The Internal Revenue Service wants taxpayers with disabilities and parents of children with disabilities to be aware of the Earned Income Tax Credit (EITC) and correctly claim it if they qualify.
The EITC is a federal income tax credit for workers who don’t earn a high income ($53,505 or less for 2016) and meet other eligibility requirements. Because it’s a refundable credit, those who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.
The EITC could put an extra $2 or up to $6,269 into a taxpayer’s pocket. Nevertheless, the IRS estimates that as many as 1.5 million people with disabilities miss out on this valuable credit because they fail to file a tax return. Many of these non-filers fall below the income threshold requiring them to file. Even so, the IRS urges them to consider filing anyway because the only way to receive this credit is to file a return and claim EITC.
To qualify for EITC, the taxpayer must have earned income. Usually, this means income either from a job or from self-employment. But taxpayers who retired on disability can also count as earned income any taxable benefits they receive under an employer’s disability retirement plan. These benefits remain earned income until the disability retiree reaches minimum retirement age. The IRS emphasized that social Security benefits or Social Security Disability Income (SSDI) do not count as earned income.
Additionally, taxpayers may claim a child with a disability or a relative with a disability of any age to get the credit if the person meets all other EITC requirements. Use the EITC Assistant, on IRS.gov, to determine eligibility, estimate the amount of credit and more.
People with disabilities are often concerned that a tax refund will impact their eligibility for one or more public benefits, including Social Security disability benefits, Medicaid, and Food Stamps. The law is clear that tax refunds, including refunds from tax credits such as the EITC, are not counted as income for purposes of determining eligibility for benefits. This applies to any federal program and any state or local program financed with federal funds. Continue reading
Do things seem a little hazy? Like the picture above, knowing whether that new hire is an employee or an independent contractor can be a little fuzzy. However, mistakenly classifying an employee as an independent contractor can result in significant fines and penalties. There are 20 factors used by the IRS to determine whether you have enough control over a worker to be an employer. Though these rules are intended only as a guide-the IRS says the importance of each factor depends on the individual circumstances-they should be helpful in determining whether you wield enough control to show an employer-employee relationship.
Checklist for Independent Contractor Status
Listed below you will find the a slew of factors with brief explanations of how to interpret each factor. If you answer “Yes” to all of the first four questions, you’re probably dealing with an independent contractor. If you answer “Yes” to any of questions 5 through 20 means your worker is probably an employee.
4 Essential Independent Contractor Tests
In order to be considered an independent contractor you MUST answer “Yes” to the following Items:
- Profit or loss: Can the worker make a profit or suffer a loss as a result of the work, aside from the money earned from the project? (This should involve real economic risk-not just the risk of not getting paid.)
- Investment: Does the worker have an investment in the equipment and facilities used to do the work? (The greater the investment, the more likely independent contractor status.)
- Works for more than one firm: Does the person work for more than one company at a time? (This tends to indicate independent contractor status, but isn’t conclusive since employees can also work for more than one employer.)
- Services offered to the general public: Does the worker offer services to the general public?
Other Tests of Independent vs Employee
To further determine if you might be at risk of having a contractor be considered an Employee by the IRS, you should evaluate him/her based on the following: Continue reading
Have you ever wondered how the difference between criminal or civil cases is determined? These are the differences:
A criminal case — whether or not something is a criminal action — is defined by state or federal statute. This means a law has been written that specifically makes an action illegal in our society. For example, designer drugs are so lucrative and popular when they are initially introduced because they are NOT illegal.
The legislatures must MAKE them illegal by statute before individuals can be prosecuted for making, distributing, or using these products. Criminal cases require that an individual be deemed guilty beyond a reasonable doubt for convictions.
If you are looking for defense from criminal charges, visit our Criminal Law Defense page.
In simplest terms, a civil case is anything that isn’t a criminal case
In a civil lawsuit the Plaintiff sues the Defendant to get the Court to order the defendant to either perform some sort of action or to pay the plaintiff money for something the defendant did or did not do. For example, if a neighbor damages your fence with their lawnmower and then refuses to repair the damage they caused, you might pursue this as a civil action to get the court to order your neighbor to pay for the repairs to the fence, or to repair the fence themselves.
Sometimes, civil actions can arise out of a criminal action. For example, in an assault case, the attacker may face both, criminal charges for the crime of assault and a civil lawsuit in which they are required to pay for the medical bills, lost work time and/or emotional distress of the victim. Civil actions usually have a lower burden of proof (which is called “a preponderance of evidence”) for a judgment in favor of the plaintiff.
Family law is also a civil matter. If you are looking for an attorney to help you in a divorce or other family law matter, visit our Family Law Page. If you have any questions about how to determine if your case is civil or criminal, call us: 859-236-8888. We can help you determine where you are now and what you need to do to move forward.
What is an LLC?
