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J.K. Lasser's Small Business Taxes 2017 by Barbara Weltman

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CHAPTER 7 Employee Compensation Salary, Wages, and Employee Benefits

  1. Worker Classification
  2. Temporary Workers and Outsourced HR
  3. Deductible Employee Compensation
  4. Compensation to Owners
  5. Stock Options and Restricted Stock
  6. Deferred Compensation
  7. Disallowance Repayment Agreements
  8. Employee Benefits
  9. Identity Theft Protection
  10. Nonstatutory Fringe Benefits
  11. Cafeteria Plans
  12. Employment Tax Credits

If  you are an employee of someone else's business, you do not pay compensation to another individual. You can skip most of this chapter and go on to look at other deductible expenses. However, you might want to review the areas covered to understand your employer's burdens and responsibilities for the wages and benefits paid to you. You may also be interested in a couple of tax credits to which you may be entitled by virtue of working.

If you are the owner of a sole proprietorship, partnership, or limited liability company, you are not an employee and cannot receive employee compensation. Money you take out of your business is a “draw,” but it is not a deductible expense for the business (you already pay tax on your share of business income, whether or not it is distributed to you). However, your business may have employees, and payments to them are deductible according to the rules discussed in this chapter. According to the Winter 2016 Statistics of Income Bulletin, wages and compensation along with commissions was the largest deduction type for sole proprietorships (other than cost of goods ...

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