Payments such as fees to an independent contractor — as opposed to an employee — are not typically subject to any withholding. The payees report and pay taxes on this income when they file their federal tax returns. However, there are exceptions. Explains the IRS, backup withholding is required on certain nonpayroll amounts when certain conditions apply. The IRS wants to make sure it gets its cut, and the current standard withholding in these situations is 24%.
When you're filing your tax returns, what expenses can you deduct from business income? It's a complex question. To start with, a business expense must be both ordinary and necessary to be deductible, according to the IRS. An ordinary expense is one that's common and accepted in your trade or business. A necessary expense is one that's helpful and appropriate for your trade or business; it doesn't always mean an indispensable cost. Since only business expenses are deductible, they must be separated from other types of expenses: those that are included in the cost of goods sold, capital expenses and personal expenses.
The IRS is encouraging taxpayers to make sure they're well-informed about their tax situation as the filing deadline approaches. The key topics include special steps related to charitable contributions, economic impact payments and advance child tax credit payments. Here are some key items for taxpayers to know before they file next year.
If you're in a second marriage, you and your spouse may both have children from previous relationships. You don't necessarily have the same level of income or savings. You also come to the marriage with different life insurance policies and retirement plans. It isn't going to be easy to create a long-term estate plan, but it is possible if you and your spouse are honest and flexible.
When you refinance, you get a new mortgage to pay off your existing mortgage. At first, this may seem like a bad decision on its face. Getting a new mortgage takes time and money, so why should you want to do it? But there are a few reasons to consider refinancing.
The IRS has issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
The COVID-19 pandemic disrupted life as we knew it. We are still in the midst of finding our way to a new normal, but it is not clear how long that will take or what it will look like. Some things are becoming clearer, however, and one of those things is that blockchain technology and cryptocurrency are growing in popularity. For example, Bitcoin, a kind of cryptocurrency, is often in the headlines as its value goes up and down.
If you own a business, you may find yourself imagining that moment when your company's stock is listed on an exchange. It's a great goal, but there's a lot to think about first. Don't consider going public unless all or most of the following are true:
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