Should I consider a short sale?
Today nearly 1/3 of all homeowners owe more on their homes then the homes are worth. If the homeowner can continue to make the mortgage payment and isn’t planning on moving anytime soon, that is not a problem. However, if the homeowner needs to sell the home being underwater on the house can be a huge problem.
In certain areas of the country, the real estate market is flooded with short sales and foreclosures. Home sales are picking up but buyers are still able to name the prices they are willing to pay for the properties. Increasingly, banks are holding the homeowners responsible for the balance left between a home’s selling price and the selling owner’s outstanding mortgage. Banks have taken a hit and now the stimulus money the got from the government keeps their top executives from earning the big bucks they want from salary and stock options so the banks are doing their best to repay the government and avoid needing any additional stimulus because the CEO wants his millions. That may sound a bit harsh, but the reality is, banks are not as willing to negotiate a short sale down and write off the balance now as they were a year ago.
Before starting a short sale, talk to your banker to see if you qualify for a loan modification or some other program that will let you stay in your home
Special Tax Treatment for Family Employees
Wages of children under 18 years of age who are employed in the family business are not subject to social security or Medicare taxes. However, this holds true only if the family business is a sole proprietorship or a partnership in which both partners are parents of the children.
If the children are under 21 and perform only domestic services, they are not subject to social security taxes or Medicare taxes. These domestic services must be performed for the parents though and be provided in the parents home only.
In addition to not being responsible for social security and Medicare taxes, the income of children who fall under either of the categories above is not subject to federal unemployment tax. However, this income may still be subject to federal income tax withholding.
Who is an employee?
When starting a business, there are many questions you need to ask yourself. One that you probably haven’t thought about is who is an employee of the business. It is important to know who the IRS considers an employee because the business needs to pay payroll taxes on all income that individual earns as well as federal and state unemployment tax. While these may not seem very expensive when the employee only earns minimum wage, however, if you make the mistake of claiming the individual is an independent contractor when the IRS determines he is an employee, not only do you have to pay the back taxes, you will also be required to pay interest and penalties, which can quickly add up.
When determining whether or not a person is an employee or an independent contractor, the IRS looks at financial control, behavioral control, and the relationship between the parties. When looking at financial control, they will look at whether or not the person had a significant interest in the his work. For example, if the person was paying his own expenses or has a significant investment in his work, he is likely to be an independent contractor. When looking at behavioral control, the IRS look at the extent of instructions the person is given to fulfill his job or the training the job provides. The more instruction or training the company provides, the more likely that the IRS will find the person is an employee. When looking at the relationship between the parties, the IRS looks at whether or not the business pays the person benefits or whether there is a written contract between the parties stating their intent that the person be treated as either an independent contractor or an employee.
The IRS says that not one of these factors is controlling, They look at the totality of the facts. If you still have questions about whether or not the person walking for you is an employee or an independent contractor, you can file Form SS-8 with the IRS requesting that they make a determination whether the person is an employee or an independent contractor.