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Free State Tax Efile

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Free State Tax Efile

Free state tax efile It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors. Free state tax efile Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. Free state tax efile Select the Scenario that Applies to You: Free state tax efile I am an independent contractor or in business for myself Free state tax efile If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center. Free state tax efile I hire or contract with individuals to provide services to my business Free state tax efile If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are. Free state tax efile Determining Whether the Individuals Providing Services are Employees or Independent Contractors Free state tax efile Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be - Free state tax efile An independent contractor Free state tax efile An employee (common-law employee) Free state tax efile A statutory employee Free state tax efile A statutory nonemployee Free state tax efile In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. Free state tax efile Common Law Rules Free state tax efile Facts that provide evidence of the degree of control and independence fall into three categories: Free state tax efile Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? Free state tax efile Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) Free state tax efile Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? Free state tax efile Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. 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. Also, factors which are relevant in one situation may not be relevant in another. Free state tax efile The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination. Free state tax efile Form SS-8 Free state tax efile If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status. Free state tax efile Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 (PDF).
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The Free State Tax Efile

Free state tax efile 2. Free state tax efile   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Free state tax efile Amount realized on a nonrecourse debt. Free state tax efile If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Free state tax efile The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Free state tax efile This is true even if you voluntarily return the property to the lender. Free state tax efile If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Free state tax efile You must report this income on your return unless certain exceptions or exclusions apply. Free state tax efile See chapter 1 for more details. Free state tax efile Borrower's gain or loss. Free state tax efile    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Free state tax efile The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Free state tax efile The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Free state tax efile For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Free state tax efile You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Free state tax efile Amount realized and ordinary income on a recourse debt. Free state tax efile    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Free state tax efile The amount realized also includes any proceeds you received from the foreclosure sale. Free state tax efile If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Free state tax efile You must report this income on your return unless certain exceptions or exclusions apply. Free state tax efile See chapter 1 for more details. Free state tax efile       Example 1. Free state tax efile Tara bought a new car for $15,000. Free state tax efile She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Free state tax efile Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Free state tax efile On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Free state tax efile The balance due after taking into account the payments Tara made was $10,000. Free state tax efile The FMV of the car when it was repossessed was $9,000. Free state tax efile On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Free state tax efile In this case, the amount Tara realizes is $9,000. Free state tax efile This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Free state tax efile Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Free state tax efile She has a $6,000 nondeductible loss. Free state tax efile After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Free state tax efile Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Free state tax efile Example 2. Free state tax efile Lili paid $200,000 for her home. Free state tax efile She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Free state tax efile Lili is personally liable for the mortgage loan and the house secures the loan. Free state tax efile In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Free state tax efile When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Free state tax efile At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Free state tax efile She remained personally liable for the $8,000 balance. Free state tax efile In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Free state tax efile The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Free state tax efile She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Free state tax efile Lili must also determine her gain or loss from the foreclosure. Free state tax efile In this case, the amount that she realizes is $170,000. Free state tax efile This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Free state tax efile Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Free state tax efile She has a $5,000 nondeductible loss. Free state tax efile Table 1-1. Free state tax efile Worksheet for Foreclosures and Repossessions Part 1. Free state tax efile Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Free state tax efile Otherwise, go to Part 2. Free state tax efile 1. Free state tax efile Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Free state tax efile Enter the fair market value of the transferred property   3. Free state tax efile Ordinary income from the cancellation of debt upon foreclosure or repossession. Free state tax efile * Subtract line 2 from line 1. Free state tax efile If less than zero, enter zero. Free state tax efile Next, go to Part 2   Part 2. Free state tax efile Gain or loss from foreclosure or repossession. Free state tax efile   4. Free state tax efile Enter the smaller of line 1 or line 2. Free state tax efile If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Free state tax efile Enter any proceeds you received from the foreclosure sale   6. Free state tax efile Add line 4 and line 5   7. Free state tax efile Enter the adjusted basis of the transferred property   8. Free state tax efile Gain or loss from foreclosure or repossession. Free state tax efile Subtract line 7 from line 6   * The income may not be taxable. Free state tax efile See chapter 1 for more details. Free state tax efile Amount realized on a nonrecourse debt. Free state tax efile    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Free state tax efile This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Free state tax efile Example 1. Free state tax efile Tara bought a new car for $15,000. Free state tax efile She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Free state tax efile Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Free state tax efile On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Free state tax efile The balance due after taking into account the payments Tara made was $10,000. Free state tax efile The FMV of the car when it was repossessed was $9,000. Free state tax efile The amount Tara realized on the repossession is $10,000. Free state tax efile That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Free state tax efile Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Free state tax efile Tara has a $5,000 nondeductible loss. Free state tax efile Example 2. Free state tax efile Lili paid $200,000 for her home. Free state tax efile She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Free state tax efile She is not personally liable for the loan, but grants the bank a mortgage. Free state tax efile The bank foreclosed on the mortgage because Lili stopped making payments. Free state tax efile When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Free state tax efile The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Free state tax efile She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Free state tax efile Lili has a $5,000 realized gain. Free state tax efile See Publication 523 to figure and report any taxable amount. Free state tax efile Forms 1099-A and 1099-C. Free state tax efile    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Free state tax efile However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Free state tax efile The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Free state tax efile For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Free state tax efile Prev  Up  Next   Home   More Online Publications