A net operating loss (NOL) is when business losses exceed income.
Prior toJanuary 1, 2018, NOLs were able to offset 100% of taxable income. They were allowed to be carried back two years and carried forward for twenty years. You could affirmatively elect with a timely filed return to NOT carryback (the default) and instead carry forward only (permanent, could not change it for that year).
Under the new law effective in 2018, an NOL can offset only 80% of taxable income in any given tax year. NOLs can be carried forward only. The 20-year carryforward period is changed to an indefinite carryforward period NOLs created in tax years beginning before January 1, 2018 are subject to the old rules. Only NOLs generated in tax years beginning after December 31, 2017 are subject to the new rules.
Special hardship exemptions have to be applied for.... and when taxpayer receives an ECN (exemption certificate number) we can input that and the penalty goes away. Has to be applied for....
Here is the link.
If you have not done so, you should explore this.... some possible exemptions.......
Required care of a loved one disrupts your ability to pay living expenses
Marketplace plans are unaffordable
Experience some hardship in obtaining health insurance.
THERE ARE MORE EXEMPTIONS. Have a look.
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.
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.
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!
Assuming you are a W2 employee (not an independent contractor)…..
There no longer is any deduction for unreimbursed employee expenses… GONE!
That means, unfortunately, you have legitimate expenses you cannot deduct.
In an ‘UNACCOUNTABLE’ plan (your allowance), it is suppose to be added to your W2 and taxed for both FICA and Federal Withholding.
It is an unfortunate part of the new tax law.
You know the fees the brokers charge? Also no longer deductible!
Anything that went on a Schedule A Itemized Deductions that were subject to the 2% of AGI limitation are ALL GONE.
Assuming the employer is doing it correctly (adding it to your W2), they also are paying FICA (employer matching).
A better cheaper plan for all concerned is to have.....
An ‘ACCOUNTABLE’ plan……
You give them an expense report showing documented business mileage. They reimburse that amount.
It does not go on your W2, no employer matching, etc. They still get the deduction for what you are paid but you are not taxed on it.
If you are an independent contractor, forget everything I’ve said. I’ll have different answer.
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:
- The payment is made to someone who is not an employee of the payer
- The payment was made for services in the course of the payer’s trade or business
- 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.
- 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.
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.
- 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.
- 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.
- 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.
- 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.
Can unreimbursed employee expenses be deducted?
No, not for a W2 employee. Any of the 2017 expenses and years prior that were subject to a 2% of AGI limitation are no longer deductible.
Yes, for independent contractors.
Yes, for Statutory employees.
The best example of a Statutory Employee is an outside insurance agent.
Apr 23, 2018 · Statutory Employees. An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done. A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors,...
I have never seen a mortgage agent classified as a statutory employee.
Now, what if you are both a W2 employee AND an independent contractor?
No for employee expenses.
Yes for independent contractor expenses.
BUT we are talking about the same business field. It would be fair if unreimbursed expenses should are pro-rated……
i.e. W2 $80k Form 1099 Independent $5k
$80 + $5 = $85k
$4k/85k = 4.7%
4.7% x $4k expenses = $188 Sch C expenses to reduce the $5k F1099.
If a shareholder terminates his or her interest in an S corporation during the tax year, the S corporation, with the consent of all affected shareholders (including those whose interest is terminated), may elect to allocate income and expenses, etc., as if the corporation’s tax year consisted of 2 separate tax years, the first of which ends on the date of the shareholders termination.
To make the election, the corporation MUST attach a statement to a timely filed original or amended Form 1120S for the tax year for which the election is made. In the statement the corporation must state that it is electing under section 1377(a)(2) and Regulations section 1.1377-1(b) to treat the tax year as if it consisted of 2 separate tax years. The statement must also explain how the shareholder’s entire interest was terminated (e.g., sale or gift), and state that the corporation and each affected shareholder consent to the corporation making the election. A single statement may be filed for all terminating elections made for the tax year. If the election is made, write “Section 1377(a)(2) Election Made” at the top of each affected shareholders Schedule K-1. If not filed on the original due date, an extension must be filed or else the actual filing will not be considerd timely.