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Payroll Taxes: What they are and how to file

payroll taxes

It’s National Small Business Week in the US, which means it’s also time for small businesses to report payroll. As a business owner, you have the responsibility of paying payroll taxes. It’s important to keep in mind the benefits of e-filing and to consider using this method for your payroll tax return.

What are payroll taxes?

Payroll taxes are often referred to as employment taxes and include federal income tax withheld from employee wages, Social Security, and Medicare taxes. The Federal Unemployment Tax (FUTA) is also included, although it isn’t withheld from employee wages.

Benefits of e-filing payroll taxes

While you have the option of filing by paper, the IRS tends to respond faster to returns that are e-filed. Just as you would file an individual tax return, e-filing can prevent delays. E-filing is also much more convenient for making amendments to your return and tracking the status after you send it.

Paper returns often go missing, whether it’s through the mail or by getting lost in the huge backlog in the IRS office. In addition, any mistakes or missing forms would be much more difficult to catch and correct once you mail your return.

How to e-file your payroll taxes

Employers that feel comfortable and confident in their ability to e-file their taxes can do so through an IRS-approved software. The IRS provided a list of Authorized IRS e-file Providers to help you in your search for a tax professional should you feel that your tax situation is more complex.

Tax debt due to payroll taxes

Taxes can be very complicated and confusing, especially for businesses. That’s why at Optima, we provide tax relief services for both individual and business taxes. Give us a call at (800) 536-0734 for a free consultation regarding your case.

You can also download the Optima Tax App to help you understand what you should do if you received an IRS notice.

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Do You Qualify for IRS Penalty Relief?

Penalty abatements provide relief from IRS tax penalties. How do you know if you’re eligible? If you are looking to resolve your tax burden with the IRS, you may qualify for a penalty abatement. Optima CEO David King and Lead Tax Attorney Philip Hwang discuss the two most common circumstances that would qualify you for penalty relief.

Got an IRS Notice? Get a FREE Risk Review with our Optima® TAX APP with Notice Analyzer.

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May 16 Filing Deadline for Tax-Exempt Organizations

tax-exempt organizations

The IRS shared a reminder for tax-exempt organizations that have a filing deadline of May 16, 2022. Filing is mandatory, so if you need more time, you should request an extension as soon as possible.

Which Form should tax-exempt organizations file?

Tax-exempt organizations would file one of four tax forms for a return:

  1. Form 990-series annual information returns (Forms 990, 990-EZ, 990-PF)
  2. Form 990-N, Electronic Notice for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ
  3. Form 990-T, Exempt Organization Business Income Tax Return (other than certain trusts)
  4. Form 4720 Return of Certain Excise axes Under Chapters 41 and 42 of the Internal Revenue Code

Electronic filing for tax-exempt organizations

You should e-file to save time on processing and to avoid inevitable delays that occur when filing by paper. E-filing also reports your compliance with the IRS.

However, for tax-exempt organizations filing a Form 990, 990-EZ, 990-PF or 990-T for 2021, it’s mandatory to file electronically.

For organizations filing Form 990-N, the IRS website states, “organizations eligible to submit Form 990-N must do so electronically and can submit it through Form 990-N (e-Postcard) on IRS.gov.”

Requesting an extension for tax-exempt organizations

Should you need additional time to file, you can request a 6 month extension by filing  Form 8868, Application for Extension of Time To File an Exempt Organization Return. While this form allows you to file later, it does not push payment due dates if you owe the IRS.

Owing the IRS as a tax-exempt organization

Optima Tax Relief takes on clients with both individual and business tax debt. Give us a call for a free consultation today at (800) 536-0734.

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What to do if You Missed the Tax Filing Deadline

filing deadline

The end of tax season was officially April 18, 2022, which means the IRS is diving into enforcements and catching up on notices. What should you do, and what should you expect if you missed the filing deadline?

One-Time Penalty Relief

For late filers who have a history of filing and making payments on-time, you may qualify for one-time penalty relief. One-time penalty relief could reduce your owed balance by removing penalties such as interest. It’s also referred to as penalty abatement.

