Tax Filing Tips
The most frequently asked tax questions related to Tax Filing Tips
For Tax Payers
Need professional help with a specific tax issue or have general tax questions? Ask a CPA is the easiest way to get advice from a licensed accountant in our network.Ask a Tax Question
Provide answers to tax questions and introduce your practice to new potential clients. Build your CPAdirectory profile and earn reputation points.Answer Tax Questions
Without knowing anything about the type of work involved, it’s a little more difficult to give an answer.
First, presumably, you’re working and being paid as an individual and not working through a company. Second, I assume you’re not going to receive a Form W-2 at year-end from the individual who is paying you. If both of those assumptions are correct, then, you would be considered self-employed. I am not getting into the issue of whether you should be properly classified as an employee or as an independent contractor, as that issue has its own intricacies. By nature of the fact that the person paying you says he/she will not claim any write-off on his/her taxes, it sounds like you’re not being treated as an employee (as treating you as an employee would involve its own paperwork). In that case, you would report any money you received (and any corresponding expenses you pay in order to generate that income) on Schedule C on your individual income tax return, subject to income tax. Also, you should expect any money you receive to be subject to self-employment tax, unless your net earnings from self-employment for the year were less than $400. You do not have to say who paid you. I wish you the best in your endeavors!
If you are under 50 you can put up to $5,500, Over 50 you can put up to $6,500.
For self-employed. the 25% refers to the self-employed worker's "net earnings" from the business. The net result of the math is that the 25% limitation on "net earnings" works out to 20% of your adjusted profit after the self-employment tax adjustment in a Simplified Employee's Pension Plan. Self- employed individuals can even take the deduction on their 2016 tax return and fund the pension plan as late as six months from April 18, 2016 if they file for an extension to file their return.
Report to your employer only cash, check, and debit and credit card tips you receive.
If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. Do not report to your employer any portion of the tips you receive that you pass on to other employees. You must report tips you receive from other employees.
If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. Fill in the information asked for on the form, sign and date the form, and give it to your employer.
If you do not use Form 4070, give your employer a statement with Your name, address, and social security number.
Your employer's name, address, and business name (if it is different from your employer's name).
The month (or the dates of any shorter period) in which you received tips.
The total tips required to be reported for that period.
You must sign and date the statement. Be sure to keep a copy with your tax or other personal records.
The penalty amount is in addition to the taxes you owe.
You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer.
To do so, attach a statement to your return explaining why you did not report them.
Tips of less than $20 are not reportable to the employer and not subject to FICA tax But are subject to income tax.
Give your report for each month to your employer by the 10th of the next month. If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday.