Western CPE Blog
Breaking tax and accounting news and analysis from the experts at Western CPE.
IRS: Taxpayers Who Reported Certain 2022 State Refunds as Taxable Should Consider Filing Amended Return
By: The IRS announced today that taxpayers who filed their federal income taxes earlier in this year’s filing season AND reported certain state 2022 tax refunds as taxable income should consider filing an amended return. To Tax or Not to Tax: That WAS The Question You might recall that on the heels of a February Procedurally Taxing post, the IRS released a statement noting that it was aware of taxpayer uncertainties involving special tax refunds or payments made by states during 2022 and was working to determine whether those payments are subject to federal tax. On February 3, the IRS recommended against …
Know Your California Income Tax Brackets
By: It’s important to understand the income tax bracket you fall into within your state so you can pay your state income taxes accordingly. If you’re a California taxpayer, your state income tax has some of the highest rates in the United States. California state taxes aren’t the same for everyone, and a few different factors determine which CA tax bracket you fall into. California income taxes are divided into nine income tax brackets. Where do you stand in the CA tax brackets? Read on to find out. Who has to file California state taxes? Let’s start with the basics. Are you subject …
9 States with No Income Tax
Oh, the joy of receiving a paycheck without income tax taken out. Though it may sound like a dream to some, it is the reality for those in 9 out of the 50 states. It’s not all cut and dry, though. Though these nine U.S. states don’t take state income tax out of personal income, their actual tax burden can be more complex. The Nine States With No Income Tax: AlaskaFloridaNevadaNew HampshireSouth DakotaTennesseeTexasWashingtonWyomingAnd there you have it, the nine states whose residents are free of income tax. But, before we get carried away, what’s the catch? The blue pop-out states …
In Case You Missed It: Clean Vehicle Credit Guidance, Irrevocable Trusts, and Disaster Relief
Happy Friday, tax pros. Once again, we’re wrapping up the week by getting some of the most noteworthy tax-related developments on your radar in case, you know, you missed it. March 31: Clean Vehicle Credit guidance – critical mineral and battery component requirements. The IRS has issued much anticipated proposed regulations (REG-120080-22) related to certain requirements that must be met for critical minerals and battery components for the new clean vehicle credit under the Inflation Reduction Act (IRA). As the IRS notes in IR-2023-64: The critical mineral and battery component requirements will apply to vehicles placed in service on or …
California Corner: Revised Instructions for 2022, 2023 Pass-Through Entity Form 3893
The California Franchise Tax Board (FTB) in an e-file news release today is aiming to clarify its revised instructions for the 2022 and 2023 Form 3893 (Pass-Through Entity Elective Tax Payment Voucher) released on March 23. Revised 2022, 2023 Form 3893 Instructions: “PTEs must make all elective tax payments either by using the free Web Pay application accessed through the FTB’s website or by using form FTB 3893,” the revised instructions state. “This includes elective tax payments made with the entity’s return. The elective tax payment cannot be combined with the entity’s other tax payments.”According to the FTB:The 2022 and …
NFTs, Form 1099-K Updates, and More
Happy Friday, tax & accounting pros. In an effort not to blow up your inbox during busy season, we’ve been lyin’ low lately. But we’ll send you off to your weekend (you’ll probably still be working) by getting a few noteworthy developments that occurred this week on your radar in case you missed them.March 24: FinCEN provides beneficial ownership information reporting guidance. Today, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published its first set of guidance materials to aid the public in understanding recently issued final regulations, effective January 1, 2024, that require many corporations, limited liability companies, and …
S corporations: Trusts Are Trickier Than You Might Imagine
By: Among the many foot faults with S corporations are the myriad of seemingly disconnected rules when trusts become shareholders. There are only a select few types of trust that are eligible to hold shares in S corporations:Grantor trusts during the grantor’s lifetime and for two years thereafter.Deemed grantor trusts, during the beneficiary’s lifetime and for two years thereafter.Testamentary trusts, for two years after funding.Qualified Subchapter S Trusts (QSST requires election).Electing Small Business Trusts (ESBT requires election).Voting trusts. QSST and ESBT Seem to Have the Most Hazards Of these trusts, the QSST and the ESBT seem to have the most hazards. …
Biden Administration Spotlights Tax Priorities in FY 2024 Budget Proposal
For those of us in the tax world residing in the D.C. area, the last several days have been a non-stop party. The theme? The Biden Administration’s fiscal year 2024 budget proposal, which would increase taxes by over $4.5 trillion over the next decade. If you’re not on Capitol Hill or a tax pro elsewhere who also gets a little amped up about these things, I’ll tell you a bit about what you’ve missed. Don’t worry, getting excited isn’t mandatory; professional interest will suffice. Tax Policy Proposals Tend to Stick Around a While Before we take a first look, it’s …
Mindfulness for Accountants: What is Mindfulness?
