Category: Federal Income Tax

To file Form 944, Employer’s Annual Federal Tax Return,  you must be notified by the IRS that you are eligible to file Form 944.    If you estimate that your annual payroll tax liability for 2012 will be $1,000 or less and would like to file Form 944 instead of quarterly Forms 941, now is the time to contact the IRS to request to file Form 944.

To File Form 944 for calendar year 2012, you must call the IRS at 1-800-829-4933 by April 2, 2012, or send a written request postmarked by March 15, 2012.  The IRS will send you a written notice that your filing requirement has been changed to Form 944.  If you do not receive this notice, you must file quarterly Forms 941 for calendar year 2012.

 New employers are also eligible to file Form 944 if they will meet the eligibility requirements. New employers filing Form SS-4, Application for Employer Identification Number, must complete line 13 of Form SS-4 indicating the highest number of employees expected in the next 12 months and must check the box on line 14 to indicate whether they expect to have $1,000 or less in employment tax liability for the calendar year and would like to file Form 944.

Generally, if you pay $4,000 or less in wages subject to social security and Medicare taxes and federal income tax withholding, you are likely to pay $1,000 or less in employment taxes. New employers are advised of their employment tax filing requirement when they are issued their EIN.

Written requests to file Form 944 should be sent to: Department of Treasury, Internal Revenue Service, Ogden, UT 84201-0038 or Department of Treasury, Internal Revenue Service, Cincinnati, OH 45999-0038.

Taxpayers that elect to deduct sales tax instead of income tax paid typically use the sales tax deduction calculator to calculate their deduction instead of saving receipts and totaling the sales tax paid.  An easily overlooked deduction is the sales tax paid on large purchases that may be added to the amount computed with the calculator.

Large purchases include:

• A motor vehicle (car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle) whether purchased or leased.
• An aircraft or boat.
• A home (including a mobile home or prefab home or a substantial addition to or major renovation of a home) with certain restrictions.

Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, 2010, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

The maximum credit goes to smaller employers — those with 10 or fewer FTEs — paying annual average wages of $25,000 or less.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.

Here are answers to frequently asked questions about the credit.

The Senate approved an amendment Wednesday to repeal the expanded 1099 information reporting requirements in the health care reform law.  The repeal of the 1099 reporting requirements enjoys broad bipartisan support.   The requirements, which were included in the Patient Protection and Affordable Care Act (commonly know as the “Health Care Reform Bill,”  would have required businesses to report to the Internal Revenue Service any purchases of goods and services over $600 a year from another business or individual.

In the past, the battle has ensued over how to pay for the measure and cover about $19 billion in estimated lost revenue.   To avoid adding to the budget deficit, the amendment authorizes the director of the Office of Management and Budget to cut unnecessary unobligated spending, but exempts the Social Security Administration’s administrative expenses from being cut.