We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.

 

Bill and Carol

Free Consult

Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Schedule H CPA explains the Nanny Tax and provides an example

Even Schedule H CPAs call it the Nanny Tax! If you paid more than $1700 to a household employee , or paid them more than $1000 of gross wages in any calendar quarter, you need to file Schedule H with your IRS Form 1040. Schedule H substitutes for the usual employer IRS tax forms. It sounds strange that Form 1040 calculates more than income taxes. But the IRS just tries to make compliance easier for household employers. It may not seem like it, but Schedule H beats becoming a traditional employer.

Household employees may include:

  • Babysitters
  • Caretakers
  • Cleaning people
  • Domestic workers
  • Drivers
  • Health aides
  • Housekeepers
  • Maids
  • Nannies
  • Private nurses
  • Yard workers

Key differences between Household Workers and Subcontractors

I think any Schedule H CPA would agree that folks generally try to classify household workers as subcontractors. Why? It shifts all the taxes and associated compliance hassles to the worker. The main two issues?

  • Do you control the HOW the work is done?
  • Does the worker use YOUR tools and supplies?

If either answer is yes, prepare Schedule H. And don’t issue a Form 1099-MISC.

Remember, Schedule H and the Nanny tax are closely linked to immigration status. You’re expected to know if your worker is legal to work in the US!

Nanny Tax Mechanics

Like any employer, you can withhold the employee’s share of employment taxes from their gross pay: a total of 5.65% in 2012 – 4.2% for Social Security and 1.45% for Medicare. The employee may request that you with hold federal income tax, but you are not required to do so.

Generally, folks pay a straight hourly wage or salary, and then pay all/both the employee’s 5.65% AND the employer’s matching 7.65% taxes themselves, on Schedule H during Form 1040 tax preparation. The employer also incurs Federal Unemployment Tax (FUTA) of .08% on the first $7000 of gross wages during the calendar year.

Nanny Tax Expense Example

So, if you paid $10,000 to a household employee in 2012, the tax due on Schedule H of Form 1040 would be $1386: $565 for employee’s employment tax, $765 for employer’s employment tax and $56 for federal unemployment tax. Remember you could have withheld the employee’s employment taxes of $565 from their gross pay.

We’re a CPA firm with a virtual office to serve long distance clients. Schedule H isn’t that complex, but we’re happy to prepare it as part of your overall tax preparation. We offer a free phone consult; just call (910) 399-2705.

 

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