Western CPE Blog
Breaking tax and accounting news and analysis from the experts at Western CPE.
CPE Done Differently: Western CPE releases its long-awaited brand revival
Bozeman, Mont., July 13, 2022 – Change is inevitable, especially in an industry focused on accounting, finance, and tax education. In an ever-changing world, tax practitioners, financial professionals, and CPAs must be prepared for constant developments from year to year; however, they are not the only ones who are constantly honing their craft. This week, Western CPE launched its new and improved website experience. Packed with unique features, the company is delighted to provide all industry professionals the continuing professional education (CPE) they need, tailored to their own learning style. Design and Content Manager Christy Jacobson explains how the company …
OECD Tax Project Could Affect Government Credits From R&D to Low-Income Housing
By: Alex M. Parker
Most of the discussion surrounding the Organization for Economic Cooperation and Development’s (OECD) five-year-old international tax project has focused on difficulties with taxation in the digital economy, as well as tax avoidance by corporations in the tech sphere through valuable intangible assets. But increasingly, it is clear that the 15% global minimum tax which is a large part of its final agreement, signed onto by nearly 140 countries, will also have profound implications on how every government uses incentives and tax credits to boost their economy. The final plan, should it be implemented, won’t just affect how much countries spend …
California Passthrough Entities Should Consider Making PTET Payments
By: California passthrough entities such as partnerships, LLCs, and S-corporations can make an election to pay a passthrough entity elective tax (PTET) equal to 9.3% of its qualified net income. This state tax payment is a deduction on the federal tax return and passed through to the owners on Form K1. This bypasses the Schedule A $10,000 State and Local Tax deduction limit. The California K1 will be reporting the entire income. PTET Election If clients do not elect… For 2022, the entity will need to make a payment by June 15, 2022 in order to make this election. The payment …
IRS Releases 2023 Inflation Adjusted Amounts for HSAs
On April 29, 2022, in Revenue Procedure 2022-24, the IRS announced the 2023 inflation-adjusted amounts for Health Savings Accounts (HSAs). The contribution limits are $3,850 for individuals for self-only coverage and $7,750 for individuals with family coverage starting on January 1, 2023. The Numbers This is a substantial increase over the 2021 limits: $200 from 2021 to 2022, whereas it was a $50 increase from 2020 to 2021 for self-only coverage; $450 from 2021 to 2022 whereas it was a $100 increase from 2020 to 2021 for family coverage; and Contribution limits are $3,650 for self-only coverage and $7,300 for …
Corps Hope Safe Harbor Could Ease Compliance Hassle With New Global Minimum Tax
By: Alex M. Parker
More than 130 countries and jurisdictions last year agreed to a global minimum tax framework, ensuring that companies pay at least 15% in taxes on excess profits in all jurisdictions they operate in. It could be a tough requirement for global multinational corporations. But a safe harbor could ensure that taxpayers face minimal compliance requirements in most countries that have tax rates significantly above the 15% threshold, or who pass special domestic taxes matching the new international standard. According to several companies, tax practitioners and business groups who submitted comments to the OECD on April 13, a safe harbor could …
S Corporations: Designed for Small Business, Reporting Now Directed by the Big Players
By: On April 13, Western CPE’s TaxByte released “IRS Adds Eight New FAQs on Schedules K-2 and K-3 But Questions Linger.” Through examination of these new reporting requirements and the history of Subchapter S, reveals a distortion of the original objectives of this business form. What started out as a simple single tax entity is now governed by the most complex reporting needs of any shareholder. Schedules K-2 and K-3 reveal a “tail wagging the dog” approach that imposes inappropriate burdens on millions of closely-held businesses that have no reason to report, or even record, much of the requested information. History …
New $1.5T Omnibus Signed, Boosting IRS Funding – Backlog Remedy Addressed?
By: TRENDING NEWSPresident Biden signed into law on March 15 a $1.5 trillion omnibus that provides the IRS with a six percent fiscal year (FY) 2022 funding boost and statutory direct-hire authority to address the agency’s ongoing backlog. The government spending bill, the Consolidated Appropriations Act, 2022, comes over five months past the start of the fiscal year after a congressional stalemate led Congress to extend FY 2021 funding levels several times via continuing resolutions to prevent a government shutdown. Omnibus Makes No Major Tax Law Changes The 2,741-page omnibus contains no major tax law changes (or extenders) despite recent …
California Tax Insights: A look at AB 150, SB 113, & Schedules K-2 & K-3
TRENDING NEWSOn February 15, the IRS stated their intention to provide certain additional transition relief for this year from the Schedule K-2 and K-3 reporting for certain domestic partnerships and S corporations with no foreign activities, foreign partners or shareholders, and without knowledge of partner or shareholder need for information on items of international relevance. For 2021, these qualifying domestic partnerships and S corporations will not have to file the new schedules.Due to the feedback the IRS received from the tax community, they decided to provide further aid and explanation. The community voiced concerns caused by several weeks of confusion and …
The Suggestion Box: The 2021 Tax Season
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& eTAX ALERT SERIES The Suggestion Box Welcome to The Suggestion Box: The 2021 Tax Season. With the startup of the 2021 tax return season, SharonKreider and the Western CPE team reached out to their experts to get their best tax season suggestions for the year. They are here to give you all the need-to-knows and advice to aid your return process with your clients. Today, we’re touching on Part 1 of our Suggestion Box eTax Alert Series. Make sure to stay tuned for new content, as the season continues. Encourage Clients to Create an IRS Online Account Encourage Clients to …
Stay Ahead This Tax Season
The 2021 tax season is officially here, come Monday. The IRS announced the nation’s tax season will start on Monday, January 24, 2022. With tax season, quickly on its way, here’s what you’ll need to know before they begin accepting and processing 2021 tax year returns and the obstacles that came with the pandemic. It’s never too early to get ahead. IMPORTANT DATES January 24 Start date for 2021 Individual Tax Return filers Start date for 2021 Individual Tax Return filers January 28 Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people …
What’s New with 2021 Form 1040?
You’ll want to take the time to review the “What’s New” Section of the Form 1040 Instruction before the 2021 tax season. Its lengthy changes will most likely need your attention before crunch time. The Instructions for the 2021 Form 1040 section on “What’s New” is two pages long. The two pages include 17 reminders on what has changed from 2020 to 2021. We talked about the changes in the update classes, but now it is time for you and your staff to review the new input forms that resulted from the changes. *Make sure you read thoroughly for some …
Your 2021 S Corporation Client Letter Needs a Change
Prepare to change your 2021 S Corporation Client Letter. Item D has been added to Part I of the 2021 Form 1120-S Schedule K-1 for use in reporting the corporation’s total number of shares for the beginning and end of the tax year. Ask your client for the share information now and look for the change on your input forms.Since no actual incorporation takes place, no shares are issued when an LLC elects to be taxed as an S corporation (S Corp). What goes on Item D? The instructions state that an entity without stock, such as an LLC, should …
THE GIFT TAX RETURN: EXPLORING SECTION 529
By: Do your clients have a child or grandchild that they want to provide funds for post-secondary education? Making use of a Section 529 plan, they can give five years’ worth of gifts at once. The 2022 annual exemption from gift tax is $16,000, a $80,000 gift to a 529 plan can be made before December 31, and the donor can elect to treat the gift as being made 1/5 per year for five years. The 2023 Gift tax exemption is $17,000, so you can give an additional $5,000 in 2023 and make another five-year election.This eTax alert will show you …
RMDS ARE BACK: THE RISKS OF A LAST MINUTE WITHDRAW
