Correspondence From The IRS – Yikes!Written by Richard A. Chapo
It’s a moment every person dreads. You pick up mail and there is an envelope from IRS. It’s not a refund check. What do you do?
Each year, IRS sends out millions of “correspondence audits” to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. These audits normally cover a very specific issue, often notifying you of additional small amounts of income for which you owe tax. Each letter and notice provides specific instructions explaining what you should do if action is necessary to satisfy inquiry.
Most correspondence can be handled without calling or visiting IRS. You simply follow instructions in letter and matter is put to rest. Alternatively, you can contact IRS to contest matter. Simply call telephone number indicated on letter or write an explanation as to why you disagree. Make sure to include copies of any supporting documentation you want considered by IRS. Typically, it will take IRS between one and two months to respond. During first quarter of year, it can take two to three months.
Sometimes, IRS sends a second letter or notice requesting additional information or providing additional information to you. Be sure to keep copies of any correspondence with your records. The IRS has been known to lose track of actions involving a taxpayer’s account.
Employment Taxes – What Are They?Written by Richard A. Chapo
If you have employees, you are responsible for paying a variety of taxes at federal, state, and local levels. You must also withhold certain taxes from paychecks of your employees. So, what are employment taxes?
Employment taxes include following.
1. Federal income tax withholding
2. Social Security and Medicare taxes
3. Federal unemployment tax (FUTA).
Federal Income Taxes/Social Security and Medicare Taxes
You generally must withhold federal income tax from wages paid to an employee. Form W-4 is used to determine specific amount, although most payroll services or your accountant will do this for you.
Social security and Medicare taxes pay for benefits that workers and families receive under Federal Insurance Contributions Act (FICA). Social security tax pays for benefits for retired, survivors, and disability insurance distribution provisions of FICA. Medicare tax pays for benefits under medical care provisions of FICA. As an employer, you must withhold a percentage of these taxes from employee and match withholding amount.