Delay for California Tax Refunds

This week, the California FTB posted FAQs about the 30-day delay for all refunds (please see our post from Jan 16 for more details on that announcement at http://ty-llp.blogspot.com/2009/01/california-delays-payments-for-tax.html) FAQs include:

• Should I wait to file my return?
• Is it possible that I will be issued an IOU?
• Am I entitled to receive interest because of the delay?

The FAQs are available at: http://www.ftb.ca.gov/refund_delay_2008.shtml

Employee or Independent Contractor?

The IRS is working to close the $345 billion "tax gap" -- the difference between what taxpayers actually pay and what they are legally obligated to pay. A significant part of the tax gap is from underpayment of employment taxes, so the IRS is increasingly focused on employers misclassifying employees as independent contractors. So how do you decide whether a worker is an employee or an independent contractor? For the answer to this and other tax questions, please visit our new Frequently Asked Questions page at http://www.ty-llp.com/about_faq.html. We welcome suggestions for new FAQs, which can be emailed to TaxCPA@rocketmail.com.

Returns due February 2

The following payroll tax and information returns are due February 2: Federal (http://www.irs.gov/)

• Forms 1098, 1099, and W-2s must be furnished to recipients.
• Form 940 (Annual Federal Unemployment - FUTA - Tax Return) due for 2008.
• Form 941 (Employer's Quarterly Federal Tax Return) due for the fourth quarter of 2008.

California (http://www.taxes.ca.gov/)

• DE 6 (Quarterly Wage and Withholding Report) due for the fourth quarter of 2008.
• DE 7 (Annual Reconciliation Statement) due for 2008.

2008 Standard Deductions

The majority of individual taxpayers claim the standard deduction, rather than itemizing their deductions. For 2008, the standard deductions are as follows:

• Married Filing Jointly $10,900
• Head of Household $ 8,000
• Single or Married Filing Separately $5,450

Special rules apply if another person can claim the taxpayer as a dependent (e.g., a 19-year-old college student claimed as a dependent on his parents' return). The lengthy IRS publication on standard deductions, dependents, and filing status is available at http://www.irs.gov/publications/p501/ar02.html#en_US_publink100041982.

Identity Theft

The IRS recently posted: "Ten Things the IRS Wants You to Know About Identity Theft." One fact is that the IRS never initiates communication with taxpayers about their tax account through emails. If you receive an e-mail or find a Web site you think is pretending to be the IRS, forward the e-mail or Web site URL to the IRS at phishing@irs.gov. For all 10 facts about identity theft, visit http://www.irs.gov/newsroom/article/0,,id=202865,00.html

Man hired by subcontractor sues general for injuries

A general contractor hired a subcontractor, who then hired an independent contractor to do the work. The independent contractor fell into a hole at the project site. The injured man filed suit against the general contractor. The trial court granted summary judgment in favor of the general contractor. The injured party appealed, and the appellate court sent the case back to the trial court, ruling that the non-employee of the subcontractor has the right to sue the general contractor. If the independent contractor wins, general contractors could face a slew of lawsuits from non-employees hired by subcontractors. If this were to happen, general contractors would likely require any workers hired by subcontractors to be employees, not independent contractors. We will be watching for the trial court's ruling. The complete article is available at: http://www.claimsjournal.com/news/west/2008/12/09/96170.htm