Clients had a break in 2020, they didn’t have to take Required Minimum Distributions (“RMDs”) from their retirement accounts. The RMDs come not just from IRAs but 403(b) arrangements, Keogh plans, and other profit-sharing plans. Failure to take the distribution can lead to a 50% penalty on the missed amount. IRA custodians are required to either calculate the RMD for customers by assuming the uniform table applies to them or offering to calculate a personalized distribution amount. Those requirements do not apply if the IRA is inherited, however. In this eTax Alert, we’ll talk about the return of RMD withholding, …
PPP LOANS & COVID-19 RELIEF: WHAT THE IRS WANTS YOU TO KNOW
By: Covid-19 threw several monkey wrenches into our everyday chaotic tax season. And the IRS wasn’t able to avoid getting hit, leading to a backlog of long delays, impacting tax refunds with no immediate solution as 2021 comes to a close. Speaking of the IRS, they finally addressed and issued guidance on some important topics impacting our clients: PPP Loans Federal Covid-19 Grant Tax-Free Income Recognition Expense Deductions S Corporation & Partnership Basis We’ll dig into the guidance, But first, let’s start with the high-level details you need to know. Note: The IRS released three new revenue procedures on the treatment …
BUILD BACK BETTER ACT: VOTE LIKELY TODAY AS BIDEN URGES ACTION
President Biden pushed The House to vote today on his historic Build Back Better (BBB) Act. During a speech today about U.S. economic recovery he asked every House member to vote yes on the bills tackling infrastructure, social spending, and tax measures. President Biden said, “Send the infrastructure bill to my desk, send the Build Back Better Act to the Senate.” Key Tax Provisions of the Revised Build Back Better Act Note: The revised draft legislation would include the following significant changes, effective January 1, 2022, unless otherwise noted: Individual Income Taxes Modified Adjusted Gross Income. Generate new surcharge on …
PRESIDENT BIDEN’S BUILD BACK BETTER ACT – WHAT’S IN AND WHAT’S OUT?
After almost two months of wrangling, cajoling, and threatening, the Democrats in the House and Senate, have almost agreed upon a cutdown version of the original $3.5 trillion “social spending and climate” plan. In September, the House Ways and Means Committee released its first try at the Build Back Better Act. On October 28, 2021, a second version costing a substantially reduced $1.75 trillion is in writing – all 1684 pages. The latest version of HR 5376, as reported by the Committee on the Budget, is here. A section-by-section summary of the October 28, 2021 version of the Build Back …
Risk Management in Two Steps: What Every CFO Needs to Know
“All Business is Risky Business” In 1983 Tom Cruz starred in the hit movie “Risky Business.” The reality is that all business is risky business. This is even more true today than almost 30 years ago. I once had a conversation with a senior manager for a specialty department store chain. I asked him what his number one priority would be for the last half of the year. He said, “minimize costs.” To that, my response was to lock the doors and walk away. That would only leave him with fixed costs. He responded that it was a stupid idea, …
Advanced Child Tax Credit Payments 2021: Should Your Client Opt-Out?
The IRS sent the first advanced monthly payment of the Child Tax Credit to roughly 35 million U.S. families with 60 million children on July 15. The first batch of payments totaling $15 billion paid as much as $300 per child. If your clients didn’t opt-out of the advanced monthly payments by August 2, they’re likely to get the August 13 and the September 15 payments. Should your client opt-out? Why Should my client OPT OUT? We need to get our talking points straight, because we may be hearing from many angry clients once the 2022 tax filing season begins. Clients …
FAQ Special: Advanced Child Tax Credit Payments
LISTEN NOW TO THE eTAX ALERTClick the Play Button to Listen for Free.https://youtu.be/W4ijdLs5XdE Should my client OPT OUT? Your clients probably have questions about opting out, payment timelines, and how much more they’ll receive. Before we dive into those topics, let your clients know August 2nd is the deadline to skip the August 13th payment.1. The client’s 2021 income will be above the thresholds ($75,000, $112,500, $150,000), and the client doesn’t want to repay the advance.2. Financial situation. “I don’t need the money. I’d rather have a bigger refund next April.”If it turns out your clients were overpaid or underpaid …