How to File

If you receive a W2 from your employer and have no other taxable income to report, and no rental property income visit the W2 Tax Preparation page, and submit the form online or download and return the W2 PDF.

If you receive a 1099R, and / or retired receiving Social Security Benefits only. Walk-In / drop-off your tax documents, or email us your tax documents.

If any of the following scenario’s below apply to you visit the Self Employed Tax Preparation page.

• I receive a W2 from my employer and have rental property, or a side job where I earn extra taxable income.
• I received a 1099 from my employer, I work as an independent contractor.
• I have rental property / rental properties or buy and sell homes (recommended to provide closing / HUD statements, your title company should have provided this at closing).
• I receive 1099 income from a third party platform or marketplace such as Airbnb, Uber, or Lyft.
• I receive 1099 income from trading stocks, crypto or any financial exchange.

Sole Proprietorship
A sole proprietorship is a business owned by one person, usually the individual in charge of the day-to-day operations, and has no formal legal structure. A sole proprietor is someone who owns an unincorporated business by themselves.

Who’s A Good Candidate?

A sole proprietorship is often the ideal choice for a professional in private practice, a guest house owner, or the owner of a small craft business, for example. For many, the advantages outweigh the disadvantages, as long as the business is carefully managed.

Advantages:

• No additional paperwork is required; owners just start
• Owners don’t file corporate income taxes; just a Schedule C with their personal tax return (Form 1040)
• The owner keeps all profits

Disadvantages:

• Sole proprietors assume unlimited liability and are legally responsible for all debts against the business
• Business and personal assets are, from a tax stance, considered the same, therefore both are at risk if the owner is sued or taxed or if creditors start calling
• Sole proprietorships are difficult for partners to buy into
• Tax consequences may result from later converting a sole proprietorship to a corporation or an LLC

Independent contractor

People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether they are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the person paying for the work has the right to control or to direct only the result of the work and not how it will be done. The earnings of a person who is working as an independent contractor are subject to self-employment tax. For more information on determining whether you are an employee or independent contractor, see Pub. 15-A, Employer’s Supplemental Tax Guide.

Source: https://www.irs.gov/publications/p334

If you own or operate a one owner LLC submit the Self Employed / 1099 / LLC form

Limited liability company (LLC)

An LLC is an entity formed under state law by filing articles of organization. By default, for income tax purposes, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner’s federal income tax return. For example, if the single-member LLC is not engaged in farming and the owner is an individual, they may use Schedule C.

Single-Member Entities Treated as Disregarded Entities

• A single-member LLC (or a one-owner LLC) engaged actively in trade or business IS required to pay self-employment tax on its profits.

• Business income is reported on a Schedule C tax form and self-employment tax is calculated on a Schedule SE tax form.

• A single-member LLC not engaged in an active trade or business DOES NOT pay self-employment tax on its profits.

• An example of this would be an LLC engaged in a passive activity such as real estate investing. These types of single-member LLCs would report passive income on Schedule E.

If there are two or more members associated with your LLC fill out the Partnership Tax Preparation Form.

Multiple-Member LLCs Treated as Partnerships

• The owners or partners in a multiple-member LLC engaged in an active trade or business DO pay self-employment tax on their shares of the profit.

• Business income is reported on a separate Form 1065 partnership tax return, and individual owner/partner income is reported on their Form 1040 individual tax return.
• If members are not engaged in active trade or business, then the LLC owners/partners DO NOT pay self-employment tax on their portion. Partnership profits are then reported on each owner/individual’s respective Schedule E.

Fill out the C Corp Tax Preparation form here

LLCs Treated as C Corporations
The profits of an LLC that has elected to be treated as a C corporation are not subject to self-employment tax but are subject to corporate income tax as reported on the LLC’s Form 1120 Corporation Income Tax Return.
Corporate profits distributed to owners in the form of dividends are taxed again at the 15% qualifying dividend rate. These entities would however pay payroll tax on any wages paid to LLC members working in the business.

Fill out the S Corp Tax Preparation form here

LLCs Treated as S Corporations
Profits of an LLC treated as an S corporation are not subject to either self-employment or corporate income taxes. The entity will need to file Form 1120S, through which the LLC’s owners will be taxed on their individual shares of the corporation’s profit. LLC owners working in this type of business entity are expected to be paid a reasonable wage, and on those wages, the LLC will owe payroll taxes.

