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Unemployment Compensation in 2020
On March 11, 2021 the American Rescue Plan Act of 2021 was enacted.
One of the provisions excludes up to $10,200 of unemployment compensation paid in 2020 for those with adjusted gross income (AGI) less than $150,000.
As this law was enacted during the tax filing season, the anticipated time until the IRS and software providers can make updates is late May 2021.
At this time the IRS is requesting that taxpayers do not file amended returns as they are still determining guidance on how best to accommodate
taxpayers who have already filed returns.
The IRS is considering automatically correcting returns filed with unemployment compensation without any need for amendments.
A group of Republicans on the House Ways and Means Oversight Subcommittee sent a letter Wednesday 02.18.21 to IRS Commissioner Charles Rettig complaining about the backlog of approximately 11 million unprocessed tax returns from the 2019 tax year. The backlog of unprocessed mail from the pandemic has created a ripple effect that’s continuing into this year’s tax-filing season, which opened last Friday.
The problem isn’t only with the mail, which piled up last year in trailers outside IRS facilities until IRS employees could return to their offices and open it. While most of the millions of pieces of mail have reportedly been opened, much of it remains unprocessed. That’s causing headaches for taxpayers and tax professionals alike, who are coping with past due notices sent automatically by IRS computer systems, even when payments were sent months ago, according to the investigative news site ProPublica. Taxpayers have had trouble with receiving their Economic Impact Payments from last year and are also having trouble reaching the IRS by phone this year, with the agency continuing to be understaffed due to the pandemic and budget cuts in past years.
• The bookstore or contracting business (example) is an operating business. Keep revenue and expenses separate from the rental business. This does not mean a separate checking account but it may be easier to maintain records. That is up to you.
PAYMENTS TO MEMBERS
1. Just take it. That is called a DRAW. Partners are NOT required (unlike a corporation) to DRAW according to ownership percentage. The DRAW itself is not a taxable event. The members (that’s what partners are called in an LLC – members) are taxed on the bottom line profit whether they take it (DRAW) or not.
• Payment for services would be a GUARANTEED PAYMENT. Deductible by the LLC and taxable to the recipient.
Read NSA's article here.