Irs & Taxes Online Course With Test

8/14/2019 Irs & Taxes Online Course With Test

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IRS & TAXES

PROTECT YOURSELF WITH KNOWLEDGE

SAVE $$ BY BEING PREPARED IN ADVANCE

DisclaimerThis is a simple basic course about taxes to familiarize you with tax

terminology, forms, and other pertinent information to begin your businessadventures without being so totally in the dark.

**************EMPLOYER, EMPLOYEE, SELF-EMPLOYED TAXES

OTHER BUSINESS RELATED TAXES

TAXABLE EARNED INCOME

TAX DEDUCTIONS

Bits & Pieces of IRS Information

PROFESSIONAL CODE

CELL PHONE DEDUCTION

SELF EMPLOYED, EMPLOYEE & EMPLOYER TAXES

IT IS YOUR MONEY, HANG ON TO IT BY UNDERSTANDING TAXES


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TAXES ARE AN INTEGRAL PART OF OPERATING A BUSINESS

For filing requirements such as when, where and how to file, and whereyou need to send or deposit payments, check with your local IRS office oryour CPA or accountant for the necessary current forms

TAXES:Taxes are a very important part of your business. There are many forms of taxes.You will have to understand & be aware of these. You must persevere throughoutthe year to plan your deductions in order to avoid paying as much federal income

tax on your own wages or salary as you possibly can. It has been said that toavoid is legal to evade is illegal. So, PLAN to avoid paying taxes by properpreparation.

As a business owner, or self-employed there are many taxes you will need to beaware of. As an employer, you will need to withhold federal income tax from youremployees wages. You have to pay an amount equal to the amount withheldfrom the employees pay.

FICA: Federal Insurance Contributions Act: FICA includesSocial Security &Medicare tax. Employer & Employee both equally share 15.30 %. 12.4 % ofemployees earned income up to an annual limit of $76,200 (for year 2000) mustbe paid into Social Security, and an additional 2.9% must be paid into Medicare.This total equals 7.65% for each of the employer and employee.

There are no income limits on Medicare taxes, so even if your income is wellabove the cap for Social Security tax, you will still owe Medicare tax on the total.

You as an employer will pay the employers portion or half, of the employees taxon certain wages, employee pays the other half, deducted by the employer fromemployees wages.

A self employed person will pay the entire amount of 15.30%. So, a total of$15.30 out of each $100.00 dollars goes to S.S. & Medicare taxes.


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ESTIMATED QUARTERLY TAXES:If you are self employed you will be required to pay quarterly taxes. If you haveever owed taxes at the end of any given year you will be required to file a formand pay an estimated amount of what you think you will owe the IRS at the end ofthe tax year. Due Dates for 2004: 4/14/ 6/15/ 9/15 and 1/15/05. This tax is basedon your year to date (YTD) profit through the month PRIOR to the due date.

Example: 6/15 estimated tax, is through 05/31st

. The only exceptions to having topay this quarterly tax is if you did not show a profit on the prior year's return or ifyou are in a declared disaster area.

TANGIBLE TAX:This is a tax assessed by your county appraisers office and is paid yearly on yourbusiness property in counties where applicable.

STATE SALES TAX:If you sell products in your facility, you may be subject to reporting and payingstate taxes on this merchandise. Check with your State taxing authorities. Salestaxes assessed on your sales of merchandise will depend on many things andmay depend on your state requirements. You will be required to file statements

regularly to report the sales tax received on your sales.

In Palm Beach County Florida for instance, you would charge .06% on certainmerchandise sales. Certain items such as vitamins and minerals are exempt fromsales tax in Florida. There are areas in the state where sales tax is higher thanothers. There is no state sales tax on services such as massage therapy orvitamins and certain food products in Florida, TN has no sales tax on the serviceof massage therapy but does on Vitamins and food products. However, in somestates there is a tax on services such as massage therapy. Ohio recently initiatedsuch a law. Massage Therapy services, when not prescribed as medicallynecessary, are now a taxable service in Ohio. Check your state to see if there is atax on services. And if so, what services.

If you hear of such a bill being brought before legislation in your state, get thetroops together and fight like hell against it, this is what we successfully did inFlorida, you can do it too!

INTANGIBLE TAX:When and where applicable, this tax is assessed on non-tangible property such as1/3 your accounts receivable in Florida for this year and goes to 0 in the year2001. Be sure to check with your accountant or CPA for up to date informationspecific for the year, your state or area.

FUTA:FEDERAL UNEMPLOYMENT TAX ASSESSMENT

This taxis paid and reported at the end of the year. This amount varies withconditions and situations. The only thing constant is that it is taxed only on thefirst $7,000 of gross wages.

