Tax

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The U.S. Internal Revenue Service has issued a reminder to taxpayers who pay estimated taxes that they have until June 15 to pay their estimated tax payment for the second quarter of tax year 2021 without incurring a penalty. Estimated tax is the method used to pay tax on income that isn’t subject to withholding, including income from self-employment, interest, dividends, rent, gains from the sale of assets, prizes, and awards. Taxpayers may also have to pay estimated tax if the amount of income tax withheld from a salary, pension, or from other income isn’t sufficient to cover their entire…
The IRS extended the deadline for individual taxpayers to file and pay taxes to May 17, 2021 in Notice 2021-21. However, Monday, May 17 is the deadline for more than just individual returns. Here is a list of some other May 17 deadline items that IRS has noted: Individual return extension requests. Taxpayers can extend the deadline beyond May 17, 2021 by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Filing an extension moves the filing deadline from May 17, 2021 to October 15, 2021. You can also get an extension…
Ruder Ware’s Trusts & Estates blog has featured several blogs (for example, Call to Action: Review Your Estate Plan in Light of the SECURE Act and Why SECURE Act Matters to You) on the SECURE Act, a federal law effective January 1, 2020,  that made significant changes to the payout provisions of inherited retirement benefits, such as 401(k) plans and IRAs. The most dramatic change brought about by the SECURE Act was the elimination of the ability of a “designated beneficiary” (in most cases an individual, such as a child) to “stretch out” distributions from an inherited retirement benefit…
Much attention has been paid in recent weeks to President Biden’s infrastructure plan as well as its key sources of funding, including, among other things, raising the corporate tax rate. In the shadow of this legislation, two bills have recently been introduced in the Senate that would take direct aim at current wealth transfer planning techniques. While neither bill is likely to survive in its current form, a recent ruling by the Senate parliamentarian has made imminent estate tax reform more likely. These proposals, their effective dates and the possible timeframe for estate tax reform are discussed below. Typically, to…
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In the United States Congress, there is an arduous journey before a bill becomes law.  See https://youtu.be/FFroMQlKiag.  But there is a common theme running through some gift and estate tax bills that have been introduced in Congress this year.  That is: an appropriate way to raise revenue (for pandemic relief, infrastructure improvements, jobs, whatever the reason) is to collect more taxes when so-called “wealthy” individuals transfer their assets through lifetime transfers and transfers at death. In this context, “wealthy” generally means an individual who is likely to own assets at death that are worth more than $3.5 million ($7…
Businesses can now claim a 100% deduction on restaurant meals through the end of 2022, the IRS announced. The IRS released guidance today, April 8, which temporarily allows businesses a full deduction for food and beverages purchased from restaurants, starting after December 31, 2020 and before January 1, 2023. Importantly, the full deduction only applies to food purchased from take-out and dine-in restaurants. The deduction does not apply to pre-packaged food or groceries. Additionally, food from third-party facilities operated by an employer isn’t eligible for the deduction. O’Neil, Cannon, Hollman, DeJong & Laing will continue to monitor federal and state…
On March 11, 2021, President Biden signed into law the next wave of COVID-19 relief, titled the American Rescue Plan Act of 2021 (ARPA). While ARPA’s $1.9 trillion in financial stimulus has taken the spotlight, the law also includes several changes that will impact retirement plans, most notably defined benefit pension plans. Funding Shortfall Amortization Extension ARPA permanently extends the shortfall amortization period from seven to 15 years. Additionally, ARPA permits plans to reamortize any previous funding shortfalls over the new 15-year window, which allows plan sponsors to decrease their near-term plan contributions. These changes are effective for the 2022…
The Internal Revenue Service (“IRS”)  announced late yesterday that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days. The postponement applies to individual taxpayers, including individuals who pay self-employment tax. However, the postponement does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of…
The Internal Revenue Service is planning to delay the April 15 tax filing deadline as it grapples with a massive backlog of 24 million returns it has yet to process since the 2019 tax year. The agency is considering setting the filing deadline for either May 15 or May 17, but a decision has not been finalized. May 15 is a Saturday and the IRS typically delays filing deadlines that fall on a weekend or holiday to the next business day, so the final deadline for filers may be the following Monday–May 17. The filing extension would give taxpayers additional…
Earlier this month, I provided a very brief overview of the estate tax in a vlog.  You can view the vlog here.  In this blog post, I’ll expand on estate tax basics. What is the estate tax?  At its foundation, the estate tax is a tax imposed on the transfer of property upon death.  It is distinct from other taxes imposed on the transfer of property, including the gift tax, the generation-skipping transfer tax, and in some states, the inheritance tax.  For purposes of this blog post, I’ll focus on the estate tax, but make sure that you subscribe…
With Congress still negotiating a third round of stimulus payments, you should carefully consider when to file your taxes this tax season.  Tax season begins February 12th and ends April 15th.  Filing your taxes earlier or later within that time period may determine whether or not you receive the third stimulus payment and how much that you receive. The third stimulus payment is again expected to be capped at certain income levels.  The current proposal is $1,400 payments to individuals earning up to $75,000 per year and married couples earning up to $150,000 per year.  Individuals earning more than $100,000…
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You will experience various changes in circumstances during your life. Some of these changes will warrant updates to your estate planning documents.  Indeed, estate planning is often a lifetime process of implementing the proper legal arrangements in the event of your incapacity and upon your death. Consider updating your estate plan upon any of the following events: Tax Law Changes What might have been a proper estate plan under the tax laws that existed at the time you created your estate plan may no longer be appropriate. For example, the Setting Every Community Up for Retirement Enhancement Act, more commonly…
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A little less than a month ago, the IRS reversed its original  position, and stated that businesses can deduct expenses paid for with the proceeds of a forgiven Paycheck Protection Program (PPP) loan, as further detailed here.  However, in guidance issued on Friday, the Wisconsin Department of Revenue clarified that expenses that are paid with the forgivable PPP funds (in the first round) are not deductible for Wisconsin income/franchise tax purposes and must be added back to Wisconsin income in the year incurred or paid. Therefore, unless the legislature acts, businesses that have received PPP loans may find themselves…
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A little less than a month ago, the IRS reversed its original  position, and stated that businesses can deduct expenses paid for with the proceeds of a forgiven Paycheck Protection Program (PPP) loan, as further detailed here.  However, in guidance issued on Friday, the Wisconsin Department of Revenue clarified that expenses that are paid with the forgivable PPP funds (in the first round) are not deductible for Wisconsin income/franchise tax purposes and must be added back to Wisconsin income in the year incurred or paid. Therefore, unless the legislature acts, businesses that have received PPP loans may find themselves…
The IRS issued two new forms for the 2020 tax year – Form 1099-NEC and a revised Form 1099-MISC. The newly reintroduced Form 1099-NEC is used to report payments for nonemployee compensation (NEC) that were previously reported on box 7 of the Form 1099-MISC. Background The Protecting Americans from Tax Hikes Act (PATH Act) P.L. 114-113 enacted in 2017 requires a payor who reports nonemployee compensation to file a 1099 by January 31. However, if a payor was only reporting payments other than non-employee compensation, then the payor had until March 31 to file Form 1099-MISC. The IRS reported confusion…
Businesses can now deduct expenses paid for with the proceeds of a forgiven Paycheck Protection Program (PPP) loan. The IRS, in Revenue Ruling 2021-2 issued today, reversed its original position that prohibited businesses with PPP loans from “double-dipping” by paying expenses with a forgivable loan, then writing off those expenses. Congress, in the latest COVID-19 relief bill, as we explained further here, explicitly stated that such expenses were deductible, forcing the IRS to reverse course. This ruling is sure to provide a significant tax benefit and relief for many small business owners who had availed themselves of the PPP…