You Don’t Have All Your Tax  Information or You Need More Time?

What happens if you cannot get all your tax information you need to file your taxes or you need more time, but you are getting close to the due date, as we are getting now close to April 15th Tax Day?

The worst thing you can do is to ignore the deadline and do nothing!

This move could prove to be very expensive because the IRS and tax courts rarely excuse delays without extraordinary justification.

Compliance Is Not Negotiable, Even If  You Need More Time To File

It is essential that you file an extension AND make a payment with the extension, if needed.

You need to try to estimate how much you owe and make the payment before April 15th.

You can make the payment on the IRS website. For an individual return, for the reason for payment choose “extension”, for tax form choose “4868” and for tax year choose “2024”.

Extension Still Not Enough

What happens if, after filing an extension, you get to the extended due date, September 15th for your business or October 15th for your personal taxes and you still don’t have all your books and documents in order?

Compliance Is Non-Negotiable

You need to file a return using estimated amounts, if needed and later amend and report the accurate amounts. And this is exactly what a recent tax court decision held. In Weston v. Commissioner issued this February 12, 2025 the court referenced a 1982 decision that read:” A taxpayer generally is required to file timely using the best information available and to later file an amended return if necessary”.

If you are in need of a good CPA firm for your business, regardless if you need more time to file your taxes or not, contact us!

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice.

The beneficial ownership information report is back in effect and the new due date for the BOI reports is March 21st, 2025.

What You Need To Do

If you filed your initial beneficial ownership information report already, make sure to report any changes to the information in that initial BOI report by March 21st, if any.

Moving forward report within 30 calendar days any change in the information reported on the previous BOI report.

If you are forming a new entity moving forward, also remember to file its BOI report within 30 calendar days from the company creation or registration.

The Good News

The good news is that FINCEN intends to initiate a process this year to revise the BOI reporting rule to reduce burden for US small businesses.

We strongly advise you read the frequently asked questions on the Financial Crimes Enforcement Network’s website.

We will keep you posted on any news on that.

You can check our YouTube channel for more subjects that you might find useful. Also, if you are in need of a good CPA firm for your business contact us!

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice.

 

1099-NEC Forms Are Due

The due date for the 1099-NEC forms is around the comer, January 31st, 2025.

To Whom Are 1099-NEC Forms Issued?

As a business owner you need to know that not only contractors get 1099 forms. Business entities, like LLCs or partnerships might need to be issued 1099 forms, depending on their tax classification.

That’s why you should obtain a W9 form from your service providers. Click here to see the form.

What Services Are Reported

Repairs, advertising , marketing, accounting, tax preparation, legal services are such services and even rents paid need to be reported, but not on a 1099-NEC forms. Instead rents are reported on a 1099-MISC.

Keep in mind, legal services get reported regardless of the tax classification of the law firm.

This is not an exhaustive list.

Reportable Payments

The payments that are reported are the ones made through means other than credit cards.

E-filing

If you have 10 or more information returns (not only 1099-NEC forms, information returns include all types of 1099s, W-2s, etc.) you must file the 1099 forms electronically. Otherwise, if you file them on paper when you should not have, the IRS will consider the 1099 forms as not filled at all.

You can use QuickBooks online to E-file the 1099 forms, but you need to set up the contractor or company properly in QuickBooks. Under the vendor information make sure to have the “track payments for 1099” box checked and that you have all their information in, like address, social security number or employer identification number.

You can check our YouTube channel for more subjects that you might find useful. Also, if you are in need of a good CPA firm for your business contact us!

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice.

Federal Judge Blocks BOIR Rules Enforcement

In a significant legal development, a federal judge has issued a nationwide preliminary injunction blocking the enforcement of the Beneficial Ownership Information Reporting (BOIR) rules under the Corporate Transparency Act (CTA).

