<h3>Getting Your W-2 From The IRS</h3>

Your W-2 is first sent to the Social Security Administration (SSA), where it is processed in anticipation of your federal tax filing. After the SSA is done processing your W-2, it is then sent to the IRS. You can get a free copy of your <a href=”https://www.irs.gov/faqs/irs-procedures/copies-transcripts/transcript-or-copy-of-form-w-2″>current year’s W-2 from the IRS</a> after July of that year if you fill out the proper form and send it back to the IRS.

If you need your W-2 from previous years, then you can fill out the form and send it back to the IRS. But this will only apply to people who sent in their paper W-2 with their federal income tax filing. If you did not send in a paper W-2 with your filing, then you can fill out a form to get a summary of your tax filing to the IRS which will include your W-2 information, but not your actual W-2.

<h3>Getting Your W-2 From The Social Security (SSA) Administration</h3>

The <a href=”https://faq.ssa.gov/link/portal/34011/34019/Article/3836/How-can-I-get-a-copy-of-my-wage-and-tax-statements-Form”>SSA can provide you with a copy of your current year’s W-2</a> for free, provided you need it for a Social Security related issue. The SSA considers the primary non-Social Security related issues to be:

<ul>
<li>Needed to file your current year’s tax return</li>
<li>Confirming residency</li>
<li>Establishing income for a workers’ compensation incident</li>
<li>Establishing access to a pension fund</li>
</ul>

If you are trying to establish a Social Security claim or are filing papers for other Social Security related reasons, then you can get your W-2 for free. If you are trying to get your W-2 for non-social security related reasons, then the fee as of 2018 for one W-2 is $86.00.

The easiest way to get your current year’s W-2 is to get it through your employer. Some employers offer secure websites where employees can access their W-2 forms whenever they want, while other companies still prefer to mail out one copy in January. If you need your W-2 form and cannot get a copy from your employer, then there are ways you can get your W-2 for free online.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Usable Square Feet

Usable square feet is that part of your commercial rental space that only you will be using. It would include your office space, conference room, break room, rest rooms and any other part of a building that only your company can use. If you are renting an entire building, then all of the square footage is considered usable. This is an important distinction that we will discuss later.

Rentable Square Feet

The part of an office complex that your company uses in conjunction with the rest of the tenants in the building is called the common area. Commercial property owners use various complex mathematical formulas to calculate common area and you should try to understand those calculations as much as possible. The common area combined with the usable square feet is called the rentable square feet.

Calculating Commercial Rent Per Square Foot

Most commercial property owners have one rate for usable square feet and a separate and lower rate for common areas. The rentable square feet is rarely used to calculate the monthly rent. Instead, the formula for monthly commercial rent is:

Commercial Rent For An Entire Space Per Month = (usable square feet x usable square feet rate per month) + (common area x common area rate per month)

Factors That Affect Rates

Commercial real estate is graded on a scale of A to D, with A being the best properties and D being the least desirable. Most commercial property owners will set rates depending on the length of the lease and the grade of the property. Commercial tenants will find that the longer the lease is they are willing to sign, the lower their overall commercial rent per square foot will be.

Common Space In Single Units

Earlier we mentioned the conditions of a lease if the tenant is renting an entire building. The rental rate for common areas is often much lower than the rate for usable square feet. When a tenant rents an entire building, they are often charged only the usable square foot rate for the entire property because no other tenants will be using what would be considered common areas. This is just one reason why many companies prefer to rent space in larger complexes.

As a business owner, you need to understand the basics of calculating commercial rent per month if you want to be sure you are getting a good deal. By understanding the difference between usable and common space, you can save your company money on commercial rent each and every month.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Defining rental property
While the tax code provides a $250,000 per person tax exemption for gains made on your primary residence, this does not apply if you’re selling a rental property. A rental property is defined as a residence where you don’t live. This means that if you have a vacation home or a second home, you’ll owe taxes if your sale represents a gain. However, if you do live in the home for two years prior to selling it and you have owned it for five or more, you can claim some of the deduction. This is ideal for people who once treated their property as a rental before deciding to move into it.

Calculating capital gains tax
The capital gains tax rate is 20%, which means you will generally pay that rate on whatever you have gained from the sale. Figuring out what you have gained can be somewhat tricky.