What Happens to Your Refund When You File Late?

Although your return is late, you should still file your taxes as soon as possible. If you are expecting to receive a return, but you filed late, you may have some of the balance offset and receive a smaller refund.

If you qualify for one-time penalty relief, you will not owe a balance and you can expect to receive the full refund.

Because you filed late, your refund will likely be late as well. The IRS has a huge backlog and the returns that are e-filed on time are top priority. Filing by paper and filing late will increase the likelihood of delays.

Penalties for Filing Your Taxes Late

Penalties for late filing range based on how late you file. Filing a few days late could result in interest on your balance. You will continue to accrue interest daily until you file, or the IRS will take more serious enforcement action.

Some of these more serious actions include levies and account liens, or even garnishing your wages to pay the balance owed.

Tax Debt Relief

Cases of tax returns that are years behind, or accounts that have been levied may benefit from professional assistance. Tax debt relief is available for many cases, in the form of payment agreements, offer in compromise, penalty abatement, and innocent spouse relief.

Call Optima for a free consultation today at (800) 536-0734. Our tax professionals may be able to assist you with your case.

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IRS Unclaimed Tax Refunds

tax refunds

There were about 1.5 million taxpayers that didn’t file a return in 2018. The IRS announced that it has $1.5 billion in tax refunds from 2018 and gave taxpayers until the end of the season to claim their money. If you missed out on claiming your refund, there are steps you can take to make sure you claim other refunds from 2019 and on.

How to claim an old tax refund

Taxpayers have a three-year deadline to claim unpaid tax refunds for federal taxes. While there are instances where it may not be required for you to report your income, filing helps the IRS ensure that you receive any refunds you may be eligible for.

The first thing you should do is make sure that you filed for the year in question. If you missed the filing deadline, you should still file as soon as possible to avoid IRS enforcement. To file a return from 2018 and prior years, you’ll have to file by paper. The final page of your current Form 1040 will tell you which IRS center to send your return to, as it may differ based on your state.

Low and moderate-income families could be eligible for larger refunds by qualifying for Earned Income Tax Credit. This credit is based on the number of children in a household and filing status.

Returns for 2019 and on can be e-filed.

What happens to your refund if you owe back taxes?

The refund is generally applied to any amount that you owe to your state or the IRS. It can be used to offset other overdue balances such as child support and student loans as well.

Optima Tax Relief assists clients with large tax liabilities reach a resolution. Give us a call for a free consultation today at (800) 536-0734.

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Where is My Tax Refund?

The IRS backlog has caused delays in millions of tax refunds, but not all refunds are delayed due to the pandemic. Lead Tax Attorney Philip Hwang and CEO David King discuss how you can avoid refund delays when you file and how your refund may be affected by various circumstances.

Got an IRS Notice? Get a FREE Risk Review with our Optima® TAX APP with Notice Analyzer

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President Biden’s Billionaire Income Tax Proposal

billionaire tax

President Joe Biden has discussed a proposal that would target billionaires in his 2023 budget. The proposal calls for a new minimum tax, forwardly named the “Billionaire Minimum Income Tax.”

What exactly is the Billionaire Minimum Income Tax?

This tax would assess a 20% minimum tax rate on US households worth more than $100 million. However, over half the revenue would likely come from households bringing in more than $1 billion of income.

The proposal document states, “This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”

Wealthy households that already pay 20% on their full income won’t pay any additional tax under the Billionaire Income Tax proposal. However, if they pay less than 20%, they will be expected to meet the new minimum.

What will the Billionaire Minimum Income Tax accomplish?

The proposal was created as part of Biden’s new spending plan, which is expected to reduce the deficit by $1.3 trillion over the next ten years. About $360 billion of that would be due to this new levy proposal.

In 2021, the federal deficit totaled nearly $2.8 trillion. Should this proposal pass through Congress, we could see nearly half of the deficit decrease over the next ten years.

When would the Billionaire Minimum Income Tax be enacted?

