Tax Filing Tips

If you're total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer.
Tips of less than $20 are not reportable to the employer and not subject to FICA tax But are subject to income tax.

If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security and Medicare taxes or railroad retirement tax you owe on the unreported tips.
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.

If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer.
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.

To help determine if a tax professional is right for you, you may consider asking the following questions. What is your fee schedule and what services does the fee cover ? What is your general background including your degree and business experience ? How much experience do you have with small businesses in my industry ? Do you hold an active PTIN license ? Are you available year round to answer questions ? What is your policy on mistakes made on clients tax returns ? Do you pay the penalties. Do you offer other services, such as tax planning, general financial planning, budgeting or retirement planning ? How active are you in the business community? Are you familiar with my type of customers ?

Enrolled agents (EAs) must pass a tax exam given by the IRS and are authorized to represent taxpayers before the IRS. They may be former IRS agents who are qualified as enrolled agents based on their past service and technical experience. Enrolled Agents have passed a three-part, comprehensive IRS exam covering individual and business returns. They must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Enrolled Agents have unlimited practice rights before the IRS, which means they can represent taxpayers for any tax matter.

No. Every new business should retain a licensed tax professional as soon as possible . A relationship with a trusted advisor such as a CPA , Enrolled Agent or RTRP is a lifelong relationship. A great tax profession is the source of unbiased advice and can provide guidance and peace of mind for the smallest of financial decisions. Not all CPAs or other professionals are willing to accept new business startups so find a tax professional in your community with whom you feel comfortable and who is excited about your new business.

You can verify that your tax accountant is licensed by visiting the website www.ptindirectory.com All tax preparers must now be registered with the IRS and obtain a preparer tax identification number. When you meet with your accountant, you can ask him or her to show you a copy of his PTIN . Many states also require licensing. CPAs, Enrolled Agents, RTRPs ) registered tax return preparers) and Lawyers can all be licensed to prepare tax returns and all must have a PTIN to practice.