The first thing to do is figure out your basis in the home. This includes what you paid for the home and any improvements you have made. Think, for instance, about the couple that buys a rental property for $200,000 in 2010. Over time, they put in a new kitchen, renovated the bathroom and added that fancy man save that everyone has been dreaming of. They updated the countertops, put in new wooden floors and built an over the garage apartment. These improvements cost roughly $100,000. This means that the couple has a $300,000 basis in the home.

The next step is to calculate the sale price properly for tax purposes. Imagine in the scenario above that the couple was able to find a buyer for $400,000. They have done quite well, netting a true $200,000 gain from purchase to sale. However, they have an additional $100,000 in improvements to add to the basis. On top of that, they had to pay $8,000 in selling costs, plus a $15,000 payment to the real estate agent who sold the home. This means that the sale price will be reduced by $23,000, leaving them with a taxable gain of $77,000.

Unless they are able to exempt some of that income, they would owe 20% on this figure, bringing the total to $15,400 in owed taxes. These taxes are unavoidable, and they become more complicated if the couple happened to take depreciation on the home from their earlier tax returns. If that is the case, then the government may be able to “recapture” some of that depreciation as ordinary income in the year of the sale.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Paycheck Stubs

If you work for the company you are researching, or you know someone who does work for that company, then you can get the company’s EIN off of any paycheck stub. Public and private companies are both required to display their EIN on the paycheck stubs of full and part-time employees.

Public Filings

Companies that sell stock traded on the public exchange have to file paperwork each year with the Securities and Exchange Commission that requires each company’s EIN. You can go to the SEC website and request the public filing information for a company and get the EIN from that data. Your other option is to contact the company and request a copy of its annual report, which will also have the company’s EIN published in it.

Legal Information Websites

Private companies are not required to release or publish their EIN for any reason. However, certain legal databases such as LexisNexis and Westlaw could be used to find the EIN of a private company. You can also go to the reference section of your local public library and request that the librarian use the business directories on-hand to look up the EIN of any public or private company.

Non-Profits

The rules for non-profits are a little different than companies. Since non-profits have different tax statuses, their EIN is available to the public at all times. Unlike a private company that does not have to reveal its EIN, a non-profit cannot avoid having its EIN available to the public. All you need to do to find the EIN of a non-profit is to use the <a href=”https://www.irs.gov/charities-non-profits/exempt-organizations-select-check”>right online IRS form</a> and look up the company by its name.

Corporate Websites

Since revealing an EIN is not really considered a big deal by any company, it is not uncommon for companies to publish their EIN on their corporate websites. If a company has an investor section to its corporate website, then you can usually go to that section to find the EIN.

An EIN is the number used by the IRS to identify a business. It can be applied to incorporated business and to sole proprietor businesses as well. There are plenty of ways to look up a business by its EIN number, and all of those methods can be used for free.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Two Ways To Pay A Bonus

A company can either include a bonus as part of an employee’s regular pay, or the company can issue a separate bonus check. The IRS prefers if companies issue separate bonus checks because bonuses are taxed differently than standard wages. If your bonus is put in as part of your regular pay, it will be taxed less than if it were a separate bonus checks. Most companies follow the law and issue separate bonus checks. But you might get lucky and work for a company that likes to reward employees while taking chances at the same time.

Money Off The Top

The amount of money that your company must take off the top (subtract from your earnings) of your bonus check changes year to year and it is a uniform number for every state. For example, if the rate is 30 percent, then your company must take 30 percent of your bonus check right off the top and send that money to the IRS.

If your state has an income tax, then usually bonus checks are taxed the same as standard income. You will want to check with your state’s department of taxation to see if you should expect extra money to be taken off the top and sent to the state.

Social Security and Medicare

The next amount of money that gets taken from your bonus check in taxes is based on the current tax rates for Social Security and Medicare. Your human resources or payroll department can give you those two rates that you would add together and then deduct from your pre-tax bonus amount.

Standard Federal Income Tax Rate

Your human resources department or the IRS can let you know how much you pay in standard income tax per pay period. This amount is also deducted from the pre-tax amount of your bonus.

Miscellaneous Deductions

A bonus check usually does not have deductions such as a Christmas club or medical insurance taken out of them. This is a small comfort to offset the amount that is automatically removed in taxes.

