Category: IRS

Payments made to liquidate a retired partner’s ownership interest in the partnership (other than payments for his or her share of certain partnership assets) are usually subject to the federal self-employment tax (also known as SE tax). That can amount to a large tax bite. Fortunately, there is a taxpayer-friendly exception. When it applies, this exception can exempt partner retirement payments from SE tax. If the retirement plan is properly structured, even large payments made in the years just after… Read more ›

  For purposes of the Child Tax Credit for the 2021 tax year, a qualifying child is one who doesn’t turn 18 before January 1, 2022, and who satisfies certain other conditions. Taxpayers who don’t qualify for the Child Tax Credit because their children are too old may have an alternative. The Credit for Other Dependents maxes out at $500 per dependent if certain conditions are met. To qualify, a dependent must: Be age 17 or older; Have an individual… Read more ›

  Almost three months after it passed the U.S. Senate, the U.S. House of Representatives has passed the Infrastructure Investment and Jobs Act (IIJA), better known as the bipartisan infrastructure bill. While the bulk of the law is directed toward massive investment in infrastructure projects across the country, a handful of noteworthy tax provisions are tucked inside it. Here’s what you need to know about them. Early termination of the Employee Retention Credit The IIJA terminates the Employee Retention Credit… Read more ›

The IRS has announced that the federal tax filing deadline will be extended this year from Thursday, April 15 to Monday, May 17, 2021. New legislation that passed recently, which provides economic, tax and other relief from the pandemic, has created a complex tax filing season for individuals, businesses and tax preparers, leading to the extended deadline. The extension does not impact all tax deadlines, however. First-quarter estimated tax payments are still due April 15. Deadlines for state tax returns… Read more ›

The IRS often provides taxpayers with recommendations for preparing for the latest tax season. Based on a recent email Councilor, Buchanan & Mitchell (CBM) received from the IRS, we thought it might be valuable to share the following tips and advice. Get organized – Identify all the records you will need for tax season including any W-2s, 1099s, cancelled checks and other documents you’ve accumulated through 2020 related to your income, deductions or credits in one location. Organizational tools –… Read more ›

During these financially challenging times, many not-for-profit organizations have had to get creative to raise adequate revenue to sustain operations. But new activities, however well-intentioned, can lead to tax trouble. Your nonprofit risks exposure to the unrelated business income tax (UBIT) if it operates outside its usual charitable scope. Here’s how to avoid unwanted tax exposure. Regular and Unrelated For tax-exempt organizations, unrelated business income generally is defined as the profits generated by regular trade or business activities that aren’t… Read more ›

The CARES Act and Relief for Businesses Impacted by COVID-19 On Friday, March 27, President Trump signed into legislation the Coronavirus Aid, Relief and Economic Security Act (CARES) Act. The $2.2 trillion legislation represents the largest stimulus package in U.S. history—dwarfing the $800 billion package signed during the 2008 financial crisis—and provides a variety of economic relief measures to mitigate the impact of the coronavirus pandemic on American society. The Act provides for five options for businesses in search of relief,… Read more ›

On Friday, March 27, President Trump signed into legislation the Coronavirus Aid, Relief and Economic Security Act (CARES) Act. The $2.2 trillion legislation represents the largest stimulus package in U.S. history—dwarfing the $800 billion package signed during the 2008 financial crisis—and provides a variety of economic relief measures to mitigate the impact of the coronavirus pandemic on American society. Not-for-profits should be aware of certain parts of the CARES Act as it pertains to the impact of COVID-19 on their… Read more ›

Councilor, Buchanan & Mitchell (CBM) has published guidance for businesses that receive a notice from the IRS (Letter 226J) relating to penalties associated with compliance with the Affordable Care Act. Click here to read our guidance. Please also keep in mind the important deadlines below. Don’t Miss Early 2020 Due Dates February 28, 2020 – Paper copies of Forms 1094-C and 1095-C must be filed with the IRS by this date. Employers with less than 250 employees can paper file…. Read more ›

The IRS is currently issuing the Letter 226J proposed employer-shared responsibility payment (ESRP) notice to businesses they suspect of having not complied with the 2017 tax-year Affordable Care Act requirements. The Letter identifies the amount of the proposed penalty that the business would be responsible for paying— an amount which can be steep. CBM has seen penalty amounts ranging from $3,160 to over a million dollars. CBM advises businesses that receive such a letter to respond promptly, especially since Letter… Read more ›