FORM 8109:Federal Tax Deposit Coupon.Remit quarterly deposits of Federal Unemployment

Tax. (Employers Quarterly Deposits for FUTA).


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FORM 940:Report annual liability for Federal Unemployment Taxes by filing Employer'sAnnual Federal Unemployment FUTA Tax Return

I-9 FORM:This is the form used to establish legal US residency.This is required by

Immigration/the Justice Department for employees right to work in the US.Sometimes two, or three forms of ID need to be provided to the employer.

SUTA: STATE UNEMPLOYMENT TAXThis tax is paid to the Department of Labor and Security by the employer to coverunemployment compensation under certain circumstances should an employeeleave work. The percentage of tax required will depend upon prior claimsexperiences. You will pay a percentage of the total employee wages.

SELF-EMPLOYMENT TAX: (See also, Estimated Quarterly Taxes)This is the social security tax for those who are self-employed, (sole proprietor)must pay. This tax is reported on a SCHEDULE SE and sent with your 1040 andSCHEDULE C. SCHEDULE C is for reporting your business expenses and showbusiness related losses or gains.

These taxes are due four times a year, April 15th, June 15th, Sept. 15th, and January15th and are filed using IRS FORM 1040-ES. If, after taking all your deductions,exemptions, and credits, you don't think you will owe any more than $1,000 onApril 15 on top of what you've already paid in taxes for the year, then you're notrequired to pay estimated taxes. If you did not show a profit in the previous year,you do not owe estimated taxes. (Or if you are in a declared disaster area).

1120S FORM:Form used to file your yearly taxes when you have incorporated using the SubChapter S status.

7004 FORM:Application for Automatic Extension to File Corp Tax Return

EMPLOYMENT TAXES: (W4 FORM)An employee fills out this form when they apply for a position with an employer.

This form will have the employee's name, address, social security number & thenumber of dependents they wish to claim or withholdings they wish to havewithheld from their paycheck.


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W2 FORM:Wage and Tax StatementYou will be required to provide a completed W2 Form at the end of the year to theemployee as a statement of wages and withholdings. Employee will need tosubmit copies to the proper entities listed on the form, and according to state andfederal requirements. A W-2 form reports how much money the employee madeon the job and how much taxes were withheld from the employees pay for the

year.

FORM 1099: MISC. REPORTSThe 1099-MISC reports income if you're an independent contractor, collected rent,or received royalties.A 1099 is the IRS Form that you must provide to anindependent contractor or to any others for which you have paid over $600.00such as rent, or royalties, in the year. You, as the person using the services of anindependent contractor will be required to file a report by January 31st of thefollowing year.

For 2003 years end, the forms are due by January 31st 2004. Filing this formnotifies the IRS of amounts paid and withholdings from each vendor, contractor orother services provided. As an independent contractor, you need to be sure you

have received this from the one hiring your services. To not have this form doesnot relieve you from your tax responsibilities as an independent contractor.

1096:Annual Summary and Transmittal of US Information ReturnsA 1096 is the recap Form for the 1099's provided. This 1096 Form gives a total ofall of the 1099's that are given to vendors. This Form is due to the IRS byFebruary 28th of the year following the payments made. There are penalties forlate filing or wrong identifying number.

W-9: You will give a W-9 Form to those vendors who will most likely be earningover $600.00 in the year. They must complete and return to you. Do NOT sendthis form to the IRS. You will need this form when filling out the 1099's.

941 FORM: TAX DEPOSITSQuarterly tax reports will need filing with the IRS on total employee wages paid.Depending on the amount, you may be required to deposit tax payments in abank account and fill out the appropriate IRS DEPOSIT FORMS. This will be basedon total wages paid for your employees. It is imperative that this is done in atimely manner.

Check with your CPA, accountant or local IRS office to be sure you are incompliance of all taxes and tax related issues. You may also find out a lot bygoing to www.google.com and type in the search window, IRS or Taxes etc..
http://www.google.com/http://www.google.com/


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MORE TAX INFORMATION

A deduction reduces your tax liability by a percent of every dollar deducted.If you're in the 27 percent tax bracket, a $100 deduction means you'll pay$27 less in taxes. A credit offers a dollar-for-dollar reduction of the tax youowe. If you're in the 27 percent tax bracket, a $100 credit means you'll pay$100 less.

You may benefit when you obtain equipment that can give you a tax credit.An example may be an electric massage table that can be used for thehandicapped or disabled, because it may qualify under the ADA. Ask youraccountant. Also, ask the person who sells the equipment to provide you thepaperwork to turn into the IRS for such a credit. An example would be JimCraft from Comfort Craft for his Comfort Craft Tables.


