AI Tax Answer Library

Yes, you can pay your children or spouse through the business, but there are specific rules and requirements that must be followed to ensure the payments are legitimate business expenses and comply with employment tax obligations.

Reporting owner’s compensation depends significantly on the business structure and the owner’s role within the organization. The treatment varies dramatically between different entity types, and proper reporting is essential for both tax compliance and avoiding penalties.

Handling state unemployment and payroll tax filings requires understanding both the federal framework and the specific requirements of each state where you have employees. This process involves multiple components including registration, ongoing filings, tax calculations, and compliance with varying state-specific rules.

Payroll taxes are indeed deductible as business expenses, but the specific treatment depends on which type of payroll taxes you’re referring to and your role as either an employer or self-employed individual.

The requirement to issue Form W-2 to employees is governed by specific statutory and regulatory provisions that establish both the circumstances requiring issuance and the timing for providing these critical tax documents.

When issuing forms to independent contractors, you primarily use Form 1099-NEC (Nonemployee Compensation), which replaced the use of Form 1099-MISC for reporting nonemployee compensation starting in tax year 2020.

The distinction between an employee and an independent contractor is one of the most fundamental and complex issues in tax law, with significant implications for both the worker and the entity paying for services. This classification affects tax withholding obligations, employment tax responsibilities, benefit eligibility, and various deduction opportunities.