Business or Hobby? Do you know what the IRS uses to decide?

The IRS has a checklist to determine if a taxpayer’s activity is a business or a hobby. The results of that decision will impact the deductibility of certain expenses on your tax return.

The checklist includes

  • How many years have been profitable on the tax return,
  • Has the taxpayer taken steps to increase efficiencies and/or profitability of the activity,
  • Does the taxpayer depend on the income from the activity

If the IRS determines the activity is not a business then certain expenses can be deducted only on a Schedule A and others may not be deductible at all.

Click here for more information from the IRS [http://www.irs.gov/uac/Business-or-Hobby%3F-Answer-Has-Implications-for-Deductions], or call us – we can help!

Is your independent contractor really an employee? Do you know how to tell the difference?

The rules regarding who is an employee and who is an independent contractor vary by state and can be surprisingly strict. If the State determines at any point during or after employment that a subcontractor was really an employee there may be substantial taxes, interest and penalties due to both the IRS and the DOL.

Below find an easy to understand check list by the Washington State Department of Labor & Industries:
http://www.lni.wa.gov/TradesLicensing/Contractors/HireCon/IndContractor/Q1.asp

The Small Business Administration also produces a list of questions that help determine who may or may not be an employee. Here is a link to their checklist:
https://www.sba.gov/content/hire-contractor-or-employee

This is a link to the Oregon Statutes:
http://www.oregon.gov/IC/pages/12-definition.aspx

And if you’d like to read some recent court findings regarding this topic, click on these links:
http://www.forbes.com/sites/richardtuschman/2013/07/17/theyre-not-independent-contractors-if-the-court-says-theyre-employees/

http://www.nytimes.com/2015/06/18/business/uber-contests-california-labor-ruling-that-says-drivers-should-be-employees.html?_r=0

http://www.wsrp.com/toeing-fine-line-employees-independent-contractors/

If you have questions, call us – we can help!

Partnership and C Corporation Filing Deadline Changes

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If you own a Partnership or a C corporation and file based on a calendar year (12/31) your filing deadlines for your 2015 tax return have changed.  Here is a synopsis

Type of Filer 2015 tax year 2016 tax year 2016 Extension
Partnerships (Form 1065) Apr 15 March 15 Sep 15
C Corporations (Form 1120) Mar 15 April 15 Sep 15
S Corporations (Form 1120S) Mar 15 March 15 Sep 15
Trusts & Estates (Form 1041) Apr 15 April 15 Sep 30
Individuals (Form 1040) Apr 15 April 15 Oct 15
Exempt (Form 990) May 15 May 15 Nov 15

You can read more about these changes in the following articles: