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How to Fix Roth IRA Over-Deposits
In a prior post, we covered over-contributions into a Roth IRA. Now, let’s look at what the fixes are.
Fix 1: Withdraw the Over-Contribution
This is the fix I see most often, and is usually the best fix. If you catch the over-contribution before you file …
Residential Energy Credit: Big Changes for 2023
The residential energy credit – for things such as purchases of energy efficient appliances, doors and windows – has changed in a big way for 2023 and beyond. Let’s examine.
Energy efficient home improvement credit
The Way it Used to Be
Up through 2022 (including 2022), the credit …
What’s Going on with Form 1099-K?
In November, the IRS announced this it was pushing back the changes to Form 1099-K reporting rules again. Let’s examine.
…Beneficial Ownership Reporting and the Tax Practitioner
Let’s talk about beneficial owner reporting. This is a tricky subject for any tax pro to talk about. We are the ones who …
Roth IRA Over-Contributions: Common Problem for Average Taxpayers
I’ve written about this before but now is a timely time to talk about it again, with tax season underway.
I prepare a lot …
Refundable Child Tax Credit
In the tax bill being debated in Congress, one of the provisions is to expand the child tax credit. The proposal would:
…E-mailing 1099s (And W-2s) to Recipients
It’s that time of year when people will …
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 …
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 …
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 …
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 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 …
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 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 proprietor’s name and SSN* on the W-9The IRS says to use the proprietor’s …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 on …
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 on IRA withdrawals.
The rules on retirement withdrawals are tricky and vary between 401(k) accounts …