taxes: Employing Spouses – Business Partnership appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-spouses-business-partnership/ If you’ve been keeping up with our Business Taxes blog post series, you’re starting to see that there are many different sets of very specific stipulations made by the IRS. One category that has many different scenarios is the type of employees employed by a business. While this might seem like a simple two-option situation with a company either employing W-2 employees or 1099 independent contractors, as we’ve been learning, the devil is in the details. In our last two posts, we’ve covered different scenarios stipulated by the IRS regarding a business employing family members. In the first of the two, Business Taxes: Employing Family, we discussed the tax responsibilities associated with a parent employing a child. In our most recent post, Business Taxes: Employing Parents, we discussed the scenarios and corresponding differences associated with a child employing a parent. In another post, we also discussed the differences to keep in mind when hiring Part Time or Season Help (read more here: Business Taxes: Employment Tax Withholdings for Part Time or Season Help). In today’s post we’ll discuss the differences associated with married couples working together or employing each other and in the following post, we’ll discuss the IRS implications of spouses in a business partnership. Employment Taxes & Employing SpousesAs of February 26th, 2021, the IRS Page Married Couples in Business, agrees with our assessment above, saying that “one of the advantages of operating your own business is hiring family members. However, the employment tax requirements for family employees may vary from those that apply to other employees.” The same page, Married Couples in Business, as of February 26th, 2021, goes on to say that “a spouse is considered an employee if there is an employer/employee type of relationship, i.e., the first spouse substantially controls the business in terms of management decisions and the second spouse is under the direction and control of the first spouse. If such a relationship exists, then the second spouse is an employee subject to income tax and FICA (Social Security and Medicare) withholding. However, if the second spouse has an equal say in the affairs of the business, provides substantially equal services to the business, and contributes capital to the business, then a partnership type of relationship exists and the business’s income should be reported on Form 1065, U.S. Return of Partnership Income PDF (PDF).” As you can see, the type of employer/employee working relationship established between the spouses is extremely important when it comes to their tax responsibilities. If one spouse is clearly the owner of the business and employs the other spouse, treating them like any other employee, then they are treated like a normal employee by the IRS. But, as the above paragraph says, if the employed spouse acts more like an equal in the business than an employee, there are different tax responsibilities and paperwork required. In our next blog post, Business Taxes: Employing Spouses – Business Partnership, we’ll go into more detail about the second scenario – where a spouse either acts as a partner in the business or is an established business partner. Check back soon! Sources:https://www.irs.gov/businesses/small-businesses-self-employed/married-couples-in-business The post Business Taxes: Employing Spouses appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-spouses/ As we’ve been discussing in our Bullseye Tax Relief Business Taxes Blog Series, depending on the types of employees your business employs, there are different taxes, paperwork and requirements with regards to the IRS. As we’ve discussed previously in our Business Taxes: 1099 Independent Contractors and Business Taxes: Hiring W-2 Employees blog posts, there are big differences regarding a company’s tax responsibilities between hiring W-2 employees and 1099 independent contractors. As you’ll learn in this post, and as we touched on in our previous one, Business Taxes: Employing Family, there are even different rules and requirements stipulated by the IRS when it comes to employing family. In our previous post, Business Taxes: Employing Family, we went into detail about the different scenarios presented by the IRS when it comes to parents employing a child. In this post, we’ll discuss the different IRS implications involved when a child employs a parent. Employment Taxes & Employing ParentsAs of February 26th, 2021, according to the IRS Page Family Help, “The wages for the services of a parent employed by his or her child in a trade or business are subject to income tax withholding and social security and Medicare taxes. Wages paid to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. For additional employment tax information, refer to Publication 15, Circular E, Employer’s Tax Guide, and Publication 51, Circular A, Agricultural Employer’s Tax Guide.” Like a typical W-2 employee, a parent employed by their child is still subject to income tax withholding and social security and Medicare taxes, however, unlike a typical employee, the wages of a parent employed by their child are not subject to Federal Unemployment Tax Act taxes. The same page, Family Help, as of February 26th, 2021, goes on to say that “if your parent works for you in your business, the wages you pay to him or her are subject to income tax withholding and social security and Medicare taxes. Social security and Medicare taxes do not apply to wages paid to your parent for services not performed in your business, but they do apply to domestic services if all the following apply:
