Independent Contractor or Employee?

A question we receive regularly from clients is whether they should file as an independent contractoror an employee at tax time.  Employers likewise ask the same question when looking at their staff. It is a topic covered with great frequency and popularity, so if it’s something you wondered – you are not alone!

The website lays out the distinction very neatly on their website.  There are several important points to recognize:

Employers must pay careful attention to the distinction when determining what to withhold for employees.  It is an important consideration because employers don’t pay taxes on payments to independent contractors. This is in contrast to income taxes, Social Security, Medicare, and unemployment taxes that must be paid on wages to employees.

There are 3 common ways to break down the difference between contractors and employees.  These categories include behavioral, financial, and the type of relationship. For example, with employees, employers:

  • Can control what and how the worker does their job and the business aspects of the worker’s job, such as how payments are made and what tools are supplied.  
  • There are also written contracts on benefits, such as insurance, vacation time, and the like with employees.
  • Finally, employees have a relationship that will continue indefinitely.

All of these attributes are in contrast to what makes up a sub contractor.  For even more detailed explanations of these 3 determinations, check out Tax Topics.

As an employer or employee, if you are still uncertain as to the correct filing status, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding can be filed with the IRS. After reviewing the individual’s completed form, the IRS will make a final determination as to employee or independent contractor status.  If you are a worker and believe that your employer has improperly classified you as an independent contractor, you can utilize Form 8919 to calculate what is due to you.  And as always, our office available to help with questions whenever needed!


Volunteering & Tax Deductions

Most of us find ourselves volunteering at some point in our lives and the reasons are numerous.  Volunteering looks great on a college or work resume. If you have interests, causes, or hobbies that you believe strongly in, volunteering in those fields is a great way to give back to the community.  Volunteering just feels good! But can you receive tax benefits in the form of credits or deductions for the time you spend volunteering? Is volunteer time tax deductible? The short answer is no. Providing free professional services to a qualifying nonprofit cannot be claimed as a tax deduction.  The IRS lists volunteer time as a contribution you cannot deduct for in their Publication 526: Charitable Contributions document.  

So what is the good news?  While you can’t claim your time, you can deduct for out of pocket expenses incurred as a part of volunteer such as uniforms and transportation.  Transportation can include travel expenses such as lodging and meals, provided the trip is primarily for volunteering and not leisure. If you use your own vehicle for volunteer work, gas and oil costs are reimbursable.  Gas can be reimbursed at the rate of $0.14 per mile and tolls and parking costs are deductible as well. Entertaining potential contributors to your charity through events such as fundraiser are also deductible expenses.

To claim any deductions, please remember – you WILL need documentation of the unreimbursed expenses for expenses totaling more than $250.  Documentation required includes a list of expenses with receipts and a letter from the charity explaining the work done. Acceptable expenses are also listed in Publication 526.  You cannot have received reimbursement from the charity for these expenses in order to claim. Additionally, the expenses accrued must be solely the result of volunteering and not due to any personal interest or benefit.

To receive tax deductions, the organization that you are volunteering for must be a qualified nonprofit, tax-exempt organization.  Not sure? There are several ways to verify status. You can ask the charity for a copy of their 501(c)(3) letters. The IRS Publication 78 contains a list of qualified organizations at or by calling 877-829-5500.

Take the time to claim the deductions due to you through volunteer work.  As you assist charities by supplying your time and skills, the IRS assists taxpayers by making it more feasible to volunteer through tax deductions.  Some volunteers look at the money saved through taxes as more that they can contribute to the causes that they believe in!

Disaster Relief Scams

Continuing our unfortunate series on scams to be aware of….disaster relief scams.  More common during this time of year when hurricanes and other natural disasters are more prevalent, educating yourself is the best step to prevention.  The IRS warns taxpayers to look out for disaster scams which could originate through email, phone call, social media, or even in person.

As a part of educating yourself to prevent fraud, it is essential to know the correct contact numbers, websites, and organizations.  If you need disaster assistance the number for help is 866-562-5227.  For anyone who would like to make a donation to help, an accurate list of organizations eligible to receive tax-deductible charitable contributions is on the IRS website.  For more information from the IRS on disaster scams, you can visit their link here.  Information is also available on how to report suspicious activity.  The FEMA website contains additional information on correct disaster phone numbers and what to do if you suspect fraud.