As a result, this would have required 32.6 million existing small businesses and 5 million new entities formed each year from 2025 to 2034,  to report their BOI to the FinCEN. This decision handed on December 3, 2024, has temporarily halted the requirement for businesses to report their BOI to the FinCEN.

This ruling has significant implications for businesses across the United States. Many small-business owners were unaware of the new rules. Additionally, the taxpayers who knew, often struggled to understand whether they were required to file and what information was needed. The injunction provides a reprieve, allowing businesses more time to prepare and understand their obligations.

Uncertainty Still Looming

The blocking of the BOI reporting rules marks a pivotal moment in the ongoing debate over financial transparency. This injunction is temporarily and it will be probably fought all the way up to the Supreme Court. That is why we recommend that you still file your BOIR and comply with CTA. Until this law is found unconstitutional,  make sure to stay informed about the latest developments and consult with tax professionals to ensure compliance.

You can check our YouTube channel for more subjects that you might find useful. Also, if you are in need of a good CPA firm for your business contact us!

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice.

This blog post can help you understand the Form 8918. This form, known as the Material Advisor Disclosure Statement, plays a crucial role in the tax reporting process for certain advisors.

Form 8918 is used by material advisors to disclose reportable transactions to the IRS.

Form 8918 is used by material advisors to disclose reportable transactions to the IRS. A material advisor is any person who provides material aid, assistance, or advice regarding the organization, management, promotion, or reporting of a reportable transaction and directly or indirectly derives gross income in excess of a specified threshold from such services.

Do You Need To File This Form?

If you are a material advisor, then you are required to file this form if you are involved in reportable transactions. These transactions are defined by the IRS and include certain types of tax shelters and other transactions that the IRS has identified as having the potential for tax avoidance or evasion.

Why Is This Form Important?

Filing Form 8918 is important for maintaining transparency with the IRS. In addition, failure to file this form can result in significant penalties. It is important that you are aware of the reportable transactions to ensure compliance. In addition, you should consider consulting a tax professional that can provide you guidance.

You can check our YouTube channel for more subjects that you might find useful. Also, if you are in need of a good CPA firm contact us!

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice.

In this blog, we’re diving into an important update from the IRS that affects partnerships and their partners. We are talking about the new Form 7217. If you are a partner in a partnership and you receive only cash distributions and/or guaranteed payments from the partnership, you don’t need to worry about this form.

What Is Form 7217?

The IRS recently released this form as a draft document, officially titled “Partner’s Report of Property Distributed by a Partnership”. It is designed for partners to report the distribution of property they receive from a partnership. This form is applicable for the tax year 2024 and beyond.

If you receive property, then you must attach this form to your individual tax return for the year you received the distribution of property. That is because the IRS wants more information about how you determine your basis in the property.

You might need to file more than one form 7217. This is because the IRS requires a form for each date you received a distribution of property subject to section 732. Even in situations when distributions made on different dates are part of the same transaction.

IRC Section 732

Now, let’s talk about how Form 7217 relates to IRC Section 732. This section of the Internal revenue Code deals with the basis of distributed property other than money. Essentially, it outlines how the basis of property distributed by a partnership to a partner should be determined.

According to IRC Section 732, the basis of property distributed to a partner is generally the adjusted basis of the property to the partnership immediately before the distribution. However, there are specific rules for distributions in liquidation of a partner’s interest.

The rules regarding how to determine the basis of property received from a partnership are complicated. They depend on whether the distribution is a liquidating distribution, meaning that your interest in the partnership is entirely terminated or the distribution is a non-liquidating distribution.

The rules also vary depending on the type of property received and if the distribution is considered a deemed sale or not.

What Does This Mean For You?

In summary, the new Form 7217, is a critical tool for partners to report property distributions accurately.

The tax rules related to partnerships are intricate. It is always recommended to have a good tax advisor in these situations.

You can check our YouTube channel for more subjects that you might find useful. If you are in need of a good CPA firm contact us!

Please note that this blog post is for informational purposes only and does not constitute tax, legal or accounting advice.