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What Payroll Taxes Do Employers Pay?

By Todd Whalen - July 12, 2019

What is a Payroll Tax?

Payroll taxes are levied as a percentage of what employers pay their employees (or as a total percentage of a self-employed person's income). In the United States, payroll taxes are split evenly between employers and employees, with employers paying their percentages and employees seeing their percentages deducted from their paychecks. These taxes include both Medicare and Social Security, which fund programs to supply health coverage and monthly income in retirement. Because the employer payroll taxes are charged directly to the business, it is wise to budget for your hiring salaries and wages based on more than just the gross income of your employee. Rather, you'll need at least 7.65% more based on federal payroll taxes alone.

What Payroll Taxes do Employers Pay?

Employers are responsible for federal, state, and local payroll taxes, as applicable in the area where they are located. Federal employer payroll tax rates currently stand at 6.2% for Social Security and 1.45% for the employer for Medicare. For each of these categories, your employee pays the same percentage, to bring the total payroll taxes to 12.4% and 2.9%, respectively. There are also federal and state unemployment taxes paid by the employer. To read more about what payroll taxes employers pay, visit the IRS website.

How Much is Colorado Payroll Tax?

Colorado has its own employer payroll taxes as well, which are based on the wages of your employees and can change every few years. To keep track of your current obligations for Colorado payroll taxes, visit Colorado's tax website or contact Advanced Tax Solutions with your questions.




Advanced Tax Solutions Payroll Tax Help

Advanced Tax Solutions understands that payroll tax liabilities can be a bit confusing and require the assistance of a professional who can help you file quickly and accurately. The difficulty of payroll tax processing can lead to expensive IRS payroll tax penalties. Many time. there are ways to have the IRS abate some of these penalties. If you have unwanted IRS payroll tax debts or payroll tax penalties our experts can assist you.

If you need payroll tax help, reach out today to Advanced Tax Solutions! Our experienced Colorado payroll tax specialists can help you understand your payroll tax liabilities as an employer.

Ways to spend your Denver tax refund

June 5, 2019

You’ve likely already received your Denver tax refund check - but what should you do with it? Tax refund checks are exciting, you can either save them or enjoy a quick moment to yourself and spend your tax refund in a way that makes you excited! Here are a few things you can do with your tax refund that are fun, unique, and will create great experiences for you and your family. 

What better way to use your tax refund trip then to travel? Traveling can help bring family and friends together and be a great way to experience new sights, sounds, and cultures. Using your tax refund to jet off to the caribbean, Europe, or even the many amazing places the United States has to offer would be a great use of a tax refund check. It’s a way to travel to a new area you’ve always wanted to go without taking money out of your normal budget.

Try Something New
Have you ever wanted to go parasailing? Or maybe try skydiving? If you have had a desire to do something unique, the tax refund check could be the perfect way to try something new without breaking the bank. If you’d like to stay in town, try searching “things to do in Denver,” and see what is around that you have yet to consider. You might be surprised what is in your own backyard! 

Treat yourself! 
If traveling or unique experiences isn’t for you - do something that is. Perhaps you go shopping with friends or enjoy a spa day. Shopping, whether it be for yourself or for your space can be therapeutic and even uplifting. If you decide to pursue a spa day, reach out to local spas to see what deals they might offer for larger packages or if they have any deals for long term packages. It might be fun to spend your refund on a membership package for the spa or something similar. 

Take Care of Your Space
Have you been meaning to make some home repairs? Tax refund time is the perfect way to take care of some of your most needed home repairs without breaking the bank. If you don’t have any home repairs you’ve been dying to make, but have some upgrades you’d like to do - it would be great to do it with a tax refund. Memorial Day is a great time to make home upgrades and repairs, there are a lot of home improvement sales at your local hardware stores.

Invest in Yourself
This goes hand in hand with treating yourself, but investing in yourself and your wellbeing is one of the most important things you can do. Perhaps you sign up for a new fitness class with your tax refund - might be a great time to do so. By using a tax refund you can pay for a gym membership outright, saving you money in the long run as many gyms offer deals for paying for a year all at once.