The Limited Liability Company (LLC) is a hybrid between a partnership and the more traditional corporate structure. An LLC is an unincorporated entity. You register an LLC, you don’t incorporate it.
What Are the Biggest Advantages to Forming an LLC?
- Provides the protection of a traditional corporation
- Allows you to maintain the flexibility and “informality” of a traditional partnership
- Cheaper to maintain (in the long term) than a traditional C-corp or S-corp structured business
- Transfer of ownership is easier than traditional corporate structures
- You avoid the double taxation you encounter with C-corps
- No need to file a second tax return, you can take gains/losses on your personal tax return
- No requirement to be a state resident or a US Citizen to form an LLC.
Do I Need An LLC?
If you think you might benefit from an LLC structure for your current or planned business venture, call Brian Bailey. He will be happy to consult with you before you decide to help you determine what the advantages and disadvantages might be in your particular situation.
Business Is In My Blood
I’ve been extremely lucky. I was raised by parents who took the time to pass on their wisdom. My mother, an accountant, has incredible business talent. She used that talent to help my father keep his own books in shape. While working outside the home and working to help my father succeed in his own business, she also managed to find time to recognize and gracefully utilize natural “teaching moments” at home while raising my brother and me.
My father, like my mother, is an inspiration to me. He was a plumber and shared his business wisdom freely and put me to work at a very young age in his entrepreneurial business. By the time I was in high school, he allowed me to take on more responsibility and learn more of his business. He made sure I would have the experience and work ethic that most of my peers didn’t.
I had the opportunity to repay him when his health began to fail. Together, we were able to keep his business open longer than he would have been able to manage alone. But, as his health worsened, he had a choice to make: he could sign up for disability or he could change his career path to a business model he could manage with health issues. My father went back to school in his late 40s and got his degree in Social Work. He became a Family Therapist and retired from that career in his late 60s. Continue reading
What is an S Corporation?
Advantages of Creating an S Corporation
An S corporation is treated by the federal tax system as a pass-through entity in the eyes of the IRS. To achieve this, your business must file Articles of Incorporation with the Secretary of State. Kentucky corporations are also required to file one copy of their Articles of Incorporation in the same county where the registered office is located.
Your company will then issue stock and the business will be governed as a corporation. The shareholders (those holding your stock) are the owners, but are protected from personal liability from the actions of the corporation. For instance, a shareholder’s personal property, bank accounts and other assets cannot be seized to pay off the corporation’s liabilities.
Income and losses are passed on to the shareholders. Each shareholder is responsible for the income or loss received by the corporation, on their own individual tax return. The S corporation eliminates double-taxation – once on the corporate level and once on the individual level, which happens with a regular corporation. Continue reading
McClure, McClure, & Bailey is the proud sponsor of an evening of local entertainment by legendary singer-songwriter and bestselling author, Gregg Allman.
On Friday, January 8th, Gregg Allman (of The Allman Brothers Band fame) will be arriving in Danville, Kentucky. This Rock and Roll Hall of Fame artist will take the stage at the Norton Center for the Arts that evening at 8:00 p.m. We hope to see you at the event. In the meantime, here’s a little sample of what the night might hold..
For tickets and more information, visit the Norton Center’s Webpage. We continue to support our local community in all ways, from our donations to the arts to our legal services to local citizens.
Brian Bailey of McClure, McClure, & Bailey is helping entrepreneur Douglas Thornburg II, owner of Southern Safety Innovation Corporation find a location for a new manufacturing facility in the Rockcastle County Industrial Park. Brian Bailey is dedicated to helping business grow. The proposal was outlined in this article from The Mount Vernon Signal, seen below:
What is a C Corporation?
Establishing a C Corporation
A C corporation is a separate legal business entity, the income of which is taxed through the corporation rather than through individual share holders, unlike S Corporations, which pass profits to shareholders who are then responsible for the tax burden of those profits on their personal tax returns. C corporations are named for Subchapter C of the Internal Revenue Code and C corporations are the default corporate type under that code. This means if another type of corporation is not specified, the entity will be a C corporation automatically when it incorporates. This is why C corporations are also called “regular” corporations.
A C corporation’s shareholders must elect a board of directors responsible for making decisions and overseeing policies for the entity. In most cases, a C corporation is required to report to the Kentucky State Attorney General on financial operations. The C corporation is viewed as an individual tax payer by the IRS. As such, C Corporations are subject to “double taxation” — being taxed once at the corporate level and again on the personal level when dividends are distributed to shareholders.
A major advantage of a C corporation is that its owners have limited liability and are not personally liable for any debts incurred by the entity and they cannot be sued individually for corporate wrongdoing. This “corporate veil” means shareholder liability is limited to their investments in the corporation. Additionally, since the corporation is an independent entity, it does not cease to exist when the owners/shareholders change or die. Continue reading