IRS Resources
Tax resources for all segments of the beauty industry.

Whether you are a manufacturer, distributor, salon owner or work in a salon, it is crucial to be aware of the Internal Revenue Service and what it means to you as a professional in the beauty industry.

We have compiled a list of the following resources for your information. Please contact Bridget Sharpe, bridget@probeauty.org, if you have any questions or need any assistance with the below resources.


Resources for Employers and Independent Contractors (Self-Employed/Booth Renters)

IRS Tax Tip Brochure (English)
Whether you’re a shop owner, employee, or booth renter (independent contractor), you need to know your federal tax responsibilities, including how to report your income and tips you receive from your customers. The purpose of this publication is to describe some of the Federal tax responsibilities that owners and workers must address each day.
IRS Tax Tip Brochure (Spanish)


Avoiding the Biggest Tax Mistakes

IRS webinar:

  • Learn about the biggest tax mistakes and how to avoid them
  • Discover how to detect common tax schemes and unscrupulous tax preparers


Cash Intensive Businesses Audit Techniques Guide - Beauty and Barber Shops
This beauty salon guide is composed of collective information from audits, interviews of salon owners, and contacts with the state departments. This guide is intended to provide an overview of the industry.


Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – Form SS-8
Official IRS form. Firms and workers file Form SS-8 to request a determination of the status of a worker for purposes of federal employment taxes and income tax withholding.


Forms and Associated Taxes for Independent Contractors
Official IRS forms independent contractors should be familiar with.


Independent Contractor Defined
The official IRS definition of an independent contractor.


Independent Contractor (Self-Employed) or Employee?
Helpful links and resources to determine whether your employees should be classified as Independent Contractors or Employees.


Independent Contractor or Employee? Training Materials
The status of a worker as either an independent contractor or employee must be determined accurately to ensure workers and businesses can anticipate and meet their tax responsibilities timely and accurately. Official IRS training materials.


IRS 2013 Form 1040-ES Estimated Tax for Individuals (Self-Employment)
Use this package to figure and pay your estimated tax. If you are not required to make estimated tax payments for 2013, you can discard this package. Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.). In addition, if you do not elect voluntary withholding, you should make estimated tax payments on other taxable income, such as unemployment compensation and the taxable part of your social security benefits.


IRS Market Segment Understandings (MSU): Tip Reporting Alternative Commitment (TRAC)
In a continuing effort to increase tax compliance and at the same time reduce taxpayer burden, the IRS has expanded its MSU Program into other industries. The newest additions are new voluntary compliance agreements for all industries where tipping is customary. These voluntary compliance agreements are designed to enhance tax compliance among tipped employees through taxpayer education instead of through traditional enforcement actions, such as tip examinations.


IRS Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
Use Form 940 to report your annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax. Do not collect or deduct FUTA tax from your employees' wages.


IRS Instructions for Form 940 - Employer’s Annual Federal Unemployment (FUTA) Tax Return
FUTA tax rate: The FUTA tax rate remains 6.0%.
Credit reduction state: A state that has not repaid money it borrowed from the federal government to pay unemployment benefits is a “credit reduction state.” The Department of Labor determines these states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940.


IRS Instructions for Form 941 (January 2013)
Social Security and Medicare tax for 2013. The employee tax rate for social security is 6.2%. Previously, the employee tax rate for social security was 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The social security wage base limit is $113,700. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2012. There is no wage base limit for Medicare tax.


IRS Form 941, Employer’s Quarterly Federal Tax Return
Employers who withhold income taxes, social security tax, or Medicare tax from employee's paychecks, or who must pay the employer's portion of social security or Medicare tax, use Form 941 to report those taxes.


IRS Publication 15 (Circular E), Employer’s Tax Guide
Publication 15 (Circular E), Employer's Tax Guide, explains your tax responsibilities as an employer. It also includes tax tables that you need to figure the taxes to withhold from each employee.


IRS Publication 583, Starting a Business and Keeping Records
This publication provides basic federal tax information for people who are starting a business. It also provides information on keeping records and illustrates a recordkeeping system.


IRS Worker Classification Webinar
This Worker Classification webinar archive presents information about worker classification issues and the Voluntary Classification Settlement Program.


Know Who You're Hiring - Independent Contractor (Self-employed) vs. Employee
Explains the difference between employees and contractors for the following: employers, nonprofits, government agencies and Indian tribal governments.


Payments to Independent Contractors

IRS webinar detailing:

  • Payments to Independent Contractors
  • Form 1099 filing requirements
  • Backup withholding and how to avoid being liable for it
  • CP2100 Notices for payee name/TIN mismatches


Present Law and Background Relating to Worker Classification for Federal Tax Purposes
In 1987, based on an examination of cases and rulings, the IRS developed a list of 20 factors that may be examined in determining whether an employer-employee relationship exists. Beginning on page 17 you will find a list and description of the twenty factors.


Self-Employed Individuals Tax Center
Helpful FAQ page for self-employed individuals, answering questions such as: What are my self-employed tax obligations? How do I make my quarterly payments? What is a qualified joint venture?


Understanding Taxes - Online Tax Tutorials
These 14 tax tutorials will guide you through the basics of tax preparation, giving you the background you need to electronically file your tax return.

Resources for Employees

IRS Tax Tip Brochure (English)
Whether a shop owner, an employee, or a booth renter (independent contractor), you need to know your federal tax responsibilities, including how to report your income and tips you receive from your customers. The purpose of this publication is to describe some of the Federal tax responsibilities that owners and workers must address each day.
IRS Tax Tip Brochure (Spanish)


Avoiding the Biggest Tax Mistakes

IRS webinar:

  • Learn about the biggest tax mistakes and how to avoid them
  • Discover how to detect common tax schemes and unscrupulous tax preparers


Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding - Form SS-8
Official IRS form. Firms and workers file Form SS-8 to request a determination of the status of a worker for purposes of federal employment taxes and income tax withholding.


IRS Publication 531 Cat. No. 15059V Reporting Tip Income
This publication is for employees who receive tips. All tips you receive are income and are subject to federal income tax. You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. Reporting your tip income correctly is not difficult. You must do three things.
1. Keep a daily tip record.
2. Report tips to your employer.
3. Report all your tips on your income tax return.


IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer
This publication contains: Form 4070A, Employee’s Daily Record of Tips and Form 4070, Employee’s Report of Tips to Employer.


Payments to Independent Contractors

IRS webinar detailing:

  • Payments to Independent Contractors
  • Form 1099 filing requirements
  • Backup withholding and how to avoid being liable for it
  • CP2100 Notices for payee name/TIN mismatches


Understanding Taxes - Online Tax Tutorials
These 14 tax tutorials will guide you through the basics of tax preparation, giving you the background you need to electronically file your tax return.