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Caring for Aging Parents

How will your aging parents be cared for down the road? If your parents won't discuss their care, you'll need to prepare a plan of your own. You should make a record of things such as their medical providers, financial and legal information, burial plans, the location of their insurance policies and wills, and relevant account numbers.

Where your parents live may depend on their health, but you don't have to care for them on your own. Instead, ask for help from family members, caregiver support groups, and community services.

Click here for more information.

IRS 20 Factor Test – Independent Contractor or Employee?

The IRS test often is termed the “right-to-control test” because each factor is designed to evaluate who controls how work is performed. Under IRS rules and common-law doctrine, independent contractors control the manner and means by which contracted services, products, or results are achieved. The more control a company exercises over how, when, where, and by whom work is performed, the more likely the workers are employees, not independent contractors.

A worker does not have to meet all 20 criteria to qualify as an employee or independent contractor, and no single factor is decisive in determining a worker's status. The individual circumstances of each case determine the weight IRS assigns different factors.

NOTE: Employers uncertain about how to classify a worker can request an IRS determination by filing Form SS-8, “Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” However, some tax specialists caution that IRS usually classifies workers as employees whenever their status is not clear-cut. In addition, employers that request an IRS determination lose certain protections against liability for misclassification.

The 20 factors used to evaluate right to control and the validity of independent contractor classifications include:

  • Level of instruction. If the company directs when, where, and how work is done, this control indicates a possible employment relationship.
  • Amount of training. Requesting workers to undergo company-provided training suggests an employment relationship since the company is directing the methods by which work is accomplished.
  • Degree of business integration. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees.
  • Extent of personal services. Companies that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. In contrast, independent contractors typically are free to assign work to anyone.
  • Control of assistants. If a company hires, supervises, and pays a worker's assistants, this control indicates a possible employment relationship. If the worker retains control over hiring, supervising, and paying helpers, this arrangement suggests an independent contractor relationship.
  • Continuity of relationship. A continuous relationship between a company and a worker indicates a possible employment relationship. However, an independent contractor arrangement can involve an ongoing relationship for multiple, sequential projects.
  • Flexibility of schedule. People whose hours or days of work are dictated by a company are apt to qualify as its employees.
  • Demands for full-time work. Full-time work gives a company control over most of a person's time, which supports a finding of an employment relationship.
  • Need for on-site services. Requiring someone to work on company premises—particularly if the work can be performed elsewhere—indicates a possible employment relationship.
  • Sequence of work. If a company requires work to be performed in specific order or sequence, this control suggests an employment relationship.
  • Requirements for reports. If a worker regularly must provide written or oral reports on the status of a project, this arrangement indicates a possible employment relationship.
  • Method of payment. Hourly, weekly, or monthly pay schedules are characteristic of employment relationships, unless the payments simply are a convenient way of distributing a lump-sum fee. Payment on commission or project completion is more characteristic of independent contractor relationships.
  • Payment of business or travel expenses. Independent contractors typically bear the cost of travel or business expenses, and most contractors set their fees high enough to cover these costs. Direct reimbursement of travel and other business costs by a company suggests an employment relationship.
  • Provision of tools and materials. Workers who perform most of their work using company-provided equipment, tools, and materials are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor finding.
  • Investment in facilities. Independent contractors typically invest in and maintain their own work facilities. In contrast, most employees rely on their employer to provide work facilities.
  • Realization of profit or loss. Workers who receive predetermined earnings and have little chance to realize significant profit or loss through their work generally are employees.
  • Work for multiple companies. People who simultaneously provide services for several unrelated companies are likely to qualify as independent contractors.
  • Availability to public. If a worker regularly makes services available to the general public, this supports an independent contractor determination.
  • Control over discharge. A company's unilateral right to discharge a worker suggests an employment relationship. In contrast, a company's ability to terminate independent contractor relationships generally depends on contract terms.
  • Right of termination. Most employees unilaterally can terminate their work for a company without liability. Independent contractors cannot terminate services without liability, except as allowed under their contracts.

Useful Links

Below are a list of useful links that contain articles, tools, and FAQ's relating to business and individual tax needs.

Entrepreneurs
Whether you’re starting a business, building the one you have, or stepping up to run a family business, you need a lot of information to help you make sound financial decisions. This link contains information pertaining to starting, operating, insuring, and selling a business and other useful benefits and retirement plan information.

Business Owner
This link has similar information as the entrepreneur’s link. However, this one is geared more towards established, incorporated businesses. Click here for more information related to insurance, retirement plans, business startup, selling a business, etc. It also has many calculators to help make better decisions.

