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ERC and Supply Chain Disruptions
On Friday, July 21, the IRS release a Chief Council Memorandum on the subject of whether or not a business qualifies for the employee retention credit (ERC) based on supply chain disruptions. Here is a link to the memorandum: https://www.irs.gov/pub/lanoa/am-2023-005.pdf
The short answer is, no, a …
Converting to an S-Corp — The QBI Deduction Complicates the Choice
The decision to be an S-corporation might be a bad thing for the overall tax picture of a small business right now, in light of the qualified business income deduction. Like everything with taxes, “it depends.”
I am not a huge fan of S-corps, and quite …
Retirement Account Contributions After Year-end; Chasing Your Tail
I usually try to steer clients away from making contributions to a retirement account after the year ends, even if they might get a deduction in that prior year. Example: an individual has until April 15, 2022, to put money into an IRA and count …
Selling a Home Converted to a Rental Property
If you convert your home to a rental property, and then sell the property, you might still be able to take a Section 121 exclusion on some of the gain.
The Section 121 exclusion is available to homeowners who have owned and lived in the home …
Selling Your Home When You’ve Taken Depreciation Deductions
Taxpayers who sell their home don’t need to pay taxes on the sale — “in general.” “In general” is famous last words of the tax code.
What if you’ve claimed a home-office deduction relating to your house? In that situation, it’s likely that some of your …
Solo Operator Blues: Adding Advisory Services is a Good Idea … But Hard to Actually Do
I write often on this blog about the struggles of being a solo operator. I do this, even though sometimes I say too much on a blog my clients read, because I think it’s important for people to know what life is like for us …
Interpreting a Federal Form 8879 E-file Authorization
In my last post I wrote about how to interpret the Iowa Form 8453, and how the math on it won’t tie out. The Iowa Form 8453 is the e-file authorization form a tax pro must get a taxpayer to sign, so the tax pro …
Interpreting an Iowa Form 8453 (The E-filing Authorization Form)
At least once a year, a client who actually bothers to look at what I give them to sign will ask a question about the Iowa Form 8453 (technical name: IA 8453-IND). This is the form a tax pro must get the client to sign, …
Do I Issue a 1099 When I Pay a Contractor in Venmo?
Venmo and other payment apps are becoming a popular way to pay contractors. We talked about the “1099-K exception” in the last post, where if you pay someone via a “third-party processor” you do NOT need to issue a 1099 yourself to that person because …
Revisiting Form 1099-K and Its Interaction with Other 1099s
If you are a business and you pay contract labor, you must issue the contractor a Form 1099-NEC if:
The amount you paid to the contractor is $600 or more for the year, and The contractor isn’t taxed as a corporation.If you pay with a credit or …
Will You Get Additional Deductions By Working with a Tax Pro?
Two weeks ago I was poking around on Twitter and saw a discussion among tax pros about how, most of the time, the answer to the question posed in the title is: no! In fact, many times the bottom line on your tax return will …
How Will Advance Child Tax Credits Affect My Tax Return?
Image by Esi Grünhagen from Pixabay
Many people are asking what the …
On Clients Hating their Tax Pro
Before you read this post, read “The Tax Field is Broken” for background.
When I take on a new client who was working with a prior preparer, almost 100% of the time the client isn’t just dissatisfied with their prior preparer, but there’s hatred in …
The Tax Field is Broken
Imagine that you run a local diner. In the past, you’ve had busy times such as the lunch rush or dinner rush where it’s overwhelming, but the busy times come and go and most of the time it’s just “running a diner.”
You serve diner …
Retirement Savers Credit And Prior Retirement Withdrawals
The retirement savers credit is a tax credit available to taxpayers who put money into a retirement account and whose income is below the threshold for qualifying for the credit.
For 2019 returns, the thresholds are: $64,000 for married filing jointly; $48,000 for head of household; …
What Millennial Business Owners Want, And Seem to be Willing to Pay For!
The bookkeeping software company Xero recently released a report, available here, which shows that “millennial” business owners are unhappy with their accountants — 50% are unhappy and are looking to switch to someone else, 33% say they only “receive insights” twice a year …
What to Do When Your Ex Wrongly Claims the Kids
When it comes to divorce and taxes, the IRS cares about who the custodial parent is. Custodial = who has custody of the kids more nights out of the year.
Note: many people say “well we have joint custody.” Or “my divorce decree says blah blah …
My Tax Reform Wish List: Instantaneous Audits
First of all if one were to really dig into ways to reform the tax system in this country, there are MANY things one could come up with. This particular wish of mine is 1) not the most important reform, and 2) not realistic anyway. …
SUTA and the Single-Member LLC
This blog post is specific to Iowa. SUTA = state unemployment tax.
In Iowa, when a 1-person LLC makes an election to be taxed as an S-corporation and pay the owner a salary, the salary is NOT automatically subject to state unemployment tax. Instead, the owner has …
Are Estimated Tax Payments Required?
A common question people ask is, am I required to make quarterly estimated tax payments? I guess the best answer is: “sort of.” It’s not a matter of you “must,” but …
Are Estimated Tax Payments Required?
A common question people ask is, am I required to make quarterly estimated tax payments? I guess the best answer is: “sort of.” It’s not a matter of you “must,” but there are penalties for not doing so.
The IRS will assess a penalty against you …
Revisiting W-9s, 1-Person LLCs and EINs
I wanted to revisit the subject of 1-person LLCs and employer identification numbers.
Here are the basics, when a 1-person LLC is taxed as a sole proprietorship:
The IRS says to put the …Revisiting W-9s, 1-Person LLCs and EINs
I wanted to revisit the subject of 1-person LLCs and employer identification numbers.
Here are the basics, when a 1-person LLC is taxed as a sole proprietorship:
The IRS says to put the proprietor’s name and SSN* on the W-9The IRS says to use the proprietor’s SSN* …Retirement Withdrawals, Home Purchases and the 10% Early Withdrawal Penalty
If you take money out of a retirement account to buy a house (for example to make a down payment), you can avoid the 10% early withdrawal penalty … but only …