Boost Employees' Take Home Pay
Even in good times, many employees have a hard time making ends meet.
Employers can help many of their employees get more take home pay. How?
With a tax benefit for employees called the advance earned income tax credit
(advance EITC). Advance EITC allows employers to add a portion of their
employees' earned income tax credits directly to their paychecks.
To get the advance EITC, employees must expect to earn less than
$26,928 in 1999, expect to have at least one qualifying child, complete
Form W-5 and give it back to
their employers. See Publication
15, Employer's Tax Guide (Circular E).
For more information on advance EITC, you can download Form
W-5 here, or call 1-800-829-3676 to get the free publication and form.
Phone In Form 941
Small businesses have an option to file their Form 941 quarterly
returns using a system that has proved highly popular and successful among
individual taxpayers. Each quarter, the Internal Revenue Service is mailing
to millions of eligible small businesses the 941TeleFile package. The package
allows qualifying businesses to file using a Touch-Tone telephone.
The package sent by the IRS contains everything a business needs
to successfully use 941TeleFile: the 941 TeleFile Tax Record, a payment
voucher and a paper Form 941 for those who do not meet the filing requirements.
Instructions on the first page list the qualifications. A business
that meets these should complete the tax record using the instructions,
then call the TeleFile system using a Touch-Tone phone and the toll-free
number listed. A recording guides users step by step through the phone
call and all the entries are repeated so users can check their accuracy.
As the user enters information, 941 TeleFile computes all the taxes and
balances. At the end of the phone call, the system provides a confirmation
number that the user records on the space provided on the 941 TeleFile
Tax Record. The tax record is the proof of filing and the official record
of filing the return and should be saved. The call takes about 10 minutes;
there is nothing to mail.
April 1998 was the first time that 941 TeleFile was made available
to small businesses nationwide. The IRS receives more than 300,000 returns
per quarter through 941TeleFile.
The 941 TeleFile system will begin accepting calls for the first
quarter of 1999 on April 1, 1999. The IRS TeleFile help desk is available
to assist and answer questions users have or to help them file. The number
is 1-901-546-2690 and is not a toll-free call.
Business Taxpayers Should Look for Tax Changes
The new year seems always to bring with it tax law changes that affect
business owners filling out their annual tax returns or that require planning
for the next year. Things are no different in 1999. The changes affect
how self-employed people and farmers handle income on 1998 returns, and
provisions that business owners should be aware of for planning in 1999.
On 1998 returns, the amount of health insurance premiums deductible
by self-employed people increases from 40 percent to 45 percent. From 1999
through 2001, 60 percent will be deductible.
Farmers can elect to compute their 1998 income taxes by averaging
farm income over a three-year period. This became effective for tax years
beginning after December 31, 1997, and ending before January 1, 2001.
One of the more high-profile changes takes effect after December
31, 1998. Self-employed people and employees may be able to take a home
office deduction if they use the office for administrative or management
activities and meet basic tests. There must be no other fixed place where
the person conducts substantial administrative or management activities
and the office must be used exclusively and regularly as a place of business.
An employee's home office deduction qualifies if the office is used for
the employer's convenience. One warning here: an employee's decision not
to use suitable space made available by the employer can affect the deductibility.
The IRS will waive penalties on businesses that timely use paper
federal tax deposit coupons while converting to the Electronic Federal
Tax Payment System (EFTPS). This penalty relief will run through June 30,
1999. It applies to all tax-payers required to enroll in EFTPS and deposit
electronically starting July 1, 1997, or later. Two toll-free EFTPS customer
service numbers, 1-800-945-8400 and 1-800-555-4477, can answer questions.
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