Archives for April 2018

Group-Term Insurance – A Perk to Attract Talent

by

Employers know that the employees of a business will effectively determine whether the venture will be a success or not. Committed employees who are satisfied with their jobs, and the rewards their jobs bring, are a significant asset of any successful business. That is one of the reasons employers seek out ways to reward employees for their hard work and loyalty.

At the same time, of course, employers have to consider the bottom line — and the cost of keeping it healthy. That means staying within a reasonable budget for compensation and benefits. If costs are not kept under control, the overall financial status of the business could be threatened. One particular employee benefit generally meets the necessary requirements and provides advantages for both employees and employers. That benefit? Group-term life insurance.

Essentially, group-term life insurance is a program of low-cost renewable term life insurance that covers the lives of a group of individuals, such as the employees of a business. A formula that may be based on age, years of service, compensation or position is used in determining how much insurance coverage is provided. Coverage valued at twice an employee’s salary might be offered, for example.

Group-term plans are popular with employees for a number of reasons:

  • Employees receive the insurance coverage at no (or little) cost, depending on whether the plan is contributory.
  • Employees can secure coverage, in most cases, without any physical examination. This can be a substantial benefit for an individual who might otherwise be unable to obtain coverage.
  • The cost of the first $50,000 of life insurance coverage provided to an employee is not included in income for tax purposes. If coverage above that level is provided, the taxable cost to the employee is determined at very reasonable rates.
  • Employees may be permitted to convert their group coverage into individual policies when they leave their employer’s workforce.

Advantages for employers:

  • A high level of insurance protection for employees can be secured at a reasonable cost, and the insurance premiums paid for the coverage are income-tax deductible by the employer.
  • Employees who are satisfied with their benefits are less likely to leave. That means lower turnover and fewer resources spent locating and training new employees. In addition, having a group-term plan in place may make it easier to attract and retain employees as a business grows.
  • Group-term life insurance programs are relatively easy and economical to administer, further easing the burden for employers.

For more help with individual or business taxes, connect with us today.

Missed the Tax Deadline? Filing a Past-Due Tax Return

by

You missed the April filing tax deadline. What now?

For whatever reason, you didn’t file an income tax return by the April tax deadline. Don’t wait until next year, and don’t think that the IRS won’t notice. You need to do something about it now. If you didn’t file because you didn’t think you’d have enough money to pay your tax bill (or you waited too long and simply couldn’t complete your tax preparation), you could have applied for an extension. The IRS still expects you to send in what you think you’ll owe, but if you pay at least 90 percent with the extension, you may avoid some penalties. You’ll then have six months to pay all taxes due and turn in your tax return.

At the very minimum, complete and send in the Form 4868 by the April deadline with some payment if this happens again. The IRS wants to hear from you at filing time.

Making Good

File and pay as quickly as you can, whether or not you can pay the entire amount due. That’s what the IRS says to taxpayers who missed the tax deadline. This will minimize penalties and interest charges (the agency charges interest, a failure-to file penalty, and a failure-to-pay penalty if you owe). You may be able to avoid these if the agency accepts your reason for being delinquent.

There’s no penalty if you’re due a refund, but you must file for it within three years. How do you file? You cannot file electronically after the extension deadline in October, either on the IRS servers or through commercial software or websites. You’ll have to file a paper return. You can either send a check along with your return or use the IRS’ online payment options.

What if you can’t pay the total due? The IRS offers options here, including applying online to make installment payments and requesting a temporary delay.

Warning: Remember that the IRS will not send you an email or make a phone call demanding immediate payment. Such a request is part of a phishing scam.

Planning Ahead, Always

How do you keep this from happening again? Our suggestion is that you start doing tax planning year-round. Tax planning should really be a part of your overall financial planning, and it’s something you need to be thinking about all year.

We can help you in several ways here, by:

  • Working with you to understand what you should be doing every month and quarter to increase your understanding of your ongoing income tax obligation.
  • Make recommendations when your company is planning to make large purchases. We can advise you on timing and on how you should be claiming the acquisition on your tax return.
  • Going over your business expenses with you. Do you know what items should be recorded, categorized, and included when you file?
  • Creating reports that will help you calculate your quarterly estimated taxes.
  • Preparing your income taxes when the time comes.

By always considering the tax implications of your income and expenses, you accomplish three things. You make smarter purchases. You’re less likely to get a big, ugly surprise at filing time. And you may well be able to minimize your obligation to the IRS.

Still sitting there with a pile of receipts and forms from an unfiled return? Let us help you get back on track.

Don’t Forget – You are Responsible for Payroll Taxes

by

Any business with employees must withhold money from its employees’ paychecks for income and employment taxes, including Social Security and Medicare (FICA) taxes. The business has to forward that money to the government. A business that knowingly or unknowingly fails to remit these withheld  payroll taxes in a timely manner will find itself in trouble with the IRS.

The IRS may levy a penalty, known as the trust fund recovery penalty. The IRS assesses the penalty on individuals classified as “responsible persons.” The amount of the penalty equals to 100% of the unpaid federal income and FICA taxes withheld from employees’ pay.

Who’s a Responsible Person for Payroll Taxes?

Any person who is responsible for collecting, accounting for, and paying over withheld taxes and who willfully fails to remit those taxes to the IRS is a responsible person who can be liable for the trust fund recovery penalty. A company’s officers and employees in charge of accounting functions could fall into this category. However, the IRS will take the facts and circumstances of each individual case into consideration.

The IRS states that a responsible person may be:

  • An officer or an employee of a corporation
  • A member or employee of a partnership
  • A corporate director or shareholder
  • Another person with authority and control over funds to direct their disbursement
  • Another corporation or third party payer
  • Payroll service providers

The IRS will target any person who has significant influence over whether certain bills or creditors should be paid or is responsible for day-to-day financial management.

Working with the IRS

If your responsibilities make you a “responsible person,” then you must make certain that all payroll taxes are being correctly withheld and remitted in a timely manner. Talk to us if you need to know more about the requirements. We can also help you analyze your business’s cash flow so you’ll be in a better position to meet your obligations to the IRS.