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TAXABLE EARNED INCOME

DEPOSITS FROM EARNED INCOME ARE TAXABLE:

FOLLOWING ARE A FEW EXAMPLES OF EARNED INCOME

CREDIT CARD CHARGES (IF you accept credit cards for payment)

CASH

CHECKS

INSURANCE COMPANY DEPOSITS, ETC.

BARTERING VALUES ARE ALSO CLASSIFIED AS EARNED INCOME

DIVIDENDS

INTEREST PAYMENTS RECEIVED


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TAX DEDUCTIONS

The great thing about owning and operating your own business is that youcan control the income, outgo, and what you do with the income you doreceive to a great degree. You have heard it said, "KNOWLEDGE ISPOWER".

To have the knowledge up front of what is tax deductible is to know how tomake your purchases and moves as you go through each year. When youknow what you can deduct you can also plan your investments such asmajor equipment purchases. I always believed in putting the money intoexpanding and enhancing my facility rather than giving it to the IRSwhenever possible.

Always be sure to hire an accountant or CPA but never just trust themwithout knowing something about taxes yourself.

I had to go through the aggravation of working with 5 accountants beforeI ended up with one that was knowledgeable and who worked in my favor,all while remaining extremely honest and for reasonable fees.

However, I still saved a lot of money by understanding taxes, having agood working knowledge, and staying on top of rules & changes in taxlaws.

Below are some, but surely not all, of the deductions you may be able todeduct.

ACCOUNTING

ADVERTISING & PROMOTION, May include Web Advertising /Web pages

ANSWERING SERVICE

AUTO; fuel, loan, insurance, rental, repair, tolls, other

BANK CHARGES, bank charge NSF, monthly, other

BROCHURES also under advertising,

CAR AND TRUCK EXPENSES

CHARITY

COMMISSIONS

COPYING CHARGES OR MACHINES (may be under equipment)


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CREDIT CARD EQUIPMENT LEASING

CREDIT CARD FEES

DUES

DECORATIONS

DEPRECIATION

EDUCATION

EQUIPMENT

ELECTRIC

EMPLOYEE LOAN

ENTERTAINMENT

FURNITURE

FREIGHT

GIFTS: (gifts can be deducted for up to $25.00 each, this excludespromotional items such as pens, buttons, calendars etc.)

HOME OFFICE EXPENSES

INSURANCE: business liability, health, employee health, group. As of2003 Health Insurance is 100% tax deductible

IRA CONTRIBUTIONS

JANITORIAL SERVICES /CARPET CLEANERS

LEGAL AND PROFESSIONAL FEES, (L & P) attorneys, accountants, etc.

LABOR COSTS: (When using a leasing agency you would write onecheck to cover the gross pay for all of your employees, such as FICA,Medicare, SUTA, FUTA, Workers Compensation, group health, etc. andit is all deducted under one category of LABOR COSTS. Also includedhere will be the administration fee charged by the leasing agency.


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LATE FEES

LAUNDRY

LEASE, i.e., office space, phone system, security, credit card machines,etc.

LEASE EQUIPMENT: Usually for large expense items such as ahydrotherapy tub, massage tables, sauna units, etc.

LICENSES, Establishment, Professional, City, County, State, Others?

LOANS

MEALS

MEDICAL: doctor, insurance co-pays, deductibles, non-insurance

medically related payments, office visits, supplies, and prescriptions,etc.

MILEAGE

MOTEL /HOTEL CHARGES

MISCELLANEOUS

MUSIC, INCLUDING CD'S, STEREO PLAYERS, LEASED MUSIC SYSTEM

OFFICE SUPPLIES

OFFICE EXPENSES

OFFICE EQUIPMENT: (large expenses that would be considereddepreciable expenses).

OFFICE REPAIRS, OFFICE CLEANING AND MAINTENANCE.

PAYROLL: (If you do not use an employee leasing agency,) FICA, FUTA,MEDICARE, SDI, SUI, GROSS PAY, GROUP INSURANCE, FLEX SPENDINGACCOUNTS, 401K s and a multitude of other possible deductions.

PENSION AND PROFIT SHARING

POSTAGE


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PRINTING AND COPYING

PROMOTIONS (Much of this may be covered underadvertising/marketing

REFRESHMENTS

RECREATION

REIMBURSEMENTS

RENT

RENT ON EQUIPMENT: Equipment that is rented and not leased.

RETURNS

SECURITY SYSTEM: (may also be listed under office expenses)

STORAGE

SUPPLIES: linens, oils, lotions, files, folders, CDS, tapes, etc. etc.

SUBSCRIPTIONS

TAX: Tangible, tax, Intangible tax, Tax Penalties, Tax Preparations,Occupational tax. Etc.

TELEPHONE: PAGERS, CELL PHONES, WEB SITE FEES, ON LINESERVICES FEES, Etc.

