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Self-Employment Tax on S-Corp / LLC issues

Posted 1/23/2017

It appears some S-Corp Owners (or an LLC tax as S-Corp) have an easier time getting some of their income treated as passive income (not subject to Self-employment tax) than others.  If your business has substantial investment of capital as opposed to a service based business (Doctors, Attorneys and Accountants) where there is usually less capital and more service, then you could benefit from separating your capital investment earnings from your wages.  Here is a very good article that helps determine where the lines are drawn.  http://www.forbes.com/sites/procedurallytaxing/2017/01/20/plastic-surgeons-share-of-llc-income-not-subject-to-self-employment-tax/#6920b828749e  

1099-Misc - Not Something to Ignore

Posted 1/19/2017

A few years ago two questions were added to all business returns and I believe some business owners still don't understand the importance of these two little question.  The first ask "Did you make payments that would require 1099?"  The second ask "If yes, did you issue them?" (are you going to comply).  Keep in mind these questions become part of the income tax return that is being signed "under penalties of perjury".  So, here we are in the heat of 1099 season and getting some businesses to issue these documents can be like pulling teeth.  What every business owner should understand is the requirement of the tax accountant under Circular 230.  We have Due Diligence requirements and can be fined if we knowing put false information on a tax return as well as banned from the e-file program.  So, if you fail to provide the 1099 info and refuse to issue the required documents, then we have no option but to answer those two little questions as follows:  1) Did you make payments that require 1099?  YES, 2) Are you going to comply? NO.  If the return is signed with any other answer, I believe you have committed perjury.  In our opinion, we believe this information will be used to select returns for audits.  I hear people tell me all the time, "I don't want any RED FLAGS"!  Then issue the 1099 forms!

Real Life "Person of Interest" Series at Play!

Interesting RV Case, Especially The Penalties

We Need Photo I.D.s on File

Posted 1/18/2017

IRS requires we document verification of identity of all taxpayers and spouses on returns that we electronically submit.  A photo ID such as a drivers license will satisfy this requirement.  We are also required to document that each dependent lives in the home with the taxpayer via school records or medical records showing such address.  If the child has tax documents or savings accounts that show an address, this will satisfy the requirement as well.  For children being claimed on a return where they do not live, a Custodial Release Form will be required (Form 8332 available on our Forms page).

Some Refunds will not be issued before February 15th

Posted 1/18/2017

IRS has announced that certain returns with refundable credits will not have refunds processed until Feb 15th as a fraud prevention measure.