10 Oct 2019
0

Taking Traditional IRA Distributions

Roger Rossmeisl, CPA
Individual Tax Briefs
Taking Traditional IRA Distributions

If you’re like many people, you’ve worked hard to accumulate a large nest egg in your traditional IRA (including a SEP-IRA). It’s even more critical to carefully plan for taking traditional IRA distributions. Knowing the fine points of the IRA distribution rules can make a significant difference in how much you and your family will get to keep after taxes. Here are three IRA areas to understand: Taking early distributions. If you need to take money out of your traditional IRA before age 59½, any distribution to you will be generally taxable (unless nondeductible contributions were made, in which case part of each payout will be tax-free). In addition, distributions before age 59½ may be subject to a 10% penalty tax. However, there are several ways...

08 Oct 2019
0

Should You Elect S Corporation Status?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Should You Elect S Corporation Status?

Operating a business as an S corporation may provide many advantages, including limited liability for owners and no double taxation (at least at the federal level). Self-employed people may also be able to lower their exposure to Social Security and Medicare taxes if they structure their businesses as S corps for federal tax purposes. But not all businesses are eligible — and with changes under the Tax Cuts and Jobs Act (TCJA), S corps may not be as appealing as they once were.  Should you elect S corporation status? Compare and contrast The main reason why businesses elect S corp status is to obtain the limited liability of a corporation and the ability to pass corporate income, losses, deductions and credits through to shareholders. In other words,...

06 Oct 2019
0

Beware Pump and Dump Schemes

Roger Rossmeisl, CPA
Fraud Briefs
Beware Pump and Dump Schemes

When the value of a stock skyrockets, its investors may think they’ve hit the jackpot. But if the stock in question is part of a “pump and dump” scheme, investors may, in fact, lose their shirts. Here’s how to avoid getting taken by this type of investment fraud. Beware pump and dump schemes! A penny for your stocks In the typical pump and dump scam, a fraud perpetrator buys shares in an inexpensive, relatively illiquid stock (often referred to as a “penny” stock) whose price will react dramatically when trading volume increases. Then the crook makes false or misleading statements to encourage people to sink their savings into the stock and drive up its price. When it hits a certain dollar amount, the fraudster sells, locking in...

06 Oct 2019
0

A Poorly Worded Apportionment Clause Can Upend an Estate Plan

Roger Rossmeisl, CPA
Estate Planning Briefs
A Poorly Worded Apportionment Claus

Federal estate tax liability is no longer an issue for many families, now that the gift and estate tax exemption stands at $11.4 million for 2019. But there are still affluent individuals whose estates may be subject to hefty estate tax bills. If you expect your estate to have significant estate tax liability at your death, it’s critical to include a tax apportionment clause in your will or revocable trust.  That's because a poorly worded apportionment clause, or no apportionment clause can upend an estate plan. An apportionment clause specifies how the estate tax burden will be allocated among your beneficiaries. Omission of this clause, or failure to word it carefully, may result in unintended consequences. How to apportion estate taxes There are many ways to apportion estate...

06 Oct 2019
0

Innocent Spouses May Get Tax Relief

Roger Rossmeisl, CPA
Individual Tax Briefs
Innocent Spouses May Get Tax Relief

When a married couple files a joint tax return, each spouse is “jointly and severally” liable for the full amount of tax on the couple’s combined income. Therefore, the IRS can come after either spouse to collect the entire tax — not just the part that’s attributed to one spouse or the other. This includes any tax deficiency that the IRS assesses after an audit, as well as any penalties and interest. (However, the civil fraud penalty can be imposed only on spouses who’ve actually committed fraud.)  So, if you’re married and file a joint return, what happens if your spouse doesn’t disclose all of his or her income or otherwise doesn’t pay the correct tax owed? You’re generally liable for the full amount, but...

03 Oct 2019
0

Steps to Take if an SSA No-Match Letter is Received

Roger Rossmeisl, CPA
Small Business Tax Briefs
Steps to Take if an SSA No-Match Letter is Received

What should you do if an SSA no-match letter is received by your business? In the past few months, many businesses and employers nationwide have received “no-match” letters from the Social Security Administration (SSA). The purpose of these letters is to alert employers if there’s a discrepancy between the agency’s files and data reported on W-2 forms, which are given to employees and filed with the IRS. Specifically, they point out that an employee’s name and Social Security number (SSN) don’t match the government’s records. According to the SSA, the purpose of the letters is to “advise employers that corrections are needed in order for us to properly post” employees’ earnings to the correct records. If a person’s earnings are missing, the worker may not qualify...

02 Oct 2019
0

Q4 2019 Business Tax Calendar

Roger Rossmeisl, CPA
Small Business Tax Briefs
Q4 2019 Business Tax Calendar

Here are some of the key tax-related deadlines affecting businesses and other employers to add to your Q4 2019 business tax calendar. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact me to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. Q4 2019 BUSINESS TAX CALENDAR October 15 If a calendar-year C corporation that filed an automatic six-month extension: File a 2018 income tax return (Form 1120) and pay any tax, interest and penalties due. Make contributions for 2018 to certain employer-sponsored retirement plans. October 31 Report income tax withholding and FICA taxes for third quarter 2019 (Form 941) and pay any tax due. (See exception below under “November 12.”) November 12 Report...

01 Oct 2019
0

Catching Revenue Recognition Fraud

Roger Rossmeisl, CPA
Fraud Briefs
Catching Revenue Recognition Fraud

Early revenue recognition has long accounted for a substantial portion of financial statement fraud. By recording revenue early, a dishonest business seller or an employee under pressure to meet financial benchmarks can significantly distort profits. Fortunately, fraud experts have tools for catching revenue recognition fraud. Multiple methods Early revenue recognition can be accomplished in several ways. A dishonest owner or employee might: Keep the books open past the end of a period to record more sales, Deliver product early, Record revenue before full performance of a contract, Backdate agreements, Ship merchandise to undisclosed warehouses and record the shipments as sales, and Engage in bill-and-hold arrangements. In this last scenario, a customer agrees to buy merchandise but the company holds the goods until shipment is requested. It and any...

29 Sep 2019
0

Understanding the Contents of a Will

Roger Rossmeisl, CPA
Estate Planning Briefs
Understanding the Contents of a Will

You probably don’t have to be told about the need for a will. But have you taken the time for understanding the contents of a will?  Do you know what provisions should be included and what’s best to leave out? The answers to those questions depend on your situation and may depend on state law. Understanding the contents of a will: basic provisions Typically, a will begins with an introductory clause, identifying yourself along with where you reside (city, state, county, etc.). It should also state that this is your official will and replaces any previous wills. After the introductory clause, a will generally explains how your debts and funeral expenses are to be paid. The provisions for repaying debt generally reflect applicable state laws. Don’t include specific...

26 Sep 2019
0

“Kiddie Tax” Hurts Families More Than Ever

Roger Rossmeisl, CPA
Individual Tax Briefs
Kiddie Tax Hurts Families More Than Ever

Years ago, Congress enacted the “kiddie tax” rules to prevent parents and grandparents in high tax brackets from shifting income (especially from investments) to children in lower tax brackets. And while the tax caused some families pain in the past, it has gotten worse today. That’s because the Tax Cuts and Jobs Act (TCJA) made changes to the tax rate structure.  These changes may mean the "kiddie tax" hurts families more than ever. History of the tax The kiddie tax used to apply only to children under age 14.  This provided families with plenty of opportunity to enjoy significant tax savings from income shifting. In 2006, the tax was expanded to children under age 18. And since 2008, the kiddie tax has generally applied to children under...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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