Michael Gray, CPA's Tax and Business Insight
September 4, 2024
© 2024 by Michael C. Gray
ISSN 1539-395X
A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!
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Table of Contents
- Happy autumn!
- Family celebrations
- Michael Gray's calendar.
- Attention CPAs, Enrolled Agents, tax advisors.
- September 16, 2024 due date.
- Trusts and estate tax returns due September 30.
- October 15 will soon be here!
- Are you eligible for an extended due date as disaster relief?
- Need help with getting your extended tax returns, amended returns, and elections done?
- Tax proposals and the Presidential election.
- IRS announces another Voluntary Disclosure Program for Employee Retention Credit errors.
- S corporation shