Ask a CPA

As a CPA, I came across this website and joined just last week, and I just came across your question.

You use Form 1040-ES to make estimated income tax payments. You can download the form (with instructions on where to mail, etc.) on the website for the Internal Revenue Service (irs.gov). On the home page, click on Search Forms & Instructions. Then, in the Search box, you can type 1040-ES.

Estimated income tax payments are normally due April 15, June 15, September 15, and January 15.

As a CPA, I came across this website and joined just last week, and I just came across your question.

If you received a corrected composite Form 1099 with Line 1a (ordinary dividends) and Line 3 (nondividend distributions) switched, it would definitely make a difference. Why? Because ordinary dividends are income that must be reported, subject to either the long-term capital gains rate applicable to you or the marginal tax rate on ordinary income for you. The extent to which each rate applies to you depends on how much is reported in Line 1b (qualified dividends). So whether line 1a (ordinary dividends) went up or down with the corrected composite Form 1099, it would have an impact on your taxes.

Having said that, I feel that whether or not you should do an amended tax return depends on the amount of the change from the corrected composite Form 1099. If it was material, I would do an amended return. If it was de minimis (very small), I wouldn’t bother. Just know that if you do not amend, you should not be surprised to eventually receive a notice from the Internal Revenue Service, potentially assessing more tax plus some penalty and interest. That’s why I recommend you make your judgment based on the dollar amount involved. If the amount involved is very small, the time (and potential expense to pay someone to amend) doesn’t make sense.

I hope that helps. I wish you the very best!

As a CPA, I came across this website and joined just last week, and I just came across your question.

If you are limiting your choices to either a dba or an LLC, then I would recommend an LLC, for three reasons.

First, an LLC gives you some legal liability protection if you are ever sued. A dba does not give you any legal liability protection.

Second, from a tax perspective, both a dba and an LLC would be taxed the same (for federal income tax purposes), assuming that you did not make any election to treat the LLC differently. However, having an LLC gives you the option to elect to treat the company as an S corporation. You don’t have that optionality with a dba. Keep in mind that making the S election for the LLC would require that you file a separate federal income tax return for the business each year. However, the tax savings that an S corporation election can afford could make it worthwhile, especially because it sounds like you intend to grow the business.

Finally, the LLC probably gives your business a little more legitimacy and professionalism, in the public’s eye.

Consider that you could choose the LLC and have the LLC get the dba – the best of both worlds. So you don’t necessarily have to treat this decision as one where you must choose one or the other.

I congratulate you on planning for the future. If you wish to engage me to help, please feel free to reach out to me.

As a CPA, I came across this website and joined just last week, and I just came across your question.

Good question. I commend you for planning ahead so that you don’t end up owing a large balance or incurring the estimated income tax penalty (Form 2210) come tax-time next year.

Both of your suggestions are acceptable. You are right that there is still a lot of time left in the year, so increasing your federal income tax withholding is an option. Alternatively, you could start making estimated income tax payments via Form 1040-ES for 2021.

As a CPA, I came across this website and joined just last week, and I just came across your question.

Unfortunately, yes, you need to file a Form 1120S, which will include the Schedules K and K-1 for 2020. S corporations must file a return every year, whether or not there is any activity. Don’t forget about any state return, such as a state income tax return, franchise return, or annual report. Feel free to contact me if you wish to engage me to help.

For 2019, the tax bracket amounts have been indexed for inflation.

For tax years beginning after December 31, 2017 and before January 1, 2026, seven brackets will apply to individuals: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

No change has been made to the filing statuses that apply to individuals.

The combination of residential property taxes and Income or sales taxes continues to be capped at $10,000.

Property taxes remain fully deductible for taxpayers in a business or for-profit activity, so taxes paid on rental realty can be taken in full on Schedule E.

For tax years beginning January 1, 2019, medical expenses, for all taxpayers, are deductible to the extent that they exceed 10% of youir AGI. It was 7.5% of AGI in 2018.

In addition, the AMT preference related to medical expenses is eliminated.

For contributions made in tax years beginning after December 31, 2017 and before January 1, 2026 the 50% limitation is increased to 60%. Any amounts in excess of the new limit can be carried forward and deducted for up to five years (as was allowed under prior law).

For any contribution made in a tax year beginning after December 31, 2016, the requirement of a charity to provide contemporaneous written acknowledgement as substantiation for any contribution of $250 or more is repealed.

Beginning in 2018, no charitable deduction is allowed for any payment to an institution of higher learning in exchange for which the contributor is given a right to purchase seats at an athletic event.

Prior to the enactment of the new law, charitable contributions were deductible with certain ceilings based upon a percentage of AGI. A 50% of AGI limit applied to cash contributions to public charities and certain private foundations.

For tax years beginning after December 31, 2017 and before January 1, 2026 all miscellaneous itemized deductions that were previously subject to a 2% AGI limitation are suspended.

Among the items included in this elimination are:
All unreimbursed employee business expenses;
Union dues
Brokerage fees
All expenses related to tax return preparation;
Appraisal fees for charitable contributions;
Investment expenses.