Anthony Sykes & Company

                 When being employed by a family member, things can get complicated. That is especially true when it comes to tax responsibilities. Often, it depends on the relationship and the type of business. For example, a spouse is considered an employee if the first spouse makes the management decisions. Then their income is subject to income tax withholding, Social Security, and Medicare taxes.           When children are employed by their parents in a Sole Proprietorship or partnership, the wages are always subject to income tax withholding. However, only after the children turn 18 does Medicare and Social Security come into play. This changes when the business is a corporation or an estate. At that point, all wages are subject to withholding, Medicare, and Social Security. It does not matter how old the child is. If you are planning on starting a business and employing family member...

           With each new year, the Internal Revenue Service ( IRS ) makes changes to the tax law, and 2022 will be no different. Now is the time to get informed about these adjustments.           Economic Impact Payments have been a part of our lives for 2 years. However, some may not have received all of their third payment. A taxpayer in this situation may be eligible for the recovery rebate credit . They would need to file a 2021 tax return to determine how much they could claim. It is also necessary to use the records you already have regarding your previous stimulus payments. Keeping good records is always important.           When it comes to Child Tax Credits , many families got monthly advance payments. If the total was less than they were eligible for, the balance can be claimed on their tax return. If there were no advance payments, the entire amount can ...

             A known part of the American Rescue Plan ( ARP ) Act, which was enacted in March 2021, is that there would be an Advance Child Tax Credit. These are advance payments of what would be expected to be claimed on the 2021 tax return. However, things can become complicated when there is shared custody of the children.           How does the Internal Revenue Service ( IRS ) decide who gets these advance payments? The information is based off of the 2020 or 2019 tax returns. So the parent that claimed them in the most recent year will be the one who gets the tax credit. If they alternate years claiming the tax and the one who will claim it is not getting the payments, they should remove themselves from this program. This will allow the other parent to claim the credit in their 2021 tax return. The other parent may need to repay the IRS if they received advance payments. If changes need to be ma...

         There are over 48 million Americans with student loans, and the number increases every year. While the amount of student loan debt can be stressful, it often turns into a benefit when it comes time to file your taxes. Specifically, the amount of interest paid on the loan during the year.           This applies to any loan taken out for educational expenses, which might include tuition, books, or room and board. This might be a loan for yourself or a family member, but your name must be on the loan in order to claim the deduction. The loan provider will send out a form that clearly states the amount of interest paid during the year to make the deduction claim easier. However, when it comes to these types of situations, there are restrictions and limitations on the amount that can be deducted and who may qualify. Talk to your Qualified Tax Professional to determine if this savings is available to you.

As the 2019 Novel Coronavirus ( COVID-19 ) spreads, people are doing one of two things. They are either changing their routines completely hoping that it does not directly affect them, or they are making slight modifications ready to get tested if they feel the onset of symptoms. The information and direction from sources like the Centers for Disease Control ( CDC ) is clear. People may wonder if getting a COVID-19 test would change their deductible medical expenses. Are these tests covered?          The Internal Revenue Service ( IRS ) has determined that High Deductible Health Plans ( HDHP ) can pay for COVID-19 testing and treatments. In a previous post, we discussed the details of Health Savings Accounts ( HSA ) and how they affect a person’s tax responsibilities. Simply put, these plans and accounts will cover the testing needed if you feel it necessary to go to the doctor. Do not let worries about taxes keep you from seeking medical help that you ...

         As we look toward 2020 and the next tax filing season, each Taxpayer must clearly understand what their filing status is. Having this information will help them know what the Standard Deduction will be, whether they will be eligible for certain tax credits , how much tax they should pay , or even if they are required to file a Federal Tax return . This usually depends on whether they are married on December 31 and that will determine their status. However, there can be exceptions.           Qualifying widow(er) with dependent child. This can be applied if the spouse of a Taxpayer has died within the previous two years and they have a dependent child. There are other conditions that must be considered. Head of household. This can be used by unmarried Taxpayers in certain situations. they must have paid more than half of the cost to maintain a home for themselves and a qualifying person who lived in the ...

         It has been well documented that the partial shutdown of the Federal Government has placed a great burden on the Federal employees who are not receiving a paycheck. Some of whom are being forced to work without pay, such as the Transportation Safety Administration , United States Coast Guard and Air Traffic Controllers . Many in the IRS will soon be called back to work in order to process Tax Returns without pay as well. However, as this shutdown has now continued for a full month, the ripple effect is now growing.           In the state of California, Non-Profit organizations are being directly impacted by this shutdown. Housing organizations are unable to tell if their applications have been received or approved by the Department of Commerce. This is a great concern because they are directly related to the fires last year in Northern California. The Tax Preparation Assistance programs that Non-Profi...

         Now that school is back in session, it’s a clear sign that summer is coming to an end. In many places, it’s time to expect a clear change of weather. It can also be the time for parents to prepare for some serious tax savings when it comes to expenses related to their children. With a little organization now, the benefits can be felt in the future.           Most of us are familiar with the Childhood Tax Credit , which can be claimed for children under the age of 17. The TCJA has affected this slightly, but it continues to be a source of joy for parents. However, there are other situations that can become tax benefits, which often occur during the summer months.           If the children are sent to a day camp, or have a nanny for the school break, those costs might be able to be written off by the parents. This is where good record keeping is critical. The car...

          Children are gifts to their parents in a variety of ways. That is also true when it comes to filing Tax Returns. Here are a few tax benefits that parents can claim that relate to their children.           If a parent paid for the care of their child under the age of 13 so they could work or look for work, this may qualify for the Child and Dependent Care Credit . Adoptive parents can also claim the Adoption Credit for certain costs related to the adoption process.          The Child Tax Credit has specific points that need to be addressed. To claim this credit, the child must be under 17, as of December 31, 2016. The child can be the Taxpayer's child, stepchild, sibling, stepbrother or sister, grandchild, and even niece or nephew. They can also be an adopted child or a child lawfully placed for adoption. They must be a dependent that is cla...