When you get a bonus check, you feel appreciated and valued by your company. It is important to remember that your company has nothing to do with the significant amount of taxes you have to pay on that bonus. Before you go spending that bonus check based on the amount of bonus you were told you were getting, remember to consider the taxes and try to get a more accurate amount to avoid bouncing any checks.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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With these things in mind, how do you know what penalties you’ll have to pay? Your accountant will walk you through the process of taking money out of your 401K. In some cases, it may make sense to do so. If you find yourself in a tight spot, for instance, it may be advantageous to pull money out, even if you have to pay a penalty. You can’t make this decision until you know just how much it’s going to cost, however.

Understanding taxes and penalties
As with traditional IRA distributions, the magic age is 59 and a half years old. Once you reach this line of demarcation, you can withdraw retirement money without penalty. If you’re younger than that number, you’ll have to pay both taxes and a penalty. Money distributed through a 401K account will be taxed as ordinary income. In many instances, this is a positive for taxpayers. You’ll be in a lower tax bracket as you near retirement age, allowing you to pay less tax on this money. If you pull money out before the designated retirement age, however, you will owe a 10% tax on any distribution.

This is much easier to understand with an example. A 58-year old person pulling $50,000 from his 401K will owe tax on this as ordinary income. Assuming the money falls into the 25% marginal tax bracket, a person will owe $12,500 in tax on the distribution. Factoring in the 10% penalty, a person will have to pay $17,500 of their $50,000 in tax money alone. As you can see, an early distribution may chop your money nearly in half if you aren’t strategic about it.

Understanding exceptions to the rule
Not every distribution before retirement age incurs a penalty. There are some exceptions to this rule that are worth understanding. If you are at least 55 and your employment has been terminated, then your penalty is waived. Likewise, if you become disabled, you can access the money without penalty. Likewise, if you need to take the money out to satisfy a domestic order, then it incurs no penalty. Finally, if you happen to pass away and your money is given to an heir as a part of an estate, it incurs no penalty. While these exceptions are critical, you will incur a substantial penalty in most cases.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Figuring out your net profit or net loss
The first step when filing taxes as a self-employed professional is to figure out your net profit or net loss. This means adding up all of your expenses and all of your revenue. Just as a company would calculate profit as the difference between revenue and total costs, you have to do the same thing. There are many things you can calculate as business costs. Certain travel costs, your telephone, Internet service and even a part of your housing cost can be applied to the cost figure if you are working from home.

The profit number you come up with will be your starting point for taxable income. From there, you will have to deal with three different tax obligations. First, there is form 1040, which allows self-employed people to file in a manner similar to those employed in standard arrangements. On top of that, you will owe self-employment tax, which is essentially Social Security and Medicare taxation for people in your situation. You’ll also have to file state income taxes, assuming you work in a state that charges these taxes.

The quarterly payment requirement
The federal government understands that it’s risky to ask self-employed people to save a whole year’s worth of taxes to pay on tax day. This is why most self-employed people are required to pay an estimated amount of taxes once every quarter. To do this, one would go through a tax obligation estimate with form 1040-ES. This form and the worksheet that goes along with it indicate just how much a person can expect to owe. If you are self-employed, you would then either mail in a check to the IRS once every quarter or you can pay using the government’s online portal. As you pay every quarter, you are essentially doing what standard employees do at their jobs. At the end of the process, you may receive money back from the government if you have paid too much.

If you make over $400 from your self-employment activities in net profit, then you are required to file a tax return. If you earn under that amount, you are only required to file a tax return if you happen to fall under some other mandatory category. The most important step for self-employed individuals is to get a true accounting of net profit by accurately keeping records of all costs and self-employment revenue. This can help immensely with staying within the law and saving money.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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How old are you?
The first step in the process is to figure out how many birthday candles you had on your cake this year. IRAs are restricted accounts in some ways. They are mechanisms through which your money can grow without up-front taxation. The government allows this because there is a societal incentive for people to save for retirement. You are essentially receiving a benefit from the government in exchange for your promise to keep the money in your account until you reach something close to retirement age. This means that if you take money out before that time, you’ll have to pay a penalty.

What’s the magic age? It’s 59 and a half. If you’re younger than 59 and a half years and you withdraw money from a traditional IRA, then you will have to pay a penalty on the distribution. That penalty is 10%.

Understanding IRA distributions through an example
Just because you didn’t have to pay income tax on your IRA contributions does not mean you are forever free of tax responsibility. In fact, you have just deferred tax liability until later in life. Often, this works out well, since most people will earn less in their golden years than in their prime. They’ll be taxed on distributions at a lower rate. Still, you will owe income tax on any money you withdraw from your IRA, even if you are over the magic age of 59 and a half.