Financial Freedom
This one isn’t as fun as the other options, but could help you in terms of buying your long term financial freedom. Do you have any outstanding credit cards that have yet to be paid off? Maybe some additional loans that you can’t help with? Using your tax refund to help pay off additional bills or loans will help you in the long run. If you don’t have any outstanding debts, it might be best to save your money and open a savings account if you don’t have one. If you do - add your refund into that. It’ll be rewarding to see your savings grow so in case of an emergency you will be covered.

This one is a fun way to spend your refund and will give you big returns on investment later in life. Investing your money can be fun, rewarding, and ultimately exciting. If you are unsure of how to invest, reach out to a local investment firm. They can help you prepare a full investment portfolio that can reap benefits for years to come. 

Nothing can be more emotionally rewarding then donating to a good cause. Donating to a good cause can not only be rewarding and help those in need, but can count towards your taxes next year as a tax break. There are many local charities that could use any donation, no matter how large or how small. If you have a cause that is close to your heart, or that you would love to see championed, that would be a great one to donate to!

No matter what you decide to do with your tax refund, the choice is ultimately yours. You can do any of the above, in any combination, and still feel accomplished and good about how you spend your tax refund. If you have questions, always remember that you can reach out to our Advanced Tax Solutions for additional information or to have your tax questions answered. We are here to help you get started on the path to success when it comes to your taxes. If you have any additional questions or requests, even unrelated to tax preparation we are always here to help. 

Notices from the IRS Denver residents should be on the lookout for

May 29, 2019

Denver tax season is coming to a close, and next year’s taxes are probably the furthest thing from your mind. However, it’s important to remember that you can receive additional notices from the IRS throughout the summer for a number of situations. While this isn’t an exhaustive list of the notices you might receive from the IRS, it’s a good starting point and something to keep in mind as the summer goes on.

Refund hold/offset notices 
Most of the time if you file prior to the IRS refund deadline of April 15 you will receive your refund. However, there are a few instances in which you might not receive your refund, instead they will be held or “offset.” This might occur if you are expected of fraudulent activity, owe the IRS money, or have additional outstanding obligations such as child support or past-due student loans. 

Past due/collection notices
This notice is more common than you would think. If you have yet to set up a payment plan, or some sort of arrangement with the IRS you might be getting these notices throughout the summer. It’s important that you set up a payment plan as soon as possible after receiving these notices. It’s okay if you can’t pay what you owe them immediately, but it’s extremely important that you at least reach out. Just as a reminder, it is possible to set up the following payment plans: 
Long-term repayment plans: Your taxes, penalties, and interests total less than $50,000 or less 
Short-term repayment plans: Your taxes, penalties, and interests total less than $100,000
Setting up a payment plan will depend on your current tax situation. You can apply online for a payment plan, but be sure you have all personal information such as your name, address, contact information and social security number. 

If you don’t set up a payment plan, you might get a collection notice from the IRS. If you have ignored all notices prior, the IRS is within their rights to place a tax lien or levy against you. The IRS can also garnish wages, acquire property and even withhold your passport. Do not ignore any attempt to collect tax debts from the IRS. 

Underreported notices 
It is the job of the IRS to check to see if tax filers are reporting income as required. If the IRS has noticed that you might have underreported your income, you will receive an underreported income notice which might result in you paying fees and additional taxes. It’s important to know that if you receive an underreported notice, it’s not from the most recent tax filed but from the year prior.

If you receive any additional notices throughout the summer that don’t fit in to the above categories, please contact our Advanced Tax Solutions team. Any notifications from the IRS will always come in the mail. If you receive any phone calls from representatives claiming to be the IRS, do not engage and do not provide any personal information. It’s been reported that many scammers pretend to be the IRS via phone calls asking for social security information and requesting payment for overdue taxes. Always reach out to the IRS directly if you believe that you owe taxes, and contact your attorney general if you have received one of these calls.

Always remember that you can reach out to our Advanced Tax Solutions for additional information or to have your tax questions answered. We are here to help you get started on the path to success when it comes to your taxes. If you have received a notice from the IRS, contact us for IRS tax lien help.