By: Mindfulness continues to gain popularity with working professionals worldwide, especially in the United States. When I made the decision to launch the Mindful-CPA website and initiative back in early 2020 before the pandemic, I did so with the intention to provide the public accounting industry with a tool for mental wellness. The pandemic hit us a few months after the launch of Mindful-CPA, and this greatly accelerated the interest and intrigue into Mindfulness in a demanding industry like ours. I view mindfulness as a tool that we as accounting professionals can add to our toolkit to bring balance, creativity, and …
How to Study for the CPA Exam: Top 10 CPA Exam Study Strategies
It’s time for you to take the Uniform Certified Public Accountant Examination, better known as the CPA Exam. You’ve have chosen to become a Certified Public Accountant (CPA), met the education requirements, gained relevant experience, and completed the application process. Your next step is to prove you have what it takes to join the world of accounting and auditing. Your hard work has led you to this point, and it’s time to cross the finish line. Four sections, 276 multiple-choice questions, 28 task-based simulations, and three writing portions now stand in your way of you and your CPA certification. According …
What is an Enrolled Agent?
In the vast world of tax professionals, there’s room for more than one designation. When it comes to the tax, accounting, auditing, and finance industries there are various types of professionals trained to meet your needs. You may have heard the terms Accountant, Certified Public Accountant (CPA), or Financial Advisor, but what about the Enrolled Agent (EA)?In this article we will dive into the world of an EA, or Enrolled Agent, by discussing:What is an enrolled agent?The enrolled agent examEnrolled agent salaryHow to find an enrolled agent What is an enrolled agent? Enrolled aAgents, I do hereby knight thee into …
California Storm Relief Update: Deadlines Pushed to October 16
By: California is conforming with IRS disaster relief. California residents in 51 counties now have until October 16, 2023, to file various federal and California individual and business tax returns and make tax payments.The IRS has released a notice (IR-2023-33) which extends the tax filing and payment deadlines for tax year 2022 for residents and businesses in specific California counties identified in IRS notices CA-2023-01 and CA-2023-02. These notices were issued on January 10th and 24th respectively. The original notices had granted an automatic postponement for various tax filing and payment deadlines from January 8, 2023, to May 15, 2023, for …
IRS Throws Relief Rope for Postponed Returns’ Trap for the Unwary
The IRS has thrown a rope of relief to those affected by a so-called trap for the unwary related to postponed return filing deadlines during the pandemic. The IRS issued Notice 2023-21 this week, which grants taxpayer relief for determining the lookback period for claims for credit or refund associated with return filing postponements under Notice 2020-23 and Notice 2021-21.In other words, most taxpayers now have more time to file tax refund and credit claims for returns with postponed due dates during the pandemic. Background: Notices and Postponements Related to the COVID-19 Pandemic Notice 2020-23 (which amplified Notice 2020-18 and …
SCOTUS Holds FBAR Penalties Apply Per Report, Not Account
The U.S. Supreme Court in a 5-4 decision has held that non-willful Foreign Bank Account Report (FBAR) penalties apply per report, not account. Today’s news is being hailed as a surprising and significant win for non-willful FBAR non-filers. The FBAR is an annual report due on April 15 following the calendar year reported and is filed electronically through the Financial Crimes Enforcement Network’s (FinCEN) BSA E-Filing System. Generally, any U.S. person, corporation, partnership, limited liability company, trust, and estate must file an FBAR to report a financial interest in, signature, or authority over at least one financial account located outside of …
