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Long Term Care Premiums in S Corps

Can you deduct Long Term Care Preimums the same as Health Insurance for the greater than 2% Shareholder.

Answer is .... sort of....

 

The way the math works…….

Let’s say LTC is $6,000

Age based LTC for age 61 to 70 is $3,900

Step 1:  The S Corp deducts the entire $6k (even if the Shareholder pays it personally).

Step 2: Box 1 on the W2 is increased by $6k.

Step 3: Box 14 on the W2 includes the aged based allowable amount $3.9k.

Result

So, steps 1 and 2 cancel each other.

Step 3 allows 100% of the allowable deduction ($3.9k) to be deducted on the front of the individual tax return, same as regular health insurance.

Accounting, Tax & Financial Services

How Often Does Tax Law Change....
There were approximately 4,430 changes to the tax code from 2001 through 2010, an average of more than one a day, including an estimated 579 changes in 2010 alone. Yup, its complicated but we can help.
 
Notice** IRS Headquarters Washington, D.C. - Names 10 New Members to IRPAC
The Internal Revenue Service announced the selection of 10 new members for the Information Reporting Program Advisory Committee (IRPAC).

“Members of IRPAC provide industry perspective and recommendations that assist the IRS in making decisions about third-party information reporting, which is important to sound tax administration,” said IRS Commissioner Doug Shulman.

The new appointees will join 14 returning members who are in the second or third year of their three-year terms.

Lonnie Young of Young & Company, LLC is one of the 10 selected in the United States! Click here for the complete article

If the IRS trusts his opinion, perhaps you can too!

2016 Form 1099 Due Dates & Penalties

Every person engaged in trade or business must file an information return for payments made to another person for services performed in the course of the payer’s trade or business if the aggregate remuneration paid to the person is $600 or more in any tax year.   The return is made on Form 1099-MISC accompanied by Form 1096.

Form 1099-MISC, Box 7, reports non-employee compensation of $600 or more.  These amounts may include fees, commissions, prizes, awards, compensation for services performed, and certain other payments.   If the following four conditions are met, the payer generally must report payments in box 7 of Form 1099-MISC:

  1. The payment is made to someone who is not an employee of the payer
  2. The payment was made for services in the course of the payer’s trade or business
  3. The payment was made to an individual, partnership, estate and in the case of attorney’s fees, even corporations must receive a 1099.   Please note that LLC’s that have not file form 8832 and made an election to be taxed as a corporation are not exempt from information reporting requirements.   Attorney fees are always reportable, even if they are incorporated.
  4. The payer made payments to the payee of at least $600 during the year.

Other 1099s for Dividends (1099-DIV), Interest (1099-INT), for mortgage interest received (1098) may also need to be filed by certain taxpayers.

NEW FOR 2016

The 2015 PATH Act has accelerated the due dates for Form 1099-MISC, as well as W2’s effective for 2016 forms that are due in 2017.  ALL Forms 1099-MISC and Forms W2 must be filed by Jan. 31, 2017, without regard to how they are filed with IRS (1099’s) or SSA (W2’s).   There is no automatic extension of this due date. 

However, a 30 day extension may be obtained by requesting that on Form 8809.

https://www.irs.gov/pub/irs-pdf/f8809.pdf

PENALTY

The penalty amount for the non-filing or incorrect filing of Forms W2/W3 or 1099-MISC will be based on when the initial/correct form is filed.

  1. The initial penalty amount will be $50 per form for any form filed after the due date but within 30 days of the initial due date.  If the form is not correct and not corrected by Aug. 1, it will be considered not filed and subject to the late filing penalties.  The maximum late filing penalty is $532,000 per year.
  2. Any Form W2 or Form 1099-MISC filed after the 30th day from the initial due date but on or before August 1st will be subject to a $100 per form penalty.  The maximum penalty is $1,596,500 per year.
  3. If Form W2 or 1099-MISC is filed after August 1st, the penalty is $260 per form.  The maximum penalty is $3,193,000 per year.
  4. An intentional disregard for the rules is subject to a $530 per form penalty with no maximum.

Before paying any outside or service person it is advisable to have them complete and sign a Form W-9 so that you will have the info available in the event a 1099 is required. 

https://www.irs.gov/pub/irs-pdf/fw9.pdf

Exchange - not Sale to defer tax

SUMMARY OF IRS LINK       https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031

You cannot sell ANYTHING and defer taxes…

You can EXCHANGE (qualified intermediary is hired.. you don’t get your hands on the money)… subsequent property is identified within 45 days… and have a total of six months from sale date to purchase like kind property.

When the exchange is done, if you received boot (money, cars, debt forgiveness in excess of debt assumed), then you are taxed on a part of the boot.

The old rules of selling a primary and reinvesting the proceeds in a home of equal or greater value are gone.

AND, it did not apply to a vacation home anyway, only a primary.

Required Minimum Distributions RMD

HEIR HAZARDS when INHERITING an IRA
 
RMD (Required Minimum Distribtutions) are required when the owner turns 70 1/2 years old.
 
NON-SPOUSE beneficiaries can 'stretch' the regular inherited IRA over their own life expentancy but must start the RMD the year following the death of the owner.
 
While ROTH IRA owners never are required to distribute RMD, NON-SPOUSE beneficiaries must.  Those withdrawls are still tax free.