David A. Turner, CPA

One of the most overlooked aspects of an S Corporation election is the requirement for owners to be on payroll, , and pay themselves a reasonable salary. The IRS expects this salary to be in line with industry standards, business profits, and the owner’s role in the company. Many business owners mistakenly believe they can take all profits as distributions and avoid payroll taxes, but this can lead to IRS scrutiny.

So often, people tell me they have a 1099 worker / independent contractor because "they agreed" the person would be responsible for his own taxes. I'm obligated to tell them that the IRS is not party to that agreement and can impose significant assessments and penalties if they reclassify a worker from independent contractor (1099) to employee (W2).

This article explains the group of considerations that are taken as a whole (not a single factor) by the IRS in making that determination.

The New Independent Contractor Test & Key Points to Know Employers should ensure workers satisfy all applicable tests before classifying them as independent contractors.

IRS Wipes Out 20,000 Employee Retention Credit Claims In September, the IRS pressed pause on the ERC program until at least the end of this year due to a wave of fraudulent claims.

401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000

401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000 | Internal Revenue Service IR-2023-203, Nov. 1, 2023 — The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023.

The IRS Is Automatically Providing Late Filing Penalty Relief for Both 2019 and 2020 Tax Returns. Taxpayers Do Not Need to Do Anything to Receive this Administrative Relief.

NTA Blog: Good News: The IRS Is Automatically Providing Late Filing Penalty Relief for Both 2019 and 2020 Tax Returns. Taxpayers Do Not Need to Do Anything to Receive this Administrative Relief. - TAS Taxpayers need not do anything to receive this administrative relief. The IRS is automatically removing (abating) failure-to-file penalties for 2019 and 2020 returns.

I know a LOT of people will not like this post but...the money you spent on Double Good Popcorn is not fully tax deductible...and MAY not be deductible at all.

When organizations sell the popcorn, 50% stays with the company, covering the cost of the products you received. The IRS does not consider deductible the cost/value of goods received. The other 50% goes to the "good cause." So at most, only 50% of your purchases may be deductible.

But, not all good causes are created equally. If the fundraising organization is not a qualified 501c3 entity, then even the 50% would be ineligible for deduction on your income tax return.

I'm very sorry for breaking the news. The popcorn and the causes are still both good.

Black CPA Centennial Celebration Honor - Celebrate - Build

Economic Stimulus Deposits for my clients are directed to the CLIENT'S bank accounts.

I never process your money through my own personal or business bank accounts. When you select the refund transfer, having my fees deducted from the refund, the processing bank sets up a temporary account IN YOUR NAME, sends the fee to my account, the remainder to your regular bank and then closes the temporary account.

For any of my clients that (1) had fees deducted using the refund transfer option and (2) qualified for a payment, I already submitted your regular account information to insure payments are processed properly, from the IRS to your personal account.

There's a difference between a "tax preparer" and a "tax professional". The preparer helps you calculate the annual return, based on your actions and decisions during the previous year. The professional helps you develop tax-saving strategies and guides you in your actions and decisions that result in the most favorable tax position at year end.

Are you working with someone whose goal is to help you get a bigger refund of YOUR MONEY, or someone helping you to avoid LOANING YOUR MONEY to the government in the first place?

WHY I DON'T OFFER "SAME DAY REFUNDS"

I still get this question once or twice a season, from new/potential customers.

There is no such thing as a same-day tax refund. A "same-day refund" is a LOAN against your pending refund, which you will otherwise receive in less than 2 weeks, filing electronically. That loan will generally cost you an origination fee and an e-filing fee, in addition to the prep fee. The loan fees often work out to more than a 100% annual percentage rate in the lender's favor. And you thought the interest rate on your credit card was bad!!! Some refund loans border on predatory lending. And the primary customers tend to be lower-income families.

Besides being a tax preparer, I provide financial counseling. Many years ago, I offered refund loans. I could see the fees my bank processor charged and felt that my clients were wasting money. While I advised against using, I felt I needed to offer the product in order to keep certain clients. Later, I decided that if I really felt strongly that refund loans represented poor financial decisions, the demand for which sometimes resulted from other poor financial decisions, I could no longer provide them. I would just have to work harder at coaching my clients. So I stopped!