Practitioner Perspective: IRS Commissioner Nominee Daniel Werfel
By: Daniel Werfel testified before the Senate Finance Committee on Feb. 15, 2023, in a hearing considering his nomination to become the next IRS commissioner through November 2027. If Werfel is confirmed, (which is likely), what can tax practitioners expect to see? Background On Daniel Werfel Werfel began his civil servant career in the late 1990s as a rank-and-file policy analyst, rising to becoming appointed Office of Management and Budget (OMB) Controller in 2009. He has worked for the Office of Information and Regulatory Affairs, Department of Justice Civil Rights Division, OMB, and as Acting IRS Commissioner when appointed by President …
How to Become a Certified Financial Planner
When it comes to occupying the throne in the land of accounting, and auditing, Certified Public Accountants (CPAs) have that covered. But who rules in the land of financial planning? Well, that would be the Certified Financial Planner, or CFP for short.If you’re interested in financial planning or financial consulting, getting a CFP certification may be the next step to take. Let’s explore how to become a certified financial planner including the duties of a CFP, the CFP board, and taking the CFP exam to get your CFP certification. What Does a CFP Do? A Certified Financial Planner (CFP) is …
How to Become a Certified Public Accountant
So you wanna be a CPA? Whether you’re a student, non-certified accountant, or just curious about getting a CPA license, becoming a certified public accountant can be a rewarding career path with many different opportunities.As any other profession, there are steps to take to get your CPA requirements and become a certified public accountant. These steps may look a bit different depending on where you start so, let’s go over the essentials on how to get CPA certified. What Is a Certified Public Accountant? CPAs are basically the Justice League of all things financial. In a more formal definition, A …
Final Regs Delay Lowered Business E-Filing Threshold Until 2024
The IRS issued final regulations yesterday that delay until 2024 the lowered, mandatory business e-filing threshold of 10 returns – down from 250. Thus, the e-filing threshold for returns required to be filed in calendar years 2022 and 2023 remains at 250. The Taxpayer First Act of 2019 (P.L. 116-25) reduced the 250-return e-filing requirement to 100 for calendar year 2021 forms (to be filed in 2022) and down to 10 for calendar year 2022 forms and years thereafter. The final regs, T.D. 9972, scheduled to be published in the Federal Register on February 23, affect filers of partnership returns, corporate …
FASB Updates Accounting Standards for Leases
By: Jeff Sailor, CPA
https://youtu.be/7STqRn3wlIQ On Wednesday, February 15, 2023, the Financial Accounting Standards Board (FASB) approved an update which will solve two major issues. The two topics are related to common control lease arrangements and involve terms and conditions to be considered in a lease and accounting for leasehold improvements. These issues came up during post-implementation with feedback primarily from private companies. While these are technically not yet an update, the Board has advised the staff to draft a final for a vote, and it is expected to pass. Terms and Conditions Let’s take a look at these issues. First, we have terms …
IRS Expands Digital Correspondence
Happy Friday, tax pros. The IRS has expanded your ability to electronically upload documents to resolve certain tax issues. Sounds like a win for everyone, as we can all agree that the less paper correspondence causing you headaches and adding to the agency’s backlog, the better. Digital Correspondence: The IRS developed its “Document Upload Tool” in 2021 and has since been testing the digital correspondence feature on a limited number of exam-related notices. The IRS announced yesterday that it is expanding the tool’s function to include several more CP notices, which will allow taxpayers to respond within 30 days by …