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Federal, State Tax Deadline Extended from April 15 to July 15, 2020
The coronavirus, or COVID-19, pandemic is disrupting the daily lives of many Americans. Federal and state officials are helping provide some relief to taxpayers by extending the tax deadline from April 15, 2020 to July 15, 2020.
A recent Tweet posted by United States Secretary of the Treasury Steven Mnuchin stated, “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”
Just like any other year, taxpayers can still request six-month extensions when filing federal returns, but Americans with refunds are encouraged to file as soon as possible.
The three-month deadline extension also applies to North Carolina state taxes. On March 20, the North Carolina Department of Revenue (NCDOR) announced that individual, corporate and franchise taxes will also have until the new summer deadline to file.
NCDOR says it will not charge penalties if taxes are filed and paid by July 15; however, unless state law is changed, interest will still be charged to state taxes filed after April 15.
In a press release https://governor.nc.gov/news/tax-deadline-extended-july-15 issued from his office, North Carolina Governor Roy Cooper said, “Taxpayers need relief during this difficult time and my administration is bringing it. I will work with both Republicans and Democrats in the state legislature to provide additional help.”
If you have questions, contact Anthony Hoffmaster, CPA, CES, MST by phone 919-435-4413 or email email@example.com. Hoffmaster CPA clients are asked to please have all tax information and documents to Anthony no later than June 15 to meet the new July 15 tax deadline.
Tax Advantages of Hiring Family Members for the Family Business
We are usually aware of the difficulties that can arise when working with family members, but there are also many real benefits. In addition to working with people you trust and spending time with those you love most, there are also tax advantages to hiring family members—especially your children.
Employment tax requirements for family employees can differ from other employees and one of the greatest advantages is that hiring your family can lower your payroll taxes.
Employing Your Children
A child age 18 or younger who works for his or her parent in a trade or business is not subject to social security or Medicare tax if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.
Additionally, a child working for his or her parent in a trade or business who is under 21 is not subject to Federal Unemployment Tax Act (FUTA) tax.
Children’s wages are subject to income tax withholding, social security, Medicare and FUTA taxes when working for a corporation, partnership (where each partner is NOT the child’s parents) or an estate.
Employing Spouses and Parents
Spouses and parents are also exempt from FUTA taxes when employed by his or her spouse or child in a trade or business, but they are still subject to income tax withholding and Social Security and Medicare taxes.
More than 150 million Americans are expected to file individual tax returns for the 2019 tax year before the traditional April 15 deadline, and this year, it’s more important than ever to work with a professional tax preparer to make sure your taxes are done correctly and accurately.
In the article, IRS Commissioner Charles Rettig is quoted saying staffing has been made a priority and that the hiring surge will help “balance enforcement and service” and enhance taxpayers’ relationship and interactions with the IRS.
A larger workforce will enable the IRS to better concentrate on things like:
• Employment Tax Evasion
One major area of focus for the IRS and the Department of Justice will be payroll tax dodgers. Businesses that use withheld funds from employee paychecks, like Social Security and Medicare, for personal expenses or to pay other debts instead of remitting the money to the IRS may be subject to extra scrutiny.
• Taxpayers with unresolved payroll tax issues
The IRS will be paying extra attention to businesses with large outstanding payroll tax withholdings not sent to the IRS. After unsuccessful attempts to reach businesses by mail, agency collectors are planning to show up in-person without warning to resolve the payroll tax issue.
The IRS is cracking down on individuals who they believe have unreported income from digital currencies, like bitcoin. Examiners are mailing letters to individuals thought to have accounts and IRS agents will work on cryptocurrency-related audits.
One final important reminder—if you own a corporation, always keep your personal and business expenses separate. In addition to saving you unnecessary stress at tax time, comingling funds and not having a separate expense record can raise red flags on both your individual and business tax returns. Having separate bank accounts and credit cards is a great way to keep the expenses separate.