As you can see, the stipulations for the above scenario are quite specific, and seem to apply in situations where a parent is hired by a child to provide “domestic services” like nannying for their child’s child or stepchild. If this situation applies to you, you may be liable for social security and Medicare taxes for these wages. If you’d like to learn more, or your business is struggling with any types of employment taxes or IRS tax debt, call the team at Bullseye Tax Relief today! We offer a free consultation and transcript analysis for new clients! Sources:https://www.irs.gov/businesses/small-businesses-self-employed/family-help The post Business Taxes: Employing Parents appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-parents/ If you have questions about the tax implications regarding employing family, then you’re in the right place! In our recent blog posts in the Business Taxes series, we’ve been discussing the different things you need to know about the business taxes associated with operating a business that has employees. As we’ve mentioned in previous posts, the type of employees your business hires plays a large role in the IRS forms, paperwork and tax responsibilities that will be required of your business. The two main types of employee classifications are 1099 independent contractors and W-2 employees. In our blog posts Business Taxes: 1099 Independent Contractors and Business Taxes: Form 1099-NEC, we cover the basics about the tax responsibilities and paperwork required for 1099 independent contractors. In our more recent posts, we’ve been discussing the employment taxes, payroll taxes and other business tax considerations regarding employing W-2 employees. As we’ve noted in one of our recent posts, Business Taxes: Employment Tax Withholdings for Part Time or Season Help, there may be extra conditions or exceptions in place by the IRS that are specific to only a few types of business, for instance, seasonal employers don’t need to file quarterly federal tax returns for quarters they don’t have a tax liability because they didn’t work. In this blog post, we’ll discuss some of the IRS intricacies that are involved when hiring an employee that is a family member. H2: Employment Taxes and Employing FamilyAs of January 31st, 2021, according to the IRS Page Family Help, “one of the advantages of operating your own business is hiring family members. However, employment tax requirements for family employees may vary from those that apply to other employees.” Like we mentioned above, the IRS does have specific rules in place for scenarios you might not have considered, that’s why it’s great you’re doing some extra research on your own and you’ve found our blog! Regarding children that are employed by their parents, the same IRS Page from the previous excerpt, Family Help (as of January 31st, 2021), continues on to say that “payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. Refer to the “Covered services of a child” section below. Payments for the services of a child under age 21 who works for his or her parent in a trade or business are not subject to Federal Unemployment Tax Act (FUTA) tax. Payment for the services of a child are subject to income tax withholding, regardless of age.” As you can see, the situation specified above is rather specific. To qualify to be able to not pay payroll and employment taxes (social security and Medicare taxes) for a child employee, the business must be a sole proprietorship owned by a parent, or a partnership owned by both parents and the child must be under 18. The excerpt also stipulates that regardless of age, the child is still subject to income tax withholding. The IRS also states several situations where the services of a child employed by their parents are explicitly subject to employment taxes. According to the IRS Page Family Help, as of January 31st, 2021, “the wages for the services of a child are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for:
If you or your business have any questions about the intricacies of employing a family member and the related payroll and employment taxes, feel free to contact the team at Bullseye Tax Relief! We specialize in business tax resolution services and offer a free initial consultation to new clients so they can learn their options risk-free. Call us today to learn more! H4: Sources:https://www.irs.gov/businesses/small-businesses-self-employed/family-help The post Business Taxes: Employing Family appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employing-family/ Welcome to our Business Taxes blog series! We’ve been talking about all of the different taxes a business might be required to pay if it has employees. These taxes are also known as employment taxes or payroll taxes. In our last few posts, we’ve started talking about some of the different components and considerations your business will want to keep in mind when it comes to the business taxes you might come across if you own or operate a business with employees. In our most recent blogs, we’ve covered the basics of Unemployment Insurance, Workers’ Compensation and the employment tax benefits of Employee Health Plans. In the posts preceding those, we covered the different types of employees your business might employ, like 1099 Independent Contractors, W-2 Employees and Seasonal or Part Time Workers and the different tax responsibilities associated with each. If you’re new to the series, you can get started learning all of the above with our introductory blog post: Business Taxes: Employment Taxes. For those of you who are caught up in the series, in this post we’ll be discussing what the IRS calls ‘fringe benefits.’ So let’s start at the beginning. What are fringe benefits?As of January 31st, 2021, according to the IRS Page Publication 15-B (2020), Employer’s Tax Guide to Fringe Benefits, “a fringe benefit is a form of pay for the performance of services. For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work.” To get an even clearer picture, we turned to the dictionary. The Oxford Languages/Google English Dictionary defines fringe benefits as “an extra benefit supplementing an employee’s salary, for example, a company car, subsidized meals, health insurance, etc.” Depending on which industry you work in, these types of fringe benefits might be commonplace or they might be rare. But for those of you who operate businesses that do provide fringe benefits to your employees, we’ll discuss the business tax ramifications next. Employment taxes and fringe benefitsAs of January 31st, 2021, according to the IRS Page Employee Benefits, “Fringe benefits are generally included in an employee’s gross income (there are some exceptions). The benefits are subject to income tax withholding and employment taxes. Fringe benefits include cars and flights on aircraft that the employer provides, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events.” Because fringe benefits are subject to income tax withholding and employment taxes, it’s very important that employers keep track of these benefits! The same IRS Page from the previous excerpt, Employee Benefits, as of January 31st, 2021, continues on to say that “in general, the amount the employer must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount that the law excludes. There are other special rules that employers and employees may use to value certain fringe benefits. See Publication 15-B, Employers’ Tax Guide to Fringe Benefits, for more information.” This last piece of information can be a little confusing. If your business needs any help with employment taxes, payroll taxes or any other type of business tax resolution services, feel free to give the team of highly trained tax resolution specialists at Bullseye Tax Relief a call today! We offer a free initial consultation and transcript analysis to all new clients. We can be reached at (844) 582-3323. Sources:https://www.irs.gov/publications/p15b https://www.irs.gov/businesses/small-businesses-self-employed/employee-benefits The post Business Taxes: ‘Fringe Benefits’ appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-fringe-benefits/ In our recent blog posts in the Business Taxes series, we’ve been discussing all of the different fundamental components of the businesses taxes your business might be responsible for if it has employees. These taxes are also commonly referred to as payroll taxes or employment taxes, since they are the taxes a business is required to pay because it has employees. As we’ve mentioned before though, the type of employees your business employs makes a huge difference in the paperwork and tax responsibilities the IRS requires of your business. There are two main types of employee classifications: 1099 independent contractors and W-2 employees. In our previous posts Business Taxes: 1099 Independent Contractors and Business Taxes: Form 1099-NEC, we discuss the different requirements for employers working with 1099 independent contractors. In one of the following posts, we also discuss the different IRS requirements when hiring part time or seasonal help (learn more here: Business Taxes: Employment Tax Withholdings for Part Time or Season Help. In today’s blog post, we’ll continue discussing the requirements and tax responsibilities of a business with W-2 employees. More specifically, we’ll discuss the business tax ramifications of paying for health plans for your employees, as well as their spouses and dependents. Employment Taxes and Employee Health PlansAs of January 31st, 2021, according to the IRS Page Employee Benefits, “if an employer pays the cost of an accident or health insurance plan for his/her employees, including an employee’s spouse and dependents, the employer’s payments are not wages and are not subject to Social Security, Medicare, and FUTA taxes, or federal income tax withholding. Generally, this exclusion also applies to qualified long-term care insurance contracts. However, the cost of health insurance benefits must be included in the wages of S corporation employees who own more than two percent of the S corporation (two percent shareholders).” This is a very important piece of information to take note of if your business pays for the health insurance of your employees and their spouses or dependents. This means that the payments made for health insurance are not counted as wages and are not subject to the typical employment and payroll taxes. What this means is that if a business can include health insurance in an employee’s benefits as a substitute for a similar amount of pay, that business could save on taxes in the long run, since the payments for health insurance are not taxed the same way that wages