There is still uncertainty surrounding Congress moving forward on Biden’s proposal. Last year, Senate Democrats proposed a billionaires’ tax that ultimately didn’t proceed.

As Congress continues to discuss and debate the new billionaire tax proposal, Optima will update our readers and clients accordingly.

For tax debt assistance, call Optima at (800) 536-0734 for a free consultation today.

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IRS Sends Large Tax Bills for 2021 Unemployment Benefits

unemployment

Due to the COVID-19 pandemic, millions of US workers lost their jobs. While some were able to return to work in 2021, approximately 25 million people received unemployment benefits and didn’t withhold taxes. The IRS is now looking to collect back taxes for the $325 billion in total benefits and mailed millions of large tax bills this season.

Withholding Unemployment Tax

Most states and the federal government consider unemployment benefits taxable income. You should withhold federal taxes on your unemployment in order to avoid a bill the following tax season.

In 2020, there was a tax break that allowed millions of Americans to owe a lesser amount of tax, or not owe tax at all. However, as the IRS has steadily made efforts to return to normal enforcement activity since 2021, there was no such tax break this year.

What happens if you don’t pay taxes on unemployment benefits?

As with any tax liability, you will receive a tax bill from the IRS via mail. Should you not reach out to the IRS or pay the bill by the end of the tax season, you could face enforcement consequences such as a levy or lien, accrue interest, and lose eligibility for a refund after filing a return.

What to do if you owe taxes for unemployment benefits

If you owe taxes on your unemployment benefits and can’t afford to pay it back in full, you have a couple of options. The first option, if your tax bill isn’t too high by your means, you can contact the IRS to set up a payment plan. This option allows you to negotiate how much you will pay monthly until the bill is paid.

Should you find that your liability is too high for you to pay back or you’re facing hardship that doesn’t allow you to afford your payment options, consider seeking professional assistance such as Optima Tax Relief.

At Optima, we assist clients who owe state and federal taxes, including individual, joint filers, and business filers. Give us a call at (800) 536-0734 for a free consultation today.

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Optima Tax Relief is Recognized in Comparably’s Best HR Teams 2022

comparably hr

Comparably’s Best HR Teams list recognizes the nation’s top HR departments. There are over 299,440 Human Resources Managers currently employed in the United States, and Optima is proud to announce that our HR team has ranked in the Top 50!

About Comparably

Comparably is a leading workplace culture and corporate brand reputation platform with over 15 million anonymous employee ratings on 70,000 companies. Comparably awards are based on feedback provided by current employees in several categories. Workplace culture categories included the following:

  • Compensation
  • Leadership
  • Co-workers
  • Work-life balance
  • Professional development opportunities
  • Perks and benefits
  • Executive Team
  • Retention
  • Happiness
  • Meetings
  • Diversity
  • Team
  • CEO Rating
  • Manager
  • eNPS
  • Gender
  • Overall Culture
  • Office Culture

Of nearly 20 different categories total, all ratings were provided from March 2021 through March 2022.

Optima’s HR Team

Optima’s Associate VP of Human Resources Kimberly Carson shared her experience working with Optima, saying, “When I came to Optima, I was provided the opportunity to build almost an entirely new HR department/team. We have been incredibly blessed for the way that both the current and new HR team members have come together to show support for one another in working as a team, to be selfless and supportive every day, and exhibit a true love for life and positivity. I wake up each day excited to work with this team, and I feel incredibly honored that their efforts are being recognized for all the great work they do to make it the best department! I could not be prouder of our team!”

Optima is just as honored to have the great support system that is our HR department. We look forward to our company’s growth and improvement in all categories for next year’s list. Congratulations on this well-deserved recognition!

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Does Inflation Affect Your Tax Debt?

The state of the economy can be detrimental to your IRS or state tax liability. What exactly happens to your tax debt during inflationary periods? CEO David King and Lead Tax Attorney Phillip Hwang discuss the difference in interest rates, deadlines, and what to do if you find yourself in this circumstance.

Need more time to file your taxes? Download the Optima® TAX APP to file a free tax extension today.

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