I post here any questions that I feel many of our clients seem to ask. This page is more or less a reference guide for everyone.
Do I Need to File a Return?
Once you know your filing status, you'll be able to figure how much income you need to have in order to be required to file.
Single, 65 or over: $11,850
Married Filing Jointly: $20,600
Married Filing Jointly, one spouse 65 or over: $21,850
Married Filing Jointly, both spouses 65 or over: $23,100
Married Filing Separately: $4,000
Head of Household: $13,250
Head of Household: $14,800
Qualifying Widow(er) with Dependent Child: $16,650
Qualifying Widow(er) with Dependent Child, 65 or over: $17,850
If your income is equal to or greater than the above amounts, you need to file.
Regardless of income, if you can answer Yes to any of the following, you must file:
1. You owe a penalty for early withdrawal from a retirement plan.
2. You have household employees that you withhold taxes from.
3. You owe Alternative Minimum Tax.
4. You owe taxes on tips that your employer didn't withhold.
5. Your self employment income was more than $400.
6. You need to pay back your First Time Homebuyer Credit or have any other recapture taxes and penalties that you owe.
7. You received distributions from a Medical Savings Account.
8. You have at least $108.28 of income from a church that was exempt from Social Security and Medicare taxes.
Employee vs. Independent Contractor
Here is a list of what constitutes an employee:
1: Do you only have one person who pays your income and does that person determine what you will do and how you should perform that job?
2: You do not advertise your own business or are not self-employed.
3: You receive different benefits such as health insurance, vacation days, and other benefits from one person who pays for these benefits.
Independent contractors typically own their own businesses and are self employed. They pay their own FICA taxes and don't rely on a boss to supply benefits.
If you do happen to misclassify an employee...the penalties, at the least, are equal to the FICA taxes that are owed since the hiring of the employee plus another penalty if the missclassification was intentional as well as having to spend time in jail. You can find the exact amount of the penalties on the IRS website.
Should I file jointly or separately with my spouse?
Filing jointly is usually the most beneficial for married taxpayers. Married taxpayers only benefit in filing separately when they believe that their spouse is going to lower their refund or if the IRS is "garnishing" their tax refunds to pay off any debt they owe, either through student loans or amounts they owe for past audits. In cases like these the spouse could just file as an "innocent spouse" or "injured spouse".
In either instance, if you do choose to file separate from your spouse, if your spouse itemizes, then you have to itemize as well. Same goes with the standard deduction: both spouses have to take the standard deduction.
Which version of Quickbooks is best?
There's no right or wrong answer for this....because all companies are different in how they want to run things. With my experience, I've found that using Quickbooks Online functions very well with most small businesses, whether they sell services or products. It encompasses many of the aspects that the desktop version does, and moreso, in my opinion.
A few more reasons why I would choose the online version:
1) It's user friendly. There's not as many menu options and lists in the online version. Everything is pretty straight forward and easy to understand.
2) If your computer crashes or you get a virus, you don't need to worry if you've made a backup copy of your files. Everything is online and under a secure server.
3) You can have as much storage as you need. You're not limited to just what you have on your computer.
4) You're not limited to accessing your file on one computer. If you have an internet connection, you can log in and work from anywhere. Even on your phone!