For Tax Payers

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Answer Tax Questions

Nonresident Tax Issues

First LLC: No Income, No Expense Filing

Asked Thursday, March 21, 2024 by Marcus C.

Hi Marcus,

Choosing the appropriate legal entity depends on many factors including the type of business, types of services, future operational expectations, etc.  Most people that are starting a business will either choose to be a Sole Proprietor or and LLC; however, in some circumstances, starting as an S-Corp or C-Corp make the most sense.  If your business has some risk that you would like to separate from your personal finances, you may want to start out as an LLC.

To answer the question based on your current situation, since your business has zero income and expenses, there will be no tax impact since there will be nothing being passed on to you to be taxed. 

Answer Provided by: Christopher Kent Christopher Kent

Health Care

My ex spouse is requesting my 2023 1095-A form. She gets to claim both children on tax return each year. We separated Nov 2022.

Asked Tuesday, February 06, 2024 by Paul H.

Paul,

I understand your concerns.  Since you were married I am sure she has all of your sensitive information from tax returns you filed in the past. 

I don't see the need to provide her with the 1095A if your divorce decree indicates you are covering the insurance for both of your children.  I don't understand why she would be requesting this information from you as she would be filing her tax returns.

I hope this helps,

Jeanne Adams, CPA

Firestone, CO

Answer Provided by: Jeanne Adams Jeanne Adams

Personal Taxes

Question about Filing Taxes with resell hobby

Asked Monday, February 05, 2024 by Amy A.

Amy, You will need to take a look at the Hobby Law Rules 1st.  If you reported losses for 3 out of the last 5 years for your businesses, the IRS will consider this a hobby and disallow any deductions.  They may send you correspondence regarding this as well.

Given the above information, you could report both of your incomes on a Schedule C and show a profit with each of your Schedule C's. 

I hope this helps,

Jeanne Adams CPA

Firestone, CO 80504


Answer Provided by: Jeanne Adams Jeanne Adams

Tax Filing Tips

Taxes on gambling winnings

Asked Friday, February 02, 2024 by Michael B.

How you heard about me?

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Answer Provided by: CPAdirectory

Personal Taxes

Marital Status

Asked Thursday, February 01, 2024 by Kiara N.

Kiara, both of you will file Single for 2023 since you did not get married until January 4, 2024.

Jeanne M Adams, CPA

Firestone, CO 80504


Answer Provided by: Jeanne Adams Jeanne Adams

Credits

Children

Asked Thursday, February 01, 2024 by Casey H.

Casey,  Only one parent is entitled to claim their dependents.  Since you have a court agreement giving him the dependents and the child tax credit, these are his to claim.  Your tax returns should reflect single with no dependents.

Jeanne Adams CPA

Firestone, CO 80504


Answer Provided by: Jeanne Adams Jeanne Adams

Miscellaneous

S-Corp Taxes Explained

Asked Tuesday, January 24, 2023 by Gift A.

At the end of each year, all S corporation profits are allocated to the corporation's shareholders. Even if you and your fellow shareholders choose to leave some or all of the profits in the corporation, taking nothing as distributions or salaries, you will still be required to pay tax on those profits. In technical lingo, an S corporation is not permitted to have any retained earnings. This is different from a regular corporation, which can retain—and pay taxes on—its earnings.

However, S corporation shareholders may be able to deduct 20% of their business income with the pass-through deduction established under the Tax Cuts and Jobs Act. 

Answer Provided by: Gary Hulett Gary Hulett

Deductions and Write-Offs

Reduce Tax Liability

Asked Wednesday, August 17, 2022 by Mary P.

Earn tax-free income.

Maximize deductions.

Maximize tax credits.

Contributing to a retirement account – 401k or IRA.

Opening a health savings account.

Contributing to employer-sponsored plans.

Profiting from investment losses.

Check for flexible spending accounts at work.

For More Details:

https://www.syriaccpa.com/

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Answer Provided by: CPAdirectory

Payments and Penalties

I didn’t do payroll in 2021, what do I do???

Asked Friday, January 07, 2022 by Bryan S.

Bryan, greetings from a Texas CPA.

I would be happy to have you come aboard as a tax client.

Technically, the shareholder of an S corporation should be on payroll, receiving a reasonable compensation, from day one. However, what you read, that the IRS MIGHT give you a pass for the first year, is correct. So, yes, you’ll probably be alright for year 1. Of course, that is partly contingent on whether they see that you’re following the rules in subsequent years.

If you filed the S election and made it retroactive back to 2020, then 2020 was year 1, even if it was not a complete year. In this case, 2021 would be year 2 for you. So, yes, you are a whole year late in doing payroll. Being this late, the best we can do now is damage control, to mitigate the problem.

If you are interested in having a phone call to discuss issue, I can probably take your call between 7:00 AM and 9:00 AM this morning (Tuesday, January 11, 2022). Otherwise, the rest of my day is booked at the moment (although I would be available this evening after 7:00 PM). I’d be available again tomorrow (on Wednesday), after 5 PM (as I already have meetings scheduled for tomorrow). My hourly rate for purely consulting is $200.00 per hour. During the call, we can discuss your questions and possible solutions. My direct number is (210) 413-4019. I don’t round up on time. I’m more interested in helping individuals like you and bringing them on as continuing clients than charging for consulting.

You can find my CPA firm (Adam Dickreiter, CPA, PLLC) by doing a Google search. I am located in San Antonio. If you’re not in San Antonio or the surrounding area, that’s not an issue, as we can still interact from a distance.

Answer Provided by: Adam Dickreiter Adam Dickreiter

Deductions and Write-Offs

What to pay out of business account?

Asked Wednesday, December 08, 2021 by Katie M.

Hello Katie,

In order to answer your question properly, it is important to know the tax structure of your business; is it a corporation, Single-member LLC or sole proprietor.

Since we can only deduct the portion of your home that is used exclusively and regularly for business (the rule of thumb for the percentage to be in the range of 5-20%), I would advise you to pay for the expenses out of your personal accounts, then record the deductible portion on a monthly basis on a separate sheet. At the end of the year or on a monthly basis, provide an employee reimbursement report to your company for payment.

In general, the deductible portion of the mortgage, real estate taxes, utilities, and insurance need to be booked as "due to shareholder". Once it has been paid by cutting a check or transferring the money out of your business account to your personal account, you will need to reverse the entry by getting rid of your account "due to shareholder" and reducing your cash balance.

Hope my answer helped.


Answer Provided by: personimage Ragi Riad