With all that’s been going on, it’s easy to forget that it’s Section 199A season again. Yes, we’re talking about that lovely 20 percent deduction. Are you compensating yourself and your fellow partners or LLC members with so-called guaranteed payments? If so, you may benefit from the following information about those payments and the preferred return option. What Is a Guaranteed Payment? A guaranteed payment is a payment by a partnership to a partner that’s determined without regard...

If you’ve formed a limited liability company (LLC) or corporation to operate your business or are thinking about doing so, you need to know about the Corporate Transparency Act. Enacted in January 2021, Congress’s new law will end business owners’ ability to form business entities without revealing their identities to the government. The new law intends to prevent the formation of anonymous shell companies for illegal purposes such as money laundering and tax evasion. But the transparency...

Two things to know about the Paycheck Protection Program (PPP) first draw enacted on December 27, 2020: The first draw is for those who missed getting in on the original PPP, which expired on August 8, 2020.Don’t think of a PPP draw as a loan. It’s not a loan. It’s a cash infusion. You have to repay a loan. You don’t have to repay the PPP funds. Who qualifies for first-draw PPP money today? You, most likely—if you file a business tax return and have not yet received any PPP monies. But...

Before the December 27, 2020, enactment of the new COVID-19 relief law, you may have chosen the Paycheck Protection Program (PPP) loan and given no thought to the employee retention credit. Remember, under the original law, you had to choose between the retention credit and the PPP loan. Millions chose the PPP loan route. But now the game has changed. You may, as a PPP recipient, qualify to take the employee retention credit retroactively for tax year 2020 quarters and also going forward...

Are you one of the millions of businesses that have an outstanding non-disaster Small Business Administration (SBA) loan? These include 7(a) loans (general small business loans of up to $5 million),504 loans (loans of up to $5.5 million to provide financing for major fixed assets such as equipment or real estate), andmicroloans (short-term loans of up to $50,000 for small businesses). If so, you have already benefited, or soon will benefit, from a little-known provision included in the...

Embedded in the COVID-19 relief law is $900 billion for financial assistance. As you would expect in these unusual times, some of the relief is in the form of direct government financial assistance and some is from tax benefits that can impact both tax year 2020 and tax year 2021. Most of the provisions create extra deductions or credits where Uncle Sam puts cash directly into your wallet. Here are four: 1. Recovery Rebate Payments and Credits Remember those $1,200 checks many...

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted on December 27, 2020, deals with the annual tax extenders. Congress made some of them permanent, while others got short- or long-term extensions. These are the big five Form 1040 tax breaks that were scheduled to expire on December 31, 2020: Exclusion from income for cancellation of acquisition debt on your principal residence (up to $2 million)Deduction for mortgage insurance premiums as residence interest7.5 percent...

The IRS can waive penalties it assessed against you or your business if there was “reasonable cause” for your actions. The IRS permits reasonable cause penalty relief for penalties arising in three broad categories: Filing of returnsPayment of taxAccuracy of information Contrary to what you might think, the term “reasonable cause” is a term of art at the IRS. This seemingly simple phrase has a precise and detailed definition as it relates to penalty abatement. Here are three instances...

Previously, we sent you emails discussing the tax issues that arise when a financially comfortable loved one has passed away. In this email, we dive into some of the non-tax issues you will have to deal with as the executor of the estate. Getting Extra Death Certificates For various reasons, a death certificate may be needed to prove that the decedent has indeed passed away. You may need originals (not copies) for some purposes. Get at least five originals from the applicable source....

How do you multiply your net worth? Let the government help. Here’s how: with both the SEP IRA and the solo 401(k) retirement plans, your investment in your tax-favored retirement creates tax deductions for the money you invest in the plan,grows tax-deferred inside the plan, andsuffers taxes only when you take the money from the plan. Example. You invest $1,000 a month in your retirement. You are in the 40 percent tax bracket (combined federal and state), and you earn 10 percent on...