Partners fill out the Partnership Tax Preparation Form.

Partnerships
A partnership is a business with two or more owners who actively engage in the management of the company and divide profits.
Who’s A Good Candidate? When two or more people elect to conduct business together, a general partnership is a relatively easy form of business to set up. Forming a partnership, especially when only two individuals are involved, is often done through a verbal agreement but it is important to create a valid, written partnership agreement as soon as possible.

Advantages:

• Partnerships are easy to establish since anyone or any entity can be a partner
• No double taxation; profits and losses flow directly through to the partners’ personal tax returns
• Offer different classes of ownership shares
• Able to distribute property to partners in a tax-deferred manner

Disadvantages:

• Partners are jointly and individually liable for the actions of the other partners, whether they knowledgeably or knowingly obligate the business
• Profits must be shared
• Some employee benefits are not deductible from business income on tax returns
• Earnings of partners are subject to self-employment taxes
• Flexible structure can complicate accounting and tax preparation preparing

Partnerships are formed under state partnership statutes. Essentially, there are two broad classifications of partnerships.

General Partnerships (GP)

In general partnerships, partners divide responsibility for management and liability, as well as the shares of profit or loss according to their internal partnership agreement. Equal shares are assumed unless there is a written agreement that states differently.

Limited Partnerships (LP)

The designation “limited” simply means that some partners have limited liability (to the extent of their investment) as well as limited input regarding management decisions. This type of arrangement generally encourages investors for short-term projects, or for investing in capital assets.

Qualified Joint Venture

Spouses that conduct a business together and share in the profits and losses are generally classified as a partnership for federal tax purposes. Previously, married individuals in a business together were considered partners and required to file an annual Form 1065, as well as Form 1040.
How’s this done? (1) Income and losses from the business are reported on Form 1065; (2) Each spouse then carries their share of the partnership income or loss from Schedule K-1 to their joint or separate Form(s) 1040; (3) All income, gains, losses, deductions, and credits, under this elect tax treatment are then divided based on each spouse’s interest in the partnership.
Couples may elect out of partnership reporting, and opt for treatment as a qualified joint venture. For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are a married couple filing a joint return, can elect not to be treated as a partnership for federal tax purposes.

A qualified joint venture conducts a trade or business where:

• the only members of the joint venture are a married couple who file a joint return,
• both spouses materially participate in the trade or business (mere joint ownership of property is not enough),
• both spouses elect not to be treated as a partnership, and
• the business is co-owned by both spouses (and not in the name of a state law entity, such as a partnership or LLC).

The QJV option simplifies the filing requirements by allowing a married couple to treat the business as sole proprietorships, and file a Form 1040 federal tax return, rather than a partnership for tax purposes. It eliminates filing a Form 1065 tax return for qualified joint ventures. The option also helps to ensure each spouse gets proper Social Security credit. Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes.

For example:

• Each spouse has a 50% membership in a partnership which has an income of $100,000, expenses of $70,000, and profit of $30,000.
• A Schedule C is prepared for each spouse, showing $50,000 in income, $35,000 in expenses, and $15,000 in profit.
• The total profit of $30,000 is shown as business income or (loss) on Form 1040, with the two Schedule C forms as supporting documents.

Family Partnerships

While the IRS allows family members to be partners, it does place some limits on “keeping it in the family.” The IRS will only recognize family members (or any other persons) as partners if one of the following is met:
• If capital is a material income-producing factor, they must have (1) acquired this capital interest in a bona fide
transaction (including gift or purchase), and (2) have actually owned and controlled the partnership interest.

• Capital is considered a material income-producing factor if a substantial part of the gross income of the business comes from the use of capital.
• If capital is not a material income-producing factor, they must have (1) joined in good faith to conduct business, (2) agreed that contributions of each entitle them to a share in the profits, and (3) each provided some capital or service.
• Capital is not a material income-producing factor if business income consists primarily of fees, commissions, or other compensation for personal services performed by members or employees of the partnership.
• If a family member receives a gift of a capital interest in a partnership in which capital is a material income-producing factor, the donee’s distributive share of partnership income is subject to the following two restrictions:
• It must be figured by reducing the partnership income by reasonable compensation for services the donor renders to the partnership.
• The donee’s distributive share of partnership income from donated capital must not be proportionately greater than the donor’s share from the donor’s capital.

Fill out the C Corp Tax Preparation form here

C Corporations

The C corporation is the “standard” corporation.

Advantages:

• Limits the liability of its shareholders, if adequately capitalized and proper corporate formalities are followed
• No limit on the number of people who can own stock (unlike an S corporation)
• Multiple classes of stock issuances are permitted
• Shareholders can easily trade publicly held shares
• No shareholder-level tax on undistributed income
• Reduced rate of capital gains taxation on the sale of qualified small business stock (thanks to IRC §1202)
• Allows ordinary loss deductions in situations of a small business corporation failure (compliments of §1244)

Disadvantages:

• Double taxation
• Lack of rate differential for capital gains
• Potential of tax traps, like personal holding company tax and accumulated earnings tax
• Shareholder unease over gains triggered at corporate level when distributions of appreciated property occur
• Operating losses do not pass through to shareholders

C corporations are dropping in popularity. When you think of C corporations, think big…GM, IBM, and 3M big; big taxes, big administrative costs, and big targets for lawsuits. By comparison, business entities like sole proprietorships, S corporations, and limited liability companies are designed for freelancers and small businesses, as well as businesses not looking to raise capital in the public markets.

Fill out the S Corp Tax Preparation form here

S Corporations
So what does the “S” in S-Corp mean? An S corporation gets its name because it is defined in Subchapter S of the Internal Revenue Code. To elect S corporation status when forming a corporation, Form 2553 must be filed with the IRS and all S corporation guidelines met.

The S corporation is a type of corporation that is largely known for permitting pass-through taxation.

Is there a catch? Well, the shareholder, if working for the company, and if there is a profit, must receive wages that meet standards of “reasonable compensation”. This varies by geographical region as well as occupation, but the basic rule is that the shareholder receives at least what they would pay someone else, as long as there is enough profit.

If compensation is not reasonable, the IRS could reclassify all of the earnings and profit as wages, and the shareholders could be liable for all of the payroll taxes on the total amount. For reference see Joly vs. Commissioner, 211 F.3d 1269 (6th Cir., 2000).

S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.
Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for the service rendered to the corporation.

Some factors in determining reasonable compensation:

• Training and experience
• Duties and responsibilities
• Time and effort devoted to the business
• Dividend history
• Payments to non-shareholder employees
• Timing and manner of paying bonuses to key people
• What comparable businesses pay for similar services
• Compensation agreements
• The use of a formula to determine compensation

To be classified as an S corporation, an entity must meet all the following tests:

• Must be a small business corporation
• Have no more than 100 shareholders (family members are treated as one shareholder)
• All shareholders are individuals, estates, exempt organizations, or certain trusts (not partnerships or corporations)
• Have no nonresident alien shareholders
• Have only one class of stock

Advantages of S Status:

• Avoid double taxation
• Limits employment taxes to reasonable salaries drawn by owners
• Losses, up to the shareholder’s basis may offset income from other sources
• Owners limit personal liability

Disadvantages of S Status:

• Can’t distribute profits unevenly as with LLCs
• Fringe benefits are limited for owners who own more than 2% of shares
• Number of shareholders limited to 100
• Limited to one class of stock (through voting and non-voting shares allowed)

Fill out the Non Profit Tax Preparation form here

Nonprofits that have tax-exempt status with the IRS still have obligations to the IRS, including filing an annual Form 990 or other 990 series information return. We’ll go-over questions you may have, including what is a 990 form, what organizations need to file one, and Form 990 instructions.

IRS form 990

The IRS form 990 series are informational tax forms that the majority of nonprofits must file every year. Both the long form and short forms provide the IRS with information about the organization’s finances and activities, including fundraising fees, grants, program service revenue, and employee’s salary.

The form requires sharing the organization’s mission statement, the number of voting members in the governing body, and the number of employees.

The IRS requires all tax-exempt nonprofits to make their three most recent Form 990s public.

Who files a 990 tax form?
Most nonprofit organizations with IRS tax-exempt status and gross receipts of $200,000 or more or assets of $500,000 or more at the end of the year must file an IRS 990 form annually with the IRS. This form details the money the organization raised through fundraising, grants, and services, how much they paid out to employees, and the assets the organization purchased, sold, or maintained.

Do all tax-exempt nonprofits need to file an IRS 990 form?
No, according to the IRS not all nonprofits are required to file a Form 990. Many types of organizations including religious institutions, foreign organizations, and certain government and political organizations are not required to file a Form 990 series return.