TAX PREPARATION

TAXES RELATED TO BUSINESS, IE; SUTA, FUTA, FICA, ETC.

TRANSFER FUNDS

TRAVEL EXPENSES: Motel, Tolls, A % of Meals & Entertainment

UTILITIES: Water, gas, electric, (electric can be under its own categoryof electric.)

WATER (BOTTLED WATER)

WAGES: For Employees


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WEB SITE EXPENSES: This may be deducted under AdvertisingExpense.

WORKERS COMPENSATION COVERAGE


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BITS & PIECES OF IRS INFORMATION

***********

MASSAGE PROFESSIONAL CODE

The IRS Requests a code on your tax return to identify your profession

CODE TO USE FOR REPORTING MASSAGE THERAPY TO IRSON SCHEDULE C (FORM 1040) LINE B is: 621900

***********

ABOUT SCHEDULE C DEDUCTIONS

SPECIFICALLY CELL PHONES

Code Sec. 162 (a) allows for ordinary & necessary business expenses incurredduring the taxable year in carrying on a trade or business. Generally, ataxpayer must establish that the deductions are ordinary & necessarybusiness expenses and must maintain records sufficient to substantiate theamounts of the deductions claimed.

Certain business expenses specified in Code Sec. 274 (d) require morestringent substantiation. This section disallows deductions for travelingexpenses, gifts, meals and entertainment as well as for "listed property"unless the taxpayer substantiates by adequate records or by sufficientevidence corroborating the taxpayers own statements the:

Amount of the expense Time and place of the expense The business purpose of the expense; and Business relationship to the taxpayer of the persons involved in the

expenses.

Cellular Phones are included in the definition of "listed property" forpurposes of Code Sec. 274. (d) (4) & are subject to strict substantiationrequirements.

***********

ALWAYS PROTECT YOURSELF

BE SURE TO KEEP GOOD WRITTEN RECORDS on Cell Phones, Travel, Meals,Entertainment, Gifts, and Listed Property.

***********


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REMEMBER

The more you can legally deduct, the more you can keep for you and yourfamily, or for save towards your future retirement. The IRS says you need toreport the least amount of allowable tax.

If you are not pleased with your accountant or CPA dont hesitate to make achange before you get in too deep or you let your tax related information getbeyond your basic control.

If you will learn as much as you can about taxes yourself you will find it easierto work with your accountant, providing him or her with what is needed andin a much more orderly fashion.

TAX QUESTIONS

MARK CORRECT ANSWER

True/False Question

1. Three deductions beginning with E are:Education Everything Entertainment

True

False

True/False Question

2.Three deductions beginning with A are:Auto Advertising Accounting

True

False

True/False Question

3.Three deductions beginning with L are:Legal Fees Licenses Labor Costs


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True

False

True/False Question

4.Three deductions beginning with T are: Taxes Telephone Travel

True

False

True/False Question

5.You can spend your money wisely to help to prevent paying taxes to the IRS byinvesting in a Computer, Massage Table (s) and / or Education?

True

False

True/False Question

6. Self- Employment Tax is the tax your employer pays into the IRS on your behalf.

True

False

True/False Question

7. Sales tax is a state tax assessed on sale of certain merchandise and / orservices in some states, while not in others?

True

False

True/False Question

8. F U T A is the employers portion or half of the employees taxes on certainwages?

True

False

True/False Question

9. If you are an independent contractor, the form you should receive from the onehiring your services, if the amount paid in the year is over $600.00, is called aMISC. 1099 Form?

True

False

True/False Question


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10. A Schedule C is used for reporting your business expenses and showbusiness related losses or gains.

True

False

Multiple Choice Question

11. Social Security, paid by a self- employed person is reported on which oneof the following forms?

Answer 1 Schedule SE

Answer 2 Schedule C

Answer 3 1120 Form

Answer 4 W4 Form

True/False Question

12. An Employee fills out a W4 Form when they apply for a position with you?

True

False

True/False Question

13. Mileage cannot be deducted from your home to your first business relatedstop?

True

False

True/False Question

14. Sub Chapter S Corporations must file an 1120s Form

True

False

True/False Question

15. Normally taxes are due on April 15th,

however you may delay PAYING yourtaxes until October at the latest without penalty?

True

False

True/False Question

16. You do not have to report cash received for your massage services?


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True

False

True/False Question

17. Checks received from insurance companies are classified as income?

True

False

True/False Question

18. The IRS rules are sometimes not the same as those for state & local rules.

True

False

True/False Question

19. Gifts can be deducted up to a limit of $75.00 each?

True

False

True/False Question

20. Under certain circumstances, when you are self employed you must payquarterly estimated taxes?

True

False

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