Another step to prevention is to always pay with a check or credit card so that you have a record of your transaction.  We discussed other scams that target taxpayers at this time of year in Tax Scams.  The advice for disaster relief scams is very similar in both cases….NEVER give out personal information to any organization you can’t verify.  This includes account numbers, social security numbers, pins or passwords.

It is certainly upsetting that people will use disaster as a means to scam taxpayers.  Stay cautious with your personal information at all times and do your research before making donations.  There are definitely plenty of worthwhile organizations available to donate to and help make a difference!

Tax Scams

As summer begins, the IRS warns about tax scams that have a high potential to occur at this time of year.  With taxes just filed, many people are expecting to hear from the IRS, but beware!

Never give out your social security number, account numbers, or passwords/PINs.  If you are asked for personal information, hang up! Get in touch with the agency that is contacting you using a number that you have on file for them and know to be accurate.  The IRS can be reached at 1.800.829.1040.  

The IRS does not leave pre-recorded messages or send emails, so if you receive one, you can be pretty sure it’s a scam.  The IRS will also not call and require payment over the phone. These calls are made under threat of serious action being taken without immediate payment, not a tactic employed by the IRS.  Suspicious emails should be reported to  

The IRS website has a list of signs to look out for to prevent scams. They also include steps to take in the event anything suspicious is sent to you.   Looking for more information? Forbes shares a list of the 12 most popular tax scams.  Please educate yourself and be aware to save yourself a lot of headache in the future!

Credit Card Debt

Paying off credit card debt can be like losing those few extra pounds you want to eliminate – it’s hard to get started and equally challenging to find a plan that you can stick with in the long run.  There are several different tactics for paying off debt, but two of the most popular are the Snowball and the Avalanche approach. With the snowball approach, you pay the minimum amount due for each credit card each month and put any extra towards the credit card with the smallest debt.  When that credit card is paid off, you then put extra amounts to the card with the next smallest debt. Using the avalanche method switches gears from the card with the smallest debt to focusing on the card with the highest interest amount first. The avalanche method is often preferred because it can save you more money in terms of lower interest payments over time.

As you pay off credit card debts, it is also the right time to look at how to prevent it from occurring again.  What changes can you make to your lifestyle to prevent future over spending? The first step is to create a budget.  If you find expenses are greater than money earned each month, use your budget to take a look at where you can reduce your expenses.  Is it possible for your family to downsize an expensive car or one that is a gas hog? Is your debt situation caused by owning a house that just doesn’t fit the budget?  Often times monetary changes can be more subtle in the forms of eating in more than going out or cutting some expensive tv or movie viewing subscriptions. If your electric bill is high, take a look at what is eating up your electric.  Is it possible to heat or cool your home in another way? Are you unplugging all electronics each day?

Once you’ve selected the pay off method that is best for you, created a budget, and looked at which costs to eliminate in the future, it’s time to set a goal for how long you want to take to pay off your credit card debt.  Curious how long it will take based on interest, minimum payments, and all those other factors? Fortunately, there are a multitude of credit card payoff calculators available that can then show you what your monthly payment needs to be.  At The Balance, they review and recommend 5 of the best.  Which payoff calculator is best for you will likely be determined by the factors at play in your own debt, such as how many cards do you have.

We’ve discussed previously what to do with your tax refund.  Paying off some or all of your credit card debt was at the top of that list.  Putting money towards debt helps to lower the amount of interest that you are paying, thereby saving you money in the long run.  If you are worried about your credit score, having a lower amount of debt helps to increase that rating as well. If you are so fortunate to receive a financial bonus at other points in the year, putting a portion of that towards debt is usually the best choice.  If you find you need someone else to turn to with questions about credit card debt, the National Foundation for Credit Counseling is a non-profit that can help!

Tax Returns: How Long to Hold?

These days we are fortunate to live in a world much less reliant on paperwork. Almost everything can be found online and file cabinets are becoming bare. As much as we live in the digital era, there are still some tax papers imperative to keep on hand.

There are several important reasons to retain tax paperwork. If you are ever audited by the IRS or learn of a deduction or tax break you could have claimed, you will need those documents. The IRS has 3 years to do an audit of your taxes. However, if you understate your adjusted gross income by 25% or more, the IRS is allowed 6 years to conduct the audit. If you file an extension, the 3 years begins from when the extended return was filed. Based on this, most would recommend keeping all documentation for 6 years.