Estate Planning
More than ever before, all of us need to take responsibility for saving for retirement. Whichever savings vehicles you choose—from 401 (k) plans to mutual funds to annuities—it’s never too early to begin preparing you for your retirement. This link contains information pertaining to investments, insurance, and retirement planning.

Protection Planning (Insurance)
Properly insuring your personal or business assets will allow you to pay premiums today, and allow peace of mind against future unexpected events. This link contains information pertaining to various individual and business insurance options and plans as well as annuities and retirement.

Life Crisis
Learn more about how to manage your finances during life’s difficult times. And start planning now so you’ll be prepared. Bankruptcy, long-term disability, unemployment, and death are just a few of the topics covered in this link.

Career
Money management should never get in the way of career advancement. Learn what you need to know to take advantage of a wide range of employer benefits, prepare for unexpected career changes and chart a clear path to job success.

Personal Finance
This link contains information related to home ownership, purchasing an auto, managing credit and debt, and other personal finance issues.

Education Planning
Next to buying a home, a college education is the largest expenditure most parents will ever make. The key to sending your child to college is advance planning. This link contains information pertaining to college savings options, financial aid, and 529 plans. Other tax savings and tuition credits are available in this link.

Retirement Planning
This link has similar information as the estate planning link. However, this one is geared more towards an individual or couple setting up and maintaining their retirement investments. Click here for information related to 401 k plans, IRAs, social security, health care issues, etc. It also has many savings and retirement related calculators to help with decision making.

Charitable Contributions Documentation Guide

This table (along with the following notes and definitions) describes the types of documentation required to substantiate various types of charitable contributions made by individual taxpayers. Failing to maintain the proper documentation generally results in the donation being nondeductible.  It is the responsibility of the taxpayer to make sure you have the proper documentation.  This table should only be used as a guide.  You should consult your tax preparer regarding the documentation requirements in your specific situation.

Click here to download the Charitable Contributions Documentation Guide.

charitable

Record Retention Schedule

records photo

 Area  Examples  Suggested Retention
Period
Workpapers & Reports Permanent files, workpapers 7 to 10 years
Finance General Ledger Accounting information, journal entries, management reports 10 years to permanent
Finance Accounts Receivables Final invoices, billing files, customer approvals 7 years
Finance Accounts Payables Client payments, A/R notes, deposits, bank statements 7 years
Finance Payroll Payroll registers, multi-state payroll deductions, deduction balances, tax balances Permanent
Finance Time & Expense Processing Time and expense processing, airline purchases, state specific tracking information 7 years
Treasury & Cash Management Treasury daily reports, lockbox sweeps, market cap reports, bank account, credit & loan information 7 years
Tax Reporting Statutory tax filings, cash accruals, meal and entertainment analysis, tax returns 10 years to permanent
Capital & Asset Management Fixed asset information, lease hold improvements, fixed asset system data 3 years
Administrative Communications Budgets, scorecards, administrative records 7 years
Quality & Risk Management Client communications, change acceptance, independence and conflict checks 4 years
Note: Industry specific or regulatory may require longer retention period, i.e., OSHA up to 30 years
Human Resources Pre-employment evaluations, self-assessments, college transcripts, offer/acceptance 7 years
Legal Records Contracts, leases, insurance documents, ethic compliance  
Marketing Records Marketing records 5 years
General & Administrative Administrative materials, personal files, meeting agendas, project notes, proposals 2 years
Accounting Records              Accounts Payable 7 years
Accounts Receivable 7 years
Audit Reports Permanent
Chart of Accounts Permanent
Depreciation Schedules Permanent
Expense Records 7 years
Financial Statements (Annual) Permanent
Fixed Asset purchases  
General Ledger Permanent
Inventory Records Permanent
Loan Payment Schedules 7 years
Purchase Orders (1 copy) 7 years
Sales Records 7 years
Tax Return 7 years
Permanent
Bank Records Bank reconciliations 2 years
Bank statements 7 years
Canceled checks 7 years
Electronic Payment records 7 years
Corporate Records Board minutes Permanent
Bylaws Permanent
Business licenses Permanent
Contracts - major Life + 4 years
Contracts - minor Life + 3 years
Insurance policies Permanent
Leases/mortgages Permanent
Patents/trademarks Permanent
Shareholder records Permanent
Stock registers Permanent
Stock transactions Permanent
Employee Records Benefit plans Permanent
Employee files (ex-employees) 7 years
Employment applications  
Employment taxes 3 years
Payroll records 7 years
Pension/profit sharing plans 7 years
Permanent
Real Property Records Construction records Permanent
Leasehold improvements Permanent
Lease payment records Life + 4 years
Real estate purchases Permanent

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