1. Remind employees that if there has been a change in their filing status (marriage or divorce) or number of dependents (birth, adoption, child turning 21), that they may want to file a new W-4 for 2009.

 

2. See that employee paycheck names/SSNs match those on their SS card and/or W-4.

 

3. The Special Accounting Rule.  Your firm may elect to treat taxable noncash fringes (i.e., personal use of company cars) provided any time in November-December 2008 as paid in 2009.  (If you make this election for tax year 2008, you must notify affected employees no later than Jan 31, 2009.)

 

Departing employees who return as ICs are a new IRS target.

 

Issuing a W-2 and 1099 to the same employee in the same year is a new red flag for IRS payroll tax examinations. The IRS believes that often the returning "independent contractor" (IC) is doing the same job as he or she did as an employee, but being treated as an IC to avoid payroll taxes and withholding. There are valid reasons to issue a W-2 and 1099 to the same worker in the same year. For example, an employee may earn non-employee compensation in addition to wages serving on a corporate board. Or the worker's role and status genuinely changes. If you issue both forms to the same employee in the same year, document the
facts - the work performed, number of hours worked, your firm's control over the work - as proof that there was a valid reason for your classification. [Kiplinger Tax Report]

 

 

If you do your own bookkeeping, test your knowledge with the following quiz.  It can also be used to test the knowledge of your current Bookkeeper or Accountant.  Scroll down for the answers.  Good luck!

 

1. Pro forma financial statements are generally not prepared in accordance with _____, but should provide a reconciliation of pro forma earnings with _____ earnings.
2. In a fair market value lease, the lessee classifies its payments as _____ _____, which it reports on the (income statement/balance sheet).
3. A new EIN is required when a small business _____.
4. A new EIN is required when a sole proprietor
takes a _____.
5. A new _____ plan or _____ _____ plan must have its own EIN.
6. A corporation that elects to be taxed as a(n) _____ must have its own EIN.
7. If your employee works two jobs at two different pay rates, do you send that employee one or two Forms W-2?

8. An employer can defend treating a new
worker as an IC by claiming it is _____
_____ because competitors do the same
thing. The safe harbors for classifying
workers as ICs, are found in IRC §_____.

 

Answers: 1. GAAP, GAAP 2. operating expenses, income statement 3. incorporates 4. partner 5. pension, qualified retirement 6. LLC 7. one 8. industry practice, 530. [AIPB Newsletter]