Tax-exempt nonprofit organizations with gross receipts less than $200,000 and assets less than $500,000 at the end of the year may file a ”short” Form 990-EZ. Tax-exempts with gross receipts of $50,000 or less may electronically file a Form 990-N e-postcard.

What happens if you don’t file a Form 990?
Organizations that do not file a Form 990 series tax form for three years in a row can lose their tax-exempt status, which can have lasting implications. If you are unsure about Form 990 and it’s requirements, make an appointment or contact us for help.

Form 990 instructions
A 990-series tax form must be filed annually to maintain your tax-exempt status.

Here’s how to file a Form 990:

Determine which form you must file based on the IRS requirements.
If you are required to file the long or short form, gather information about employee pay, fundraising activities, and other income or donations. Documents you may need include W-2s for employees, donation receipts, etc.
Tax-exempt organizations are generally required to file electronically. Large organizations that file at least 250 returns (such as Form W-2 and Form 1099) are required to file Form 990 electronically. The Form 990-N is always filed electronically.
Complete the form as indicated, paying special attention to the Checklist of Required Schedules, which explains what portion of the form must be filled out based on your organization’s unique circumstances.
File the form by the 15th day of the fifth month after the end of your organization’s accounting period. For example, if your accounting year ends on December 31, you must file Form 990-N by May 15 of the following year.

Get help with your 990 tax form
Need help determining how to file a 990 tax form? Contact Tax Service Masters, or make an appointment online.

Whether you make an appointment in person or file online, our tax pro can help file and submit your nonprofit form 990. Make an appointment.

Fill out the Non Resident Tax Preparation form here

If you are not a US Citizen or green card holder, but still have US filing requirements Tax Service Masters can help.

We provide help to those who are not a US citizen or a Green card holder, but have US tax filing needs.

With regards to tax filing, a nonresident alien must pay taxes on any income earned in the U.S. to the Internal Revenue Service (IRS) unless the person can claim a tax treaty benefit (this can be challenging – we specialize in this). This applies to students as well.

Risk of Failing to Pay Taxes

Failure to pay the correct tax can result in an unexpected tax obligation when the individual leaves the U.S. or may put an application for residency at risk of rejection.

The filing process will vary based upon nonresident status & which country you are a resident of.

Resident and nonresident aliens are taxed differently, it is important for you to determine your status. You are considered a nonresident alien for any period that you are neither a United States citizen nor a United States resident alien. You are considered a resident alien if you met one of the following two tests for the calendar year:
The 1st test is the green card test 

If at any time during the calendar year you were a lawful permanent resident of the United States according to the immigration laws, and this status has not been rescinded or administratively or judicially determined to have been abandoned, you are considered to have met the green card test.

The 2nd test is the substantial presence test

To meet the substantial presence test, you must have been physically present in the United States on at least 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count all of the days you were present in the current year, and one-third of the days you were present in the first year before the current year, and one-sixth of the days you were present in the second year before the current year.

If you are a nonresident alien, you must file Form 1040NR or Form 1040NR-EZ if you are engaged in a trade or business in the United States, or have any other U.S. source income on which the tax was not fully paid by the amount withheld. If you had wages subject to income tax withholding, the return is due by April 15, provided you file on a calendar-year basis. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. If you did not have wages subject to withholding and file on a calendar-year basis, you are required to file your return by June 15th. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. File Form 1040NR or Form 1040NR-EZ with the Internal Revenue Service Center, Austin, TX 73301-0215.

If you are a resident alien, you must follow the same tax laws as U.S. citizens.

You are taxed on income from all sources, both within and outside the United States. You will file Form 1040EZ, Form 1040A, or Form 1040 depending on your tax situation. The return is due by April 15, and should be filed with the service center for your area. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.

This may be the single most overlooked task by self employed, and business owners new and seasoned. If you don’t or haven’t been tracking your income and expenses, or balancing your books, it’s advised to download your monthly financial statements for any months your business was active normally January 1st – December 31st.

• Label your business expenses and calculate the totals monthly, then annually.
• Label your income and calculate the totals monthly, then annually.

If you’re not up to the task, or simply lack the time Hire Us

A full updated list can be found here https://www.irs.gov/publications/p535

You may also provide your tax preparer with your expenses and the tax professional will apply the expenses accordingly.