Ask Bob: Should My Business Be an S Corporation? 6 Myths and Facts
Posted on September 25th, 2020
CPA Robert Russo Breaks Down the Question: Should My Business Be an S Corp?
Ever since the Tax Cuts and Jobs Act was signed into law in late 2017, the team at Robert P. Russo, CPA has been getting questions about which business entity will allow them to best take advantage of the law. One question that keeps coming up is: should my business be an S corp? We get this question from LLCs and sole proprietorships – even employees wondering if now’s the time to launch that startup.
The answer to “should my business be an S corp”? It depends. There are benefits to becoming an S corporation (taking a distribution of dividends exempt from self-employment tax). But there are also pitfalls – if you don’t follow S corp requirements (take too large a distribution, and you could hear from the IRS).
Tags: Business Entity, Self-Employment, Small Business
Small Business Update: Payroll Tax Deferral
Posted on September 7th, 2020
On August 8, 2020, the President issued a Memorandum allowing employers to defer withholding and payment of an employee’s portion of the Social Security tax (i.e., the 6.2% FICA portion of the federal payroll tax on employees). Medicare taxes, however, are not covered. The payroll tax deferral is effective starting September 1, 2020, and also applies to the employee portion of the Railroad Retirement Act Tier 1 tax. While employers are allowed to defer the withholding and payment of the payroll taxes on employees’ applicable wages, they are not required to do so.
Let’s take a look at how this affects employers and employees: Read More…
Tags: Coronavirus, COVID-19, Pay Roll, Social Security
IRS Form 1040-X Now Available for E-Filing
Posted on September 7th, 2020
Form 1040-X has been one of the last major individual tax forms that still needed to be paper-filed, but now taxpayers can quickly correct previously filed tax returns by submitting Form 1040-X, Amended U.S. Individual Income Tax Return electronically using commercial tax-filing software. Read More…
Tags: E-filing, Tax Return
It’s Never Too Early to Check Tax Withholding
Posted on September 6th, 2020
While it probably seem like tax season just ended, it is never too early to do a “Paycheck Checkup” to make sure the right amount of tax is withheld from earnings – and avoid a tax surprise next year when filing your 2020 tax return. As a reminder, because income taxes operate as a pay-as-you-go system, taxpayers are required by law to pay most of their tax as income is received. Read More…
Tags: Coronavirus, COVID-19, Unemployment, Withholding
The Home Office Deduction
Posted on September 6th, 2020
With more people working from home than ever before, taxpayers may be wondering if they can claim a home office deduction when they file their 2020 tax return next year. The short answer is that self-employed taxpayers who use their home for business may be able to deduct expenses for the business use of it whether they rent or own their home. If you are an employee, however, you are not eligible to take the home office deduction – even if you are working remotely in your home office. Read More…
Tags: Deductions
Preparing for a Successful Retirement
Posted on September 4th, 2020
As you approach retirement, it’s vital that you pay attention to several important financial matters to ensure a smooth transition. Here are five of them: Read More…
Tags: Retirement
Recordkeeping Tips for Individuals and Businesses
Posted on September 4th, 2020
The key to avoiding headaches at tax time is keeping track of your receipts and other records throughout the year. Whether you use an excel spreadsheet, an app, an online system or keep your receipts organized in a folding file organized by month, good record-keeping will help you remember the various transactions you made during the year. Read More…
Tags: Bookkeeping, Record Keeping, Unemployment
Tax Considerations When Hiring Household Help
Posted on September 3rd, 2020
If you employ someone to work for you around your house, it is important to consider the tax implications of this type of arrangement. While many people disregard the need to pay taxes on household employees, they do so at the risk of paying stiff tax penalties down the road. Read More…
Tags: Social Security
What To Do If You Get a Letter From the IRS
Posted on September 3rd, 2020
The IRS mails millions of notices and letters to taxpayers every year for a variety of reasons. If you receive correspondence from the IRS don’t panic. You can usually deal with a notice by simply responding to it; most IRS notices are about federal tax returns or tax accounts. Each notice has specific instructions, so read your notice carefully because it will tell you what you need to do. In most cases, your notice will be about changes to your account, taxes you owe or a payment request; however, your notice may also ask you for more information about a specific issue. Read More…
Tags: Fraud Prevention, IRS, Tax Tips
Tax Tips for Workers in the Gig Economy
Posted on September 2nd, 2020
The gig economy, also called sharing or access economy, is defined by activities where taxpayers earn income providing on-demand work, services, or goods. This type of work is often carried out via digital platforms such as an app or website. There are many types of sharing economy businesses including two of the most popular ones: ride-sharing, Uber and Lyft, for example, home rentals such as Airbnb, and TaskRabbit. Read More…
Tags: Gig Economy, Real Estate, Self-Employment
E-Signatures Temporarily Allowed for Certain Forms
Posted on September 2nd, 2020
The use of digital signatures on certain forms that cannot be filed electronically will now be temporarily allowed. Expanding the use of digital signatures will help to protect the health of taxpayers and tax professionals during the coronavirus pandemic by reducing in-person contact between taxpayers and tax professionals. Read More…
Tags: Tax Return, Tax Tips
2 Ways to Avoid Massive Taxes When Selling a Rental Property
Posted on September 1st, 2020
If you own a rental property (and live there, too) you have 2 fantastic opportunities to reduce taxes on capital gains when selling a rental property. Read More…
Tags: Real Estate, Tax Credits
Tax Due Dates for September 2020
Posted on September 1st, 2020
September 10
Employees Who Work for Tips – If you received $20 or more in tips during August, report them to your employer. You can use Form 4070.
September 15
Individuals – Make a payment of your 2020 estimated tax if you are not paying your income tax for the year through withholding (or will not pay in enough tax that way). Use Form 1040-ES. This is the third installment date for estimated tax in 2020.
Partnerships – File a 2019 calendar year income tax return (Form 1065). This due date applies only if you were given an additional 6-month extension. Provide each shareholder with a copy of Schedule K-1 (Form 1065) or a substitute Schedule K-1.
S corporations – File a 2019 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you made a timely request for an automatic 6-month extension. Provide each shareholder with a copy of Schedule K-1 (Form 1120S) or a substitute Schedule K-1.
Corporations – Deposit the third installment of estimated income tax for 2020. A worksheet, Form 1120-W, is available to help you make an estimate of your tax for the year.
Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in August.
Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in August.
Tags: Tax Due Dates