of a similar amount would be. The same IRS Page from the previous excerpt, Employee Benefits, as of January 31st, 2021, continues on to say that “health insurance programs allow workers and their families to take care of essential medical needs. A health plan can be one of the most important benefits provided by an employer. The Department of Labor’s Health Benefits Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) provides information on the rights and protections that are afforded to workers under COBRA.” Without employer-sponsored or paid for health insurance, many people end up foregoing health insurance altogether and this can leave them and their families vulnerable to high costs later on if there’s ever an emergency. Thankfully, as we’ve learned today, the IRS actually incentives employers to purchase health insurance for their employees, since like we said before, the health insurance payments are not taxed like wages. This creates a win-win scenario for both the employers and the employees! In our next blog post, we’ll discuss other business taxes and employee benefits. More specifically, we’ll be talking about what the IRS calls ‘fringe benefits.’ Check back soon! Sources:https://www.irs.gov/businesses/small-businesses-self-employed/employee-benefits The post Business Taxes: Employee Health Plan appeared first on Bullseye Tax Relief. Via https://www.bullseyetaxrelief.com/business-taxes-employee-health-plan/ In recent posts we’ve been discussing the different business taxes your business might be responsible for if your business has employees. As we’ve discussed, depending on which types of employees your business hires, your business will have different paperwork and forms to file with the IRS, as well as different tax responsibilities. In our posts Business Taxes: 1099 Independent Contractors and Business Taxes: Form 1099-NEC, we shared the different tax responsibilities associated with 1099 independent contractors. In our more recent blog posts, we’ve been discussing the different IRS forms, employment taxes and payroll taxes associated with W-2 employees. If you haven’t read those previous posts and your business employs W-2 employees, we’d recommend starting with this blog post to get caught up on all your IRS Forms and tax responsibilities: Business Taxes: Employment Identification Number. Today we’ll discuss another type of business tax you should know about that is associated with having employees: workers’ compensation.H2: Employment Taxes and Workers’ CompensationAs of January 31st, 2021, according to the IRS Page Employee Benefits, “the Department of Labor’s Office of Workers’ Compensation Programs (OWCP) administers four major disability compensation programs that provide wage replacement benefits, medical treatment, vocational rehabilitation and other benefits to federal workers or their dependents who are injured at work or who acquire an occupational disease.” As a business owner, it is most likely that the above paragraph does not apply to your business or your employees, since it is specifically for federal workers or their dependents. As you’ll see next, the information provided by the IRS regarding private companies is a little more vague. The same IRS Page from the previous excerpt, Employee Benefits, as of January 31st, 2021, continues on to say that “individuals injured on the job while employed by private companies or state and local government agencies should contact their state workers’ compensation board. The Department of Labor has several programs designed to prevent work-related injuries and illnesses. You may obtain information about these programs by visiting the Workplace Safety & Health page.” The requirements for workers’ compensation vary from state to state, so to get a better idea of what any particular state’s workers’ compensation requirements might be, we decided to take a look at the requirements in our home state of California. According to the State of California’s Department of Industrial Relations Employer Information Page (as of January 31st, 2021), “workers’ compensation is the nation’s oldest social insurance program: It was adopted in most states, including California, during the second decade of the 20th century. The workers’ compensation system is based on a trade-off between employers and employees. Employees are entitled to receive prompt, effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.” “As a result, California employers are required by law to have workers’ compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers’ compensation benefits. Workers’ comp insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.” While these requirements for workers’ compensation insurance might not be the same in every state, the idea that workers’s compensation provides a trade-off between employers and employees to exchange medical treatment for on-the-job injuries for the ability to sue the employer is the general idea of workers’ compensation. To learn more about the requirements in your state, check out the Department of Labor’s state-by-state map here: https://www.dol.gov/agencies/owcp/dfec/regs/compliance/wc H4: Sources:https://www.irs.gov/businesses/small-businesses-self-employed/employee-benefits https://www.dir.ca.gov/dwc/Employer.htm https://www.dol.gov/agencies/owcp/dfec/regs/compliance/wc The post Business Taxes: Workers’ Compensation appeared first on Bullseye Tax Relief. 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