There is however, no time limit to when audits for unfiled returns or fraudulent returns can be done. Additionally, many recommending keeping your W2 forms until your Social Security begin. You can very easily find that you have to prove your earnings to the Social Security office when the time comes. Having your W2 forms as record of your earnings will be critical as proof in that case.

For any real estate and retirement accounts, the 3 year rule applies again. It is advised to keep your real estate records for as long as you own the property plus 3 years after it is sold. Likewise, retirement records should be retained for as long as you’re receiving payouts plus 3 years.

The IRS website shares their recommendations on the topic as well. They recommend that you should keep your records until the period of limitations, or the time in which you can amend your return, runs out. For more information from the IRS directly,

So what really is the safest bet? Keep everything for at least 6 years and in the case of real estate and retirement accounts for 3 years after the gain is realized. After 6 years the choice is yours. If you believe your tax returns to be clean, it should be fine to keep just the return itself and the W2s. But as many experts debate, how much room do those files really take up? Save yourself a future headache and save those files…..forever.

Taxes 101

To quote the great Benjamin Franklin, “…in this world nothing can be said to be certain, except death and taxes.”  Taxes can be confusing and frustrating but, have you ever stopped to wonder when the taxes we pay originated and where the money goes?  Taxes in the form of tariffs on imports have a long history in the USA, dating back to the 1760’s.  Taxes as we know them however are more recent with the 16th amendment to the constitution. This was ratified in 1913 and legally allowed for income taxes.  Not long after, in 1930, sales taxes were introduced. Since then, more taxes have been introduced along with more legislature and complexities surrounding them.  

Taxes generally consist of money paid by individuals or businesses to help the government fund schools, libraries, armed forces, roads, bridges, police, and other public services.

  • Approximately 7.65% of your wages go to the government before you even see your paycheck in the form of a Payroll Tax.  These payroll taxes fund Social Security, healthcare, and unemployment.  
  • Property Taxes are paid annually for the land you own and real estate. This money goes to your local public services such as schools, roads, sanitation, etc.
  • Sales Tax impacts the greatest number of consumers as it is levied on goods and sometimes services purchased.  45 states have a sales tax and each state is responsible for the laws of their own state tax. The rates average between 4 – 7%.  These taxes are found on goods and sometimes services offered and are used to pay for state roads and other public safety measures.
  • Income Taxes are the dollars paid by employees based on earnings at the federal, state, and local level.  There are 7 states who do not charge a state income tax. Businesses pay income taxes as well as individuals on the income they earn.  Deductions are available to both individuals and businesses to lessen the amount of income that they pay on taxes. Additionally, not all income that you may receive (such as child support payments) is taxable.  This money is to be used by the government for activities that serve the public. Present day, income taxes account for nearly half of the government’s revenue.


The percentage of income that the government makes from taxes has gone up exponentially over the past 100 years, both in terms of an increased percent of taxable income and increase in the number of taxes levied.  These taxes are a source of controversy for many business owners and tax payers. The better we educate ourselves about what we are paying and why, the more informed we can be at tax time to make good decisions. Knowing what deductions are available to you and what the specific laws of your state require can help.  Our office is always available to help answer questions!!

Nicole Hagen

One of the most challenging parts to a healthier lifestyle is making positive changes and then sticking with them weeks and months down the road.  This is where Nutrition Coaching with Nicole has been found to excel. In an effort to help clients get the best results that last for the rest of their lives, Nicole Hagen encourages sustainable habit-based strategies as opposed to the deprivation-based mindset of dieting. With guidance and accountability from an educated and experienced nutrition coach using sustainable, easy-to-begin habit-based coaching, Nicole believes anyone can create healthy, positive change that lasts a lifetime.

As a certified nutrition coach, Nicole helps people change their bodies and their lives with guided nutrition coaching geared specifically to their individual goals, lifestyle, and preferences.  Through her nutrition coaching process clients will learn the best eating, exercise (optional), and lifestyle strategies — unique and personal — for their body. And because she recognizes that we live in a fast-paced world, Nicole offers both in-person and remote nutrition coaching packages. So even those who live at a distance or who can’t get away for a face-to-face consultation can stay consistent and see results, no matter what life brings.

The majority of her clientele have fat loss goals, whether it’s 10, 50 or 100 pounds. She also does a lot of work with disordered eating and sport-specific clientele. So whether you feel like your body is working against you and just can’t seem to lose weight, or you’re looking for a way to enhance your fitness performance, Nicole is here to help guide the way.