Wise Ways Denver-Area Residents Can Spend Their Tax Return

May 22, 2019

Whether you’ve filed your 2018 income tax return with the friendly team of professionals here at Advanced Tax Solutions or not, it’s time to think about diligent ways to spend that return. Some  among us utilize this extra cash on a splurge —a vacation, a new car or appliance, or to update our wardrobe. While spending can be fun, it’s also important to remember about the more responsible ways you can utilize your tax return for a more profitable and prosperous present and future. 

The refund is actually your money, and that money could be used throughout the year to lower debt, save for an emergency or invest for the future. Some people utilize their return as a strategy to minimize their weekly withholdings, so that they earn more each week instead of seeing a large tax return at the end of the year. If you’re not sure whether this change is right for you, talk to the certified professional accountants here at Advanced Tax Solutions —or you pursue one of these refund-investing methods that could help you out throughout 2019. 

If you are one of the millions of Americans who have high-interest debt hanging over your head, you could utilize your tax return could to make a considerable dent in that debt. With interest compounding on you every month, getting rid of this burden could mean freeing up your future cash flow with big one time payments thanks to your tax return. 

One particular element of personal finances that can be cleaned up with a robust income tax return is credit card debt, which is a a large burden for millions of Americans nationwide — one that can have a negative impact on your credit history. The national average APR is around 17%, but some credit cards may charge even more if you carry a balance you carry month to month. If your refund doesn’t cover the entire outstanding balance on your high-interest debt, making a dent in the principal amount could still put you in a better position to cover the rest throughout the rest of the calendar year.

Many Americans don’t have enough to cover expenses in the event of an emergency. Your tax refund could be a solid foundation to start your new emergency fund with. Emergency funds are terrific ways to spare your weekly income when it comes to unexpected auto repairs, sudden unemployment, medical bills or travel expenses. 

Most financial experts recommended that you have two to three months worth of your normal expenses in your emergency fund, but if this year’s tax return is more than you expected, you might want to consider saving more. 

If you have ever been tempted to use your existing emergency fund on a new piece or technology, a vacation, or any other “treat-yourself” expenditure —you may want to consider a targeted savings account as an option for your tax refund.

Both targeted savings accounts and emergency funds are two of ne of the best things you can do with your money is make it work for you. Investing your tax refund is one way to try and grow that money over time. 

While a tax refund alone might not be enough to buy that dream property you’ve been looking at, it could help you make improvements to your current home that you’ve already made significant payments on. Home improvements can increase the overall value of a home, which will make it more valuable when you do decide to sell —and more enjoyable to live in in the time being. Have a home repair you’ve been putting off for far too long? Maximizing your enjoyment in the home is a worthy investment for your tax refund.

Investing in yourself is another terrific way to spend a tax return income. By learning a new skill, or become better at something you already do, you can make yourself more skillful both at your current position or in the eyes of future employers. Spending your tax refund on a class or program to improve yourself is another way to invest in both your personal and financial your future.

Still haven’t filed your return? Or search for the right Denver-area tax professional to submit your return in lieu of an extension? At Advanced Tax Solutions, our team of tax professionals takes tremendous pride in the accuracy and transparency we offer when we work with you to file your income tax return. Whether you’re filing for your business or your small family, our dedication to professionalism is all in effort to all-but-reduce errors that will not just delay your 2018 tax return, but potentially cost you time and money in the future. Contact Advanced Tax Solutions today to put an end to the stress and headaches that tax time has caused you, and get your return filed right. It’s the best way to make the right decision about how to invest your return.

Steps you can take to prepare for next year’s taxes

May 15, 2019

Denver tax season is coming to a close, and next year’s taxes are probably the furthest thing from your mind. Many of our tax clients from the Denver, Aurora, Littleton and surrounding areas wait until weeks before their taxes are due to even think about the upcoming tax year. But there are always things you can start doing ahead of time to make next year’s tax season quick, easy and efficient.

