Tax Musings of a Burbank CPA: Reminder about Corporate and Partnership Extensions

Ok, this is a reminder that S-Corporation and Partnership extensions will expire on September 15, so after today there are only 15 days to file. You also need to remember that C-Corporation extensions now expire this year on October 16, the same as personal extensions.  You have an extra month to file this year. Make sure you file by these dates as the IRS penalizes severely if you are late.    For financial,  accounting and tax musings, You can count on us to count for you! Email: bstonercpa@sbcglobal.net  Phone: 818-317-6035   Website: www.briantstonercpa.com AWARDED BEST ACCOUNTANT IN BURBANK, CA BY BEST BUSINESSES 2016, 2015 AND 2014!   Android and the IPhone:    Has been Featured On   https://twitter.com/bstonercpa

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Tax Musings of a Burbank CPA: What Is Reasonable Compensation?

For small businesses formed as an S Corporation and with plenty of profits, reasonable compensation is a term you may want to be familiar with.   Many small businesses have organized as an S Corporation form of entity.  In many cases, the S Corp election allows a business owner to save money on self-employment taxes, especially if they are operating as a sole proprietor.  S Corp profits, or distributions, are not subject to payroll taxes.  If you are a business owner taking a salary and contributing substantially to the operations of the business, you may think that you should just take the distributions and forget the salary.  After all, think how much you would save in payroll taxes.  But this has already been tried and shot down by the IRS in the courts.  And this is where the term reasonable compensation comes in.  The IRS requires that business owners that perform a substantial contribution to the business be paid a salary according to a number of factors.  This is called reasonable compensation. You can’t pay yourself below market and take a large amount in distributions.   The IRS has issued a fact sheet that describes the guidelines that can be used to [...]

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Tax Musings of a Burbank CPA: IRS Phone Scams Still a Serious Threat

Aggressive and threatening phone calls by criminals impersonating IRS agents are still a serious threat to taxpayers. People claiming to be from the IRS or the Treasury Department say that your return has been recalculated and that the taxpayer now owes taxes and demand payment by wire transfer, gift cards or a prepaid debit card.  The “agents” threaten the taxpayer with police arrest, deportation and jail time if the tax bill isn’t paid immediately. They can also leave “urgent” callback demands through telephone robocalls and phishing emails. A new claim is that the “payment” by those methods will be tied into the IRS EFTPS system and that the taxpayer will be able to validate the “payment” through that system after it is made. These phone scams have been going on for years and can still be successful, especially with taxpayers who are on extension and think they may owe money and the elderly.  Since October of 2013 the Treasury General for Tax Administration (TIGTA) reports over 10,000 victims have collectively paid more than $54 million because of phone scams.  The IRS will NEVER: * Call to demand immediate payment using a specific payment method like gift cards, prepaid debit cards [...]

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