13 Sep 2020
0

Employers Have Questions About FICA Deferrals

Roger Rossmeisl, CPA
Small Business Tax Briefs
Employers Have Questions About FICA Deferrals

The IRS has provided guidance to employers regarding the recent presidential action to allow employers to defer the withholding, deposit and payment of certain payroll tax obligations.  The three-page guidance in Notice 2020-65 was issued to implement President Trump’s executive memorandum signed on August 8.  Even with the guidance, employers have questions about FICA deferral, specifically whether, and how, to implement the optional deferral. The President’s action only defers the employee’s share of Social Security taxes; it doesn’t forgive them, meaning employees will still have to pay the taxes later unless Congress acts to eliminate the liability. (The payroll services provider for federal employers announced that federal employees will have their taxes deferred.)  Deferral basics President Trump issued the memorandum in light of the COVID-19 crisis. He directed the...

06 Sep 2020
0

What Happens When You Can’t Pay Your Taxes?

Roger Rossmeisl, CPA
Individual Tax Briefs
What Happens When You Cant Pay Your Taxes?

While you probably don’t have any problems paying your tax bills, you may wonder: What happens in the event you can’t pay your taxes on time? Here’s a look at the options. Most importantly, don’t let the inability to pay your tax liability in full keep you from filing a tax return properly and on time. In addition, taking certain steps can keep the IRS from instituting punitive collection processes. Common penalties The “failure to file” penalty accrues at 5% per month or part of a month (to a maximum of 25%) on the amount of tax your return shows you owe. The “failure to pay” penalty accrues at only 0.5% per month or part of a month (to 25% maximum) on the amount due on the...

06 Sep 2020
0

How to Protect Your Investment Accounts from Fraud

Roger Rossmeisl, CPA
Fraud Briefs
How to Protect Your Investment Accounts from Fraud

Because the average investment account boasts a much larger balance that a typical checking or savings account, cybercriminals are particularly interested in hacking them. Financial institutions are largely responsible for ensuring the security of these accounts, but business customers and consumers also should adopt defensive measures. Here are five recommendations for how to protect your investment accounts from fraud. Select two-step authentication. Most financial service providers give customers the option of using a two-step verification process to prevent unauthorized access to their accounts. A two-step approach requires you both to log in to your account with a password and to verify your identity with, for example, a one-time code sent to your mobile phone. Choose complex and unique passwords. Criminals often gain access to bank...

06 Sep 2020
0

Filing Cash Transaction Reports for Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Filing Cash Transaction Reports for Your Business

Does your business receive large amounts of cash or cash equivalents? You may be required to begin filing cash transaction reports with the IRS to report these transactions. Filing requirements Each person engaged in a trade or business who, in the course of operating, receives more than $10,000 in cash in one transaction, or in two or more related transactions, must file Form 8300. Any transactions conducted in a 24-hour period are considered related transactions. Transactions are also considered related even if they occur over a period of more than 24 hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions. To complete a Form 8300, you will need personal information about the person making the cash...

06 Sep 2020
0

Stepped-Up Basis of Inherited Property

Roger Rossmeisl, CPA
Individual Tax Briefs
Stepped-Up Basis of Inherited Property

If you’re planning your estate, or you’ve recently inherited assets, you may be unsure of the “cost” (or “basis”) for tax purposes.  Generaly, there is a stepped-up basis of inherited property. Fair market value rules Under the fair market value basis rules (also known as the “step-up and step-down” rules), an heir receives a basis in inherited property equal to its date-of-death value. So, for example, if your grandfather bought ABC Corp. stock in 1935 for $500 and it’s worth $5 million at his death, the basis is stepped up to $5 million in the hands of your grandfather’s heirs — and all of that gain escapes federal income tax forever. The fair market value basis rules apply to inherited property that’s includible in the deceased’s gross estate,...

06 Sep 2020
0

Are Scholarships Tax-Free or Taxable?

Roger Rossmeisl, CPA
Individual Tax Briefs
Are Scholarships Tax-Free or Taxable?

COVID-19 is changing the landscape for many schools this fall. But many children and young adults are going back, even if it’s just for online learning, and some parents will be facing tuition bills. If your child has been awarded a scholarship, you might be wondering . . . are scholarships tax-free or taxable? Scholarships (and fellowships) are generally tax-free for students at elementary, middle and high schools, as well as those attending college, graduate school or accredited vocational schools. It doesn’t matter if the scholarship makes a direct payment to the individual or reduces tuition. Tuition and related expenses However, for a scholarship to be tax-free, certain conditions must be satisfied. A scholarship is tax-free only to the extent it’s used to pay for: Tuition and fees...

06 Sep 2020
0

Back-to-School Tax Breaks

Roger Rossmeisl, CPA
Individual Tax Briefs
Back-to-School Tax Breaks

Despite the COVID-19 pandemic, students are going back to school this fall, either remotely, in-person or under a hybrid schedule. In any event, parents may be eligible for certain back-to-school tax breaks to help defray the cost of education. Here is a summary of some of the tax breaks available for education. (1) Higher Education Tax Credits Generally, you may be able to claim either one of two tax credits for higher education expenses — but not both. With the American Opportunity Tax Credit (AOTC), you can save a maximum of $2,500 from your tax bill for each full-time college or grad school student. This applies to qualified expenses including tuition, room and board, books and computer equipment and other supplies. But the credit is phased out for...

30 Aug 2020
0

How Fraudsters Steal Unemployment Benefits

Roger Rossmeisl, CPA
Fraud Briefs
How Fraudsters Steal Unemployment Benefits

When Congress authorized an additional $600 in monthly unemployment benefits as part of the CARES Act, out-of-work Americans weren’t the only ones it helped. Criminals have descended like locusts on state unemployment insurance agencies.  How fraudsters steal unemployment benefits is by using stolen identities to fraudulently claim both standard benefits and the additional funds administered by the Pandemic Unemployment Assistance (PUA) program. States have lost hundreds of millions of dollars. Individuals have also suffered, as government efforts to control fraud have clogged up benefit systems and delayed payments to the jobless. States struggle Washington state was the first to experience a COVID-19 outbreak and has since estimated losses of $650 million to unemployment insurance fraud. According to the Secret Service, a scam was detected when someone noticed...

23 Aug 2020
0

Why is Partner Taxable Income Different than Cash Received

Roger Rossmeisl, CPA
Small Business Tax Briefs
Why is Partner Taxable Income Different than Cash Received

If you’re a partner in a business, you may have come across a situation that gave you pause. In a given year, you may be taxed on more partnership income than was distributed to you from the partnership in which you’re a partner. Why is partner taxable income different than cash received? The answer lies in the way partnerships and partners are taxed. Unlike regular corporations, partnerships aren’t subject to income tax. Instead, each partner is taxed on the partnership’s earnings — whether or not they’re distributed. Similarly, if a partnership has a loss, the loss is passed through to the partners. (However, various rules may prevent a partner from currently using his share of a partnership’s loss to offset other income.) Separate entity While a partnership isn’t...

23 Aug 2020
0

Bartering is a Taxable Transaction

Roger Rossmeisl, CPA
Small Business Tax Briefs
Bartering is a Taxable Transaction

During the COVID-19 pandemic, many small businesses are strapped for cash. They may find it beneficial to barter for goods and services instead of paying cash for them. If your business gets involved in bartering, remember that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the bartering is a taxable transaction for both parties. For example, if a computer consultant agrees to exchange services with an advertising agency, both parties are taxed on the fair market value of the services received. This is the amount they would normally charge for the same services. If the parties agree to the value of the services in advance, that will be considered the fair market...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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