Tax season starts on January 20, which is just a few days from now. The last day to file taxes in Michigan follows the federal deadline of April 15, 2015. The well organized and financially savvy are already preparing their paperwork, if they haven’t already submitted it to a CPA to double check everything and file it as soon as the date comes around. If you’re like most people, however, you’re probably not looking forward to filing your taxes at all, let alone early. Here are five reasons you could be making a mistake:

#1 – Avoid Identity Theft Tax Return Fraud

As discussed in another blog post, identity theft tax return fraud has exploded in recent years, amounting to $5.2 billion in 2013 alone. Some unscrupulous people have found easy ways to get the Social Security Numbers (SSN) and other information of unsuspecting victims and use them to claim tax refunds in their name. This has become a ridiculously big “business,” with almost 15 million foiled attempts and almost 2,000 pending cases from the past few years. The IRS is struggling to catch up and find ways to bring these numbers down.

Along with keeping your information secure and entrusting it only to reputable establishments, filing your taxes early is your best defense against ID theft tax fraud.

#2 – Get Refunds Faster

If you’re owed money, the sooner the better, right? If you get a tax refund, you could have extra cash on hand for any unforeseen expenses. This is also always better than getting additional interest and charges on a credit card or loan. Processing time will also be faster since many people across the country will still wait until April when the IRS will get bogged down by the sheer volume.

#3 – Have More Time to Pay

If you will owe the IRS this year, filing early will also let you know early on just how much you need to pay. This gives you time to prepare, set aside the money, and avoid any nasty surprises.

 
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#4 – Avoid Additional Penalties and Paperwork

Life is unpredictable. According to Murphy’s Law, “anything that can go wrong, will.” Filing early gives you time to anticipate and address any problems that may surface. It gives you time to prepare the money you owe, or if needed, to file for an extension.

Figuring everything out in the first place can be complicated and time consuming. If you do things in a hurry at the last minute, you’re much more likely to make costly mistakes. You could miss out on significant deductions you’re entitled to just because you forgot to do the paperwork. On the other hand, you could underestimate how much you’re supposed to pay, leading to penalties and even an audit and criminal charges. Remember also that even if you file on time or file for an extension, you will be charged a stiff interest and penalties on the amount you owe if not paid by the deadline.

#5 – Avoid the Crowds

Waiting until the last minute will mean longer lines, whether at the IRS, the post office, the local CPA office, the bank, etc. Do yourself a favor and get it over with early on. That way, it won’t keep bothering you in the back of your mind for several months to boot. Tax season is an inevitable part of each new year. Since you can’t avoid it, you may as well get it over with and get on with the rest of your year hassle-free.

Contact Hazzouri Accounting and Tax Service Today!

Hazzouri Accounting is here to help. We have over 16 years of experience helping the communities of Canton, MI and the surrounding areas with all their tax needs. We take care of all the paperwork and filing to give you peace of mind, knowing everything was done right, on time, and with the utmost protection of your information. Call us today at (734) 844-1614 to get started! You can also fill out our website contact form or stop by our social media accounts to learn more:

Facebook fan page / Twitter Feed / Google+ Account

According to 60 Minutes, it is “the biggest tax scam around now,” tripling in the past three years. According to the Government Accountability Office (GAO), it has cheated U.S. taxpayers out of $5.2 billion in 2013 alone (the Treasury Department thinks it’s actually much more). How did they do it? They filed other people’s tax returns before they themselves did, basically stealing their tax refunds.

Although identity theft tax return fraud only really started in recent years, the terms “gone viral” and “epidemic proportions” have been used to describe this problem today. According to the IRS itself, they have stopped close to 15 million suspicious returns from 2011 to 2013, amounting to over $50 billion. According to CBS, over 565,000 cases of identity theft were resolved by IRS agents in 2013, three times the number of cases resolved the previous year. It took an average of almost a year to resolve the cases closed between August 2011 and July 2012.

These refunds also go to all sorts of places, including Bulgaria, Lithuania, Ireland, and Shanghai. In the U.S., Miami tops the list for identity theft tax fraud, partly because of a thriving underground community there, and partly because of the high number of retirees in the state. A big chunk of identities stolen belong to retirees, children, prisoners, and even people who have passed away.

Detroit is included in the list of top cities for identity theft tax fraud, along with Chicago, Atlanta, and Houston.