Imagine, for instance, a woman who is 61 years old. She withdraws $20,000 from her IRA at that point. She would owe income tax on that amount. That income would be taxed as ordinary income, so it would fall into whatever marginal tax bracket she happened to be in depending on her other income.

If she happened to be 58 years old, she would still owe income tax on the money she had withdrawn. She would also owe an extra $2,000 in penalties because she chose to withdraw the money before she reached the magic age.

Understanding Roth IRA distributions
Some people go with a Roth IRA, which allows them to pull money out before the age of retirement. There are penalties associated with some of these distributions, however. For a person under 59 and a half, there is a 10% penalty if the Roth IRA has been open for less than five years. Each of these rules is designed to encourage long-term investment and deter people from taking early distributions.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Make Sure You Have All Of Your Information

For each independent contractor, you will need their tax ID number, name, address and the amount of money you paid them during the tax year. If you paid an independent contractor less than $600.00 for the year, then you do not need to issue a 1099-MISC form to them. But an contractor you paid over $600.00 to for the year must get a 1099-MISC form.

Getting The Right Forms

Unlike most other tax forms issued by the IRS, you cannot download or print blank 1099-MISC forms from the IRS website. You must buy these forms by calling 1-800-TAX-FORMS to get the proper forms. There are special parts of the blank 1099-MISC forms that are scanned by the IRS computers and only the specially printed blank forms will work. If you try to submit printed forms they will be rejected.

Filling In The Form

The payer’s name and tax ID boxes are where you put in your company information that includes company name and address. The tax ID is either your federal EIN or your own social security number, depending on how your business is registered. The recipient’s identification number is where you would put the tax ID number for your contractor, and the nonemployee compensation box is where you would enter how much money they made in the tax year.

Distributing Forms To Your Contractors

Your independent contractors get the Part B of the 1099-MISC and they must either be postmarked by February 1, or you must physically hand them to your contractors by February 1. If you miss this deadline, you could incur serious IRS penalties.

Getting Information Back To The IRS

IRS form 1096 is a summary of all of the 1099-MISC forms you have issued for that tax year. You must mail your 1096 and all of the Part A copies of your 1099-MISC forms to the IRS and have them postmarked no later than February 28th (or 29th on a leap year). You do have the option of filing all of your 1096 and 1099-MISC Part A information online, but you must file them before the March 31 deadline.

You would keep all of the Part C copies of the 1099-MISC forms for your records, and be sure to make a copy of the 1096 before you mail it. This will allow all of your independent contractors to file their taxes and legally claim their income.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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Qualify as retirement age under IRS regulations
The best way to pull your money out without a penalty is to live to the ripe old age of 59 and a half years old. This is the threshold age that allows you to pull money out without a problem. For many people, this means you’ll be able to access the money even before you officially retire.

The one upside to dying
Passing away is unarguably the least efficient way to avoid a penalty for an early withdrawal. If you die, the money in your 401(k) can pass on to heirs without a penalty. Whether you’re giving money to your children or leaving it to your favorite charity, your death will help them avoid this penalty. This knowledge can give you some peace of mind if you’re stacking money away for later in life. If the worst case scenario happens, your children or other heirs won’t get clipped for a penalty fee.

Suffer from a disability
Federal law allows those with a disability to begin using their retirement funds early. In order to qualify as disabled, you have to be declared disabled either by an insurance company or by the Social Security Administration. If you find yourself disabled, it’s best to get a letter certifying this so you can access the money you need.

Medical bills under a few conditions
When you have medical bills either for yourself or a dependent, you can access that retirement money. You have to meet a few conditions, however. First, you have to take the distribution during the year your medical bills were due. On top of that, you can only take out up to 7.5% of your adjusted gross income. This means that if you have $100,000 in adjusted gross income in a given year, you’re limited to $7,500 in penalty free 401(k) withdrawals.

Early retirement
If you become unemployed after turning 55 but before hitting the magic mark of 59 and a half, you may be able to access your money without a penalty. You’ll need to be legitimately unemployed, though. The good news is that it doesn’t really matter how you become unemployed. If you choose to take early retirement or you get fired during layoffs, you will still be able to access your retirement money as long as you don’t get another job.

Jim Treebold

Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!

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