Nicole utilizes an online nutrition coaching portal with her clients. This service allows for daily accountability, so nutrition and fitness goals remain a priority amidst the everyday life distractions! You can learn more at her website or Facebook/Instagram pages, where she posts daily Nutrition Tips of the Day. Nicole is also on instagram at  If you need any additional information, Nicole is happy to help via email at!

Sandra Kilpatrick Jordan

Our local business spotlight is always proud to share the many talents and expertise of our local area from  Himalayan tours to candle makers. Today we are incredibly excited to introduce Sandra Kilpatrick Jordan. Sandra worked at Sesame Workshop for 12 years as an executive producer of non-broadcast educational programs.  She spent 2 years as a federal grant maker at the National Girl Scouts of the USA which she describes as an amazing experience! Sandra followed this with another 8 years in public affairs and government relations for the international trade association for the music products industry (NAMM) and grant maker for their foundation.

 This employment resume is incredibly impressive in itself, but the work that Sandra does for these organizations is even more exciting.  An independent consultant since 2010, she works with business and nonprofit clients in various parts of the U.S. and overseas. Sandra describes her work as strategic planning and communications, along with program and partner development in education and the arts. She has been labeled a “trim tab” by one of her mentors, a definition she agrees with for herself and her work.  This term is primarily used to describe a small part on boats that gives better control and improved performance with just minor adjustments. Sandra fits this description by recognizing the future implications of small, high-leverage actions that can help to guide an organization in a right, new direction. She helps busy business and nonprofit leaders accelerate their social impact by

  • supporting them to plan, brand and communicate more effectively
  • producing new collateral materials
  • developing partnerships and programs


Sandra brings a wealth of bold and innovative services to organizations including writing strategic plans and annual reports, introducing new products or services, crafting new content for any medium, and spearheading or re-evaluating an education, public affairs or community outreach program.  This list does not exhaust her capabilities and Sandra’s customer testimonials and completed projects speak volumes to the work that she does and the quality she brings.

To see a complete list of the programs and projects she has been involved with, her website includes testimonials from many.—Products.html

If you are ready to take your organization in a new and innovative direction, Sandra is ready to help!  She is based locally in Lancaster at the Candy Factory and can be reached by email at  

Spending Your Refund

Getting a tax refund can feel like winning the April jackpot.  But how do you spend your winnings? It may be tempting to look at this fun money as a new wardrobe, expensive dinner, or other splurge.  Here are some ideas on how we can utilize our tax refunds for the greatest gain, and still have a little fun.

First, take care of your needs – and of course these are different for each person.  Start by paying off some of those big bills with highest interest rates first. If you have credit card debt or student loans, this is the perfect time to put a little extra towards those amounts.  Next, look at those monthly bills with lower interest rates such as your mortgage and car payments. Not only does paying more now help to pay them off quicker, it saves you future money in the form of saved interest payments.  It is always a good idea to get ahead now on these payments. You will be set when there is an emergency and you need to take a month of from making payments.

Second, start an emergency account in a separate savings account.  Even if you don’t add to it for several months, at least it is started and there in case of…..well, an emergency.  If you haven’t set up a retirement fund, now is a great time to do so. Set up an IRA or see if your employer has a matching retirement account.  If you already have an emergency account and retirement account, adding a little money from your tax refund will be a big help towards the future.

Third, look towards those expenses that you may be putting off but know need to be taken care.  Many people avoid making medical and dental appointments because of their fear of the price tag.  Now is the perfect time to schedule those appointments and take care of YOU! Just like us, our cars need TLC that often gets avoided because of cost fear.  Maintaining your automobile will save dividends down the road. This is a great time to get that noise looked at, before it becomes a bigger noise! The same can be said for our homes.  Ignoring a leaky roof or a dryer that doesn’t really dry? Here is the opportunity that you’ve been waiting for!

Finally, we come to the category of fun ways to spend this money….a trip of a lifetime.  If you’ve been living paycheck to paycheck, this might fall more under the need category.  Enjoy it!

The best advice for spending that refund is to spread it around.  Most Americans receive close to a $3,000 return. In this instance, the money can be split with $500 to credit cards, $500 to student loans, $500 to car payment, $500 to emergency or retirement fund, $500 to yourself $500 to vacation.  Putting a little money towards each of your big expenses and still pampering yourself is a great way to enjoy your winnings!