Are Employees Messing Up Your Taxes?

Posted by Armen G. Derderian C.P.A on January 22, 2018

Are your taxes not matching the IRS’s records? Sometimes, your employees can file fraudulent taxes which can result in your business getting an audit. Here are a few tips on how to avoid this, and make sure both you and your employees are doing their due diligence for taxes.

First of all, make sure you’re paying your employees what they are due and using the proper forms. Are your employees true employees or contractors? The difference lies in how they’re compensated and if taxes are withheld from their paychecks or not. Contractors that work for you will owe more taxes at the end of the year than employees will.

You also have a duty to ensure that your employees file proper W4 forms. If you know that a W4 is inaccurate, you need to reject it. However, you should give your employees the benefit of the doubt. Only reject a W4 if your employee has said something that directly contradicts what’s on the form. You should never reject a form on suspicion of fraud, but instead only if you know with absolute certainty your employees are attempting to commit fraud. By rejecting the form, you are giving your employee an opportunity to correct any error before they get in legal trouble.

You can also contact a tax attorney to double-check all your forms before filing them with the IRS, so you know if you’ve made any mistakes. You don’t want to cost your employees money they deserve by making any errors on your taxes—treat them right, and they’ll do the same.

Contact Armen Tax for more information on how to make sure your business taxes are matching what your employees are filing. We can help you ensure your business taxes are accurate, as well as making sure you get the most out of your profits. We’re available to help now!