Let’s start with some general maintenance. The first thing you should do is check on your current paycheck withholdings. The 2018 tax changes have most likely affected your paycheck by giving you more take home pay now, but this might mean you aren’t paying enough in taxes. Take a look at your paycheck to see if you should adjust your withholdings, and if you should take time to complete a new form W-4 and Employee’s Withholding Certificate. If you do not check your paycheck now, you might be setting yourself up for a shock when you realize you owe the IRS money and won’t be getting a refund.

Something else that you should consider is what you will do financially if you don’t get a refund. With hundreds of families counting on refunds every year, it’s never too early to start budgeting and preparing for a lesser refund, or greater refund if you have made the adjustments needed! Counting on tax refunds to pay necessary expenses is never a good idea, and if you find yourself doing that year after year reach out to your financial planner - they are here to help.

If you are planning on freelancing during the year, get a system in place now. If you are looking into grocery delivery, a ride sharing service, or something similar - get a mileage tracker going now so that you can claim it on your taxes. Take a few hours out of each month to make sure everything is recorded, so that once it comes time to file your taxes you can pull everything at once. When it comes to your wages, start putting away 30 percent of your wages (if you can) to prepare for what you might owe the IRS. While 30 percent might seem like a lot, we recommend saving more so that you are fully prepared for your tax bill when April comes around.

If you are self-employed, the same advice applies. Set up a system early in the year to track any deductible expenses. Typically, if you are self-employed you can claim travel expenses, office expenses, and additional business-related expenses. However, you must have the documentation to back up any expenses you are attempting to claim. This is why setting up a tracking system is extremely important. What’s more, is if you are self-employed you might have to pay estimated taxes quarterly. These deadline are roughly the 15th of April, June, September, and January of the next tax year. If you have any questions regarding quarterly taxes, or what you should be planning for, feel free to reach out to our Advanced Tax Solutions team. 

Set a lunch-time appointment sometime in the next few months with your tax preparer. This is your chance to get their help on adjusting your withholdings, and your chance to get all of your necessary questions answered prior to starting the tax season. Meeting with your tax preparer would also allow you to ask questions about your retirement accounts - something we strongly recommend doing each year. The IRS limits on taxable IRS contributions can change from year to year, and while it might not always change it’s important to take a look at that each year.

Do you make charitable donations each year? If so, the beginning of each year is the perfect time to start planning when you will make your charitable donations and how much they will be. By making a plan, you are far more likely to give as planned and have the documentation needed to claim charitable giving on your taxes. 

Perhaps the easiest thing for you to do throughout the year is to collect tax documents and other important documents as you have them throughout the year and collect them in a centralized place as your employer(s) begin sending them your way. Below is the basic personal information you will need when preparing your taxes, be sure to have this information on standby:

  • Bank account information for direct deposit if you’d like your refund deposited in your account
  • Last year’s tax return for comparison
  • Dates of birth for all dependents, and social security numbers

Now you’ll also need to keep track of your income documents throughout the year such as any jury duty documents, gambling winnings, medical expenses, education expenses, alimony received, and scholarship awards. All of this information should be claimed on your taxes. Also, when it comes time to file your taxes you will need additional documents such as:
  • W-2 forms
  • 1099 forms
  • Any income/expenses from rental properties 

Also be sure to keep an eye on your mail for the following documents. You will need these when filing your taxes: 
  • 1098 forms
  • Records of IRA contributions made throughout the year 
  • Medical Savings Account (MSA) contributions

Good news? You have plenty of time to prepare for filing next year’s taxes. However, we do recommend getting a plan in place earlier than expected. Reach out to your local tax representatives and get on their schedule for tax preparation assistance. This can provide you with an opportunity to ask some of the questions you will need to know the answer to ahead of tax season. Preparing for next year’s taxes ahead of time can save you massive amounts of time down the road. 

Always remember that you can reach out to our Advanced Tax Solutions for additional information or to have your tax questions answered. We are here to help you get started on the path to success when it comes to your taxes. If you have any additional questions or requests, even unrelated to tax preparation we are always here to help.