Our Most Recent Blog Posts

SUB S OWNERSHIP CHANGE

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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.

2018 20% Pass-through Deduction

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MUCH CONFUSION NOW!
In general the new tax law allows self-employed and owners of pass-through entities (partnerships and S Corps) to deduct 20% of "qualified business income".
 
The law is COMPLEX with limitations, exceptions and undefined terms.
 
Needs to define "qualified business income" more clearly.  Specified service entities are subject to high income limitations.  There is an issue wit tiered entities and whether or not Schedule E rental income is "qualified business income".
 
Expect guidance (hopefully clear guidance) late this year 2018.
 
 

Canadian Pensions

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U.S. social security benefits paid to a resident of Canada are taxed in Canada as if they were benefits under the Canada Pension Plan, except that 15% of the amount of the benefit is exempt from Canadian tax.
 
According to the IRS, special tax treatment applies to payments received from the Canadian
pension, the Quebec pension plan, and the Old Age Security plan. If the recipient is a resident of the United States, the benefits are taxable only in the United States, treated as US social security benefits for US tax purposes

Affordable Care Act Penalty Exemptions

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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.

https://www.healthcare.gov/health-coverage-exemptions/hardship-exemptions/

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

Or

Marketplace plans are unaffordable

Or

Experience some hardship in obtaining health insurance.

THERE ARE MORE EXEMPTIONS.  Have a look.

 

1099's - can we just do them?

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For many things processed at www.USATaxHelp.com, we will need to submit your authorization in the form of a Power of Attorney (POA).  If it is an income issue, audit issue, etc we will need one type POA (F2848)... if it is authorization to file payroll tax forms... IRS has another form (F8655) as does State of Florida (DR600).....

BUT, for 1099's to IRS, our firm can process if.........

Transmitters, paying agents, etc.  A transmitter, service bureau, paying agent, or disbursing agent (hereafter referred to as “agent”) may sign Form 1096 on behalf of any person required to file (hereafter referred to as “payer”) if the conditions in 1 and 2 below are met.

  1. The      agent has the authority to sign the form under an agency agreement (oral,      written, or implied) that is valid under state law and

  2. The      agent signs the form and adds the caption “For: (Name of payer).”

http://www.irs.gov/instructions/i1099gi/ar02.html#d0e507