How It Works

Despite the many criticisms the IRS gets over the years, they’re actually pretty quick about sending tax refunds. They are generally required to send your refund within six weeks, but are usually able to send it within 1-3 weeks. Generally, you can file for your return as early as the end of January, all the way up to midnight of April 15. All you really need in order to file your return is your Social Security number and birth date. To detect fraud, the IRS needs to check your tax return against the W-2 your employer files. Employers have until March to file this, and this is first sent to the Social Security Administration before being forwarded to the IRS. All in all, the IRS can’t even begin checking tax returns against employers’ W-2’s until July.

The effectiveness of Kamagra tablet and its counterpart sildenafil price in india or sildenafil are the most recognized selections for treatment though these medicines and others with the same benefit do not really crush or even break all of them. Order buy cialis is very much smart decision and special care is taken to manufacture this medicine. Thus there is an increased blood supply to the penis causing firm erections. secretworldchronicle.com viagra online Parents opt to get their newborn baby’s spine checked immediately to check if there are any attractive discounts available for you. cialis tadalafil 10mg Now, unscrupulous people have discovered a way to take advantage of this wide window of opportunity. The first step is to get the Social Security Number (SSN) and other needed information of unsuspecting people. In the report by 60 Minutes mentioned earlier, a former scammer who had been caught and convicted revealed that it’s “very easy” to get the needed information from the likes of banks, medical offices, schools, or simply by people being careless about keeping their SSN private. Then, the fraudsters simply file tax returns for the stolen identities as early as they can. The people who had their identities stolen often don’t discover this until months later when they try to file their real tax return and are told by the IRS that they’ve already been filed.

How to Avoid It

First of all, you should be careful about giving out your Social Security Number (SSN) and other sensitive information. Even those who’ve protected this information have been victimized because they provided it to offices or clinics that turned around and sold it to scammers. It has become more and more important to provide sensitive information only to institutions with extensive track records and strict policies on keeping your data private.

The IRS is also providing an annual Identity Protection PIN (IP PIN) to ensure only the rightful person can file his or her tax return. However, it will probably take a lot more time for this to fully address the problem. While the IRS doubled the number of IP PINs issued for the second year in a row in 2013, it only amounted to 1.2 million out of more than 120 million taxpayers.

Filing your tax return as early as you can remains your best defense against identity theft tax return fraud. Hazzouri Accounting has over 15 years’ experience helping the Canton, MI and surrounding communities with all their Michigan tax needs. Being a local operation, we can ensure the safety of your information when handling and filing your IRS forms on top of affordable rates and quick service. Contact Hazzouri Accounting today at 734-844-1614 or fill out our contact form to get started on your tax return!

You can also find us on-line at our social media accounts:  Facebook fan page / Twitter Feed / Google+ Account

It can be incredibly easy to fall into the many pitfalls of payroll tax. Not only do they add up really fast, honest mistakes are common and lead to big penalties and interest. Things can quickly get out of hand and lead to civil and/or criminal lawsuits.

The Statistics

There are more than 15,000 tax laws in the U.S., averaging one change a day from 2001 to 2012.

A full one third of small businesses get fined for payroll mistakes, according to the Yahoo! Small Business Advisor.

Payroll taxes are even more problematic, with 40% of small businesses getting fined an average of $845 each year in penalties. This is a huge unnecessary cost, especially for those just starting out.

What’s more, according to the National Small Business Association (NSBA), business owners spend an average total of three weeks each year just sorting out payroll taxes. That’s three weeks of your time times your average ideal rate per hour/day, which equals a whole lot more $ down the drain.

Federal Withholding Forms

IRS forms start with the W-4, which also has a Spanish version and a version for Non-resident Aliens, depending on your employees.

There is also Form 673 for Claiming Exemption From Withholding on Foreign Earned Income based on Section 911 of the tax law.

Then, there’s Form 8233 for Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual.

State Withholding Forms and Rates

Michigan tax forms can be even more specific. In fact, Michigan is the only state that has different W-4 for many individual cities.

Michigan has the state W4 and Certificate of Nonresidency, the MI-W4 and MI-NR respectively.

Cities that have their own W4 forms are, in alphabetical order:

• Albion (AL-W4)
• Battle Creek (BS W-4)
• Big Rapids (BRW-4)
• Detroit (DW-4)
• Flint (FW-4)
• Grand Rapids (GRW-4)
• Grayling (GR W-4)
• Hamtramck (HW-4)
• Highland Park (HPW-4)
• Hudson (HU W-4)
• Ionia (IW-4)
• Jackson (JW-4)
• Lansing (LW-4)
• Lapeer (LW-4)
• Muskegon (MW-4)
• Muskegon Heights (MHW-4)
• Pontiac (PW-4)
• Port Huron (PH-W4)
• Portland (PW-4)
• Saginaw (SW-4)
• Springfield (SF W-4)
• Walker (WW-4)

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Withholding rates and exemption values also vary widely depending on the city:

1. 00% residents; 0.50 non-residents; $600 exemption
   1. Albion
   2. Flint
   3. Hamtramck
   4. Jackson
   5. Lansing
   6. Lapeer
   7. Muskegon
   8. Muskegon Heights
   9. Pontiac
   10. Port Huron
   11. Walker
2. Cities with same rate as (1) but with different exemption values:
   1. Battle Creek ($750)
   2. Grayling ($3,000)
   3. Hudson ($1,000)
   4. Ionia ($700)
   5. Portland ($1,000)
   6. Springfield ($1,500)
3. Cities with same exemption value as (1) but different rates:
   1. Big Rapids (1.50% / 0.75%)
   2. Detroit (2.40% / 1.20%
   3. Grand Rapids (1.30% / 0.65%)
   4. Highland Park (2.00% / 1.00%)

Other State Payroll Requirements

Aside from Federal/State withholding taxes, there are other contributions and laws that apply in Michigan:

1. State Unemployment Insurance (SUI): 0.06% to 10.3% depending on situation
2. Minimum Wage: $8.15 effective September 1, 2014
3. New Hire Reporting: Within 20 days (Form 3281 or MI W-4)
4. Withholding Child Support
5. Reciprocal States: Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin

Bottom line

As you can see, payroll and especially payroll taxes are something almost all small businesses will want to leave to the experts. Unfortunately, entrepreneurs by nature tend to try to do everything themselves. Do not make this costly mistake.

We at Hazzouri Accounting offer you over 16 years of expertise to ease this burden from your shoulders. We believe that our relationship with the local communities of Canton, MI and the surrounding areas take top priority, and easing their burdens in making a living is our calling. Contact us today at 734-844-1614 or fill out our contact form for more information on our complete, flat-rate payroll services.

You can also come find us on the web:  Facebook fan page / Twitter Feed / Google+ Account

Successful entrepreneurs often have more willpower, independence, and individualism than others. But while these are seen as important success factors, those who are just starting out can end up having a “superman complex,” and trying to do everything themselves.

Business owners already have so many roles to play in the first place. Many start out thinking that they’ll just be selling a product, how hard could that be? Then they quickly realize that they need to pay the lawyer, the accountant, the marketing director, the human resources director, and many other different roles at different times. Established companies often have entire departments to handle each of these, but small business owners are often faced with the difficult choice between spending what little capital they have on outsourcing or saving that money and doing it themselves.

Spoiler alert: payroll is almost always one of the things you will want to outsource.

While other tasks are easy enough to learn and manage on top of actually running your business, payroll can be quite complex and tedious. It is also one aspect of your business that can have severe ramifications if mistakes are made. First of all, employees will leave or underperform if they are not paid enough or on time. Violations of minimum wage and other laws regulating pay will have severe legal consequences. The taxes, especially, can drown you in confusion and IRS penalties. Numerous forms for the different taxes, such as Form 940, Form 941, Form 1099 (and its many variants), the W-2 Form, and the W-4 Form are just some of the IRS forms you will usually have to deal with.

Aside from the specific tax types and rates that may apply (a topic that can be worth a whole other blog post), there are things to remember that may be unique to Michigan (information is from the official state website).

– All employers who are required to withhold federal income tax are also required to register for and withhold state income taxes.

– Those with companies located in a different state, but with employees working in Michigan, are also required to register for and withhold taxes in Michigan. They would have to create a “nexus” or a physical presence of the company in the state.

– For companies out of state with no nexus in-state, but have employees who are residents of Michigan, things get more complicated. Those located in Wisconsin, Indiana, Kentucky, Illinois, Ohio and Minnesota may voluntarily register for and withhold taxes in Michigan; otherwise, the employees are required to make estimated income tax payments directly to Michigan. Companies in all other states are only required to withhold that state’s withholding tax.
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– Non-profit organizations are all also required to withhold state income tax in Michigan.

– Businesses are required to send a copy of their Form 1099 to the Michigan Department of Treasury if state taxes were withheld. This is submitted along with any 1099-MISC forms at the same time as Form 165 (Annual Return for Sales, Use and Withholding Taxes).

– Specific cities also impose their own income tax, with their own corresponding city tax forms. These cities are Albion, Battle Creek, Big Rapids, Detroit, Flint, Grand Rapids, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield and Walker.

This is just a general overview of payroll taxes. The situation can change depending on location, type of business, and even from one employee to the next. Sure, if you have a strong background in accounting and have studied the IRS Employer’s Tax Guide (it’s 67 pages long), you may be able to save some money and handle payroll yourself.

Because of all the complexity and risks involved with payroll and taxes, payroll service providers are growing in number and sophistication. There are companies that focus solely on handling others’ payrolls, going as far as “hiring” their clients’ employees themselves. Such services can be complicated, however, and quite expensive. Unless you’re running a large operation, hiring an experienced accounting firm that offers full payroll services can be much more cost effective.

Khaled Hazzouri is a Michigan CPA with over 16 years of expertise in helping local companies with all their accounting needs. Hazzouri Accounting offers complete payroll services for all your business payroll requirements. Contact us today at 734-844-1614 for more information.

You can also visit us on our social media accounts:  Facebook fan page / Twitter Feed / Google+ Account

“Whether you have one employee or 50, setting up a payroll system not only streamlines your ability to stay on top of your legal and regulatory responsibilities as an employer, but it can also save you time and help protect you from incurring costly Internal Revenue Service (IRS) penalties.”

This is how the U.S. Small Business Administration (SBA) summarizes payroll. This is the government agency whose slogan is to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” So when they warn against legal responsibilities and IRS penalties, we’d better listen.

Employer Identification Number

First of all, you should get an Employer Identification Number (EIN) from the IRS. This can be done online. You can also take advantage of the Michigan Business One Stop online service to register online for Michigan taxes, Unemployment Insurance, and other permits that may apply to your specific type of business.

Classifying Employees

In hiring workers, a common problem of human resources departments and business owners is whether to classify them as employees or independent contractors. You are required to withhold taxes from your employees’ paychecks (more on this later). With contractors, however, you simply pay them the amount agreed and they are responsible for paying their own taxes. Improperly classifying an employee as a contractor and failing to withhold and pay their taxes will make you, the employer, liable for back taxes and penalties.

However, the distinction is often vague. Even the IRS admits that “there is no ‘magic’ or set number of factors that ‘makes’ the worker an employee or an independent contractor, and no one factor stands alone in making this determination.” Generally, the employer must take a look at the business relationship with each worker and determine the degree of control of the employer on the worker’s job, and conversely, the degree of independence the worker has in carrying out the job. Things to consider are how much control you have on how the worker does his or her job, whether you provide a regular salary and tools/supplies etc., and the type and length of contract, benefits provided, and the importance of the work as an aspect of the business.

Payment Schedule
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Another decision to be made beforehand is how often your employees will be paid. State laws vary, but in Michigan, this can be once a month, twice a month, every two weeks, every week, or more frequently. There are also time limits as to how long after the work is done you are required to pay the salary. Aside from the pay period, have clear systems set in place for tracking hours or days worked, paid time off, overtime pay, and deductions for health plan premiums, retirement funds, and taxes.

Find Out All Taxes That Need To Be Filed

The taxes, in particular, need precise accounting and attention to detail. As the employer, you are responsible for filing and submitting both employees’ income tax and payroll taxes. These usually include Social Security, Medicare, federal income tax, state taxes and insurance payments. You will also have to submit your own Social Security contribution and federal unemployment tax for each employee.

For bona fide employees, they must fill out the Federal Income Tax Withholding Form (W-4) and submit this to you upon employment. You will use these forms to determine, withhold, and pay the corresponding federal income tax for each employee. Employers are also required to keep complete records of each employee for at least three years after the employee leaves. These records should contain the name, address, birth date, job title, basic rate, hours worked (unless employed in executive, administrative or professional capacity), total wages paid each period, and itemized deduction and fringe benefits.

Get Help If Needed

Setting up and running a payroll system properly is one of the most important financial aspects of your business. The system should ensure that employees are paid fair wages for their work, which is mandated by law and keeps your workforce happy and productive. As you can see, however, setting up payroll can be quite complex and tedious, and any small mistake could result in hefty fines and penalties. There are many tools available, such as paycheck calculators and programs, that you can use to make things easier. However, if you’re like most business owners, you already have too much on your plate. Getting an experienced CPA to handle everything is your best option. Khaled Hazzouri has over 15 years’ experience helping businesses in Michigan with all their accounting and payroll needs. Contact us today at 734-844-1614 or fill out our contact form to set up an appointment.

We can also be reached through our social media accounts:  Facebook fan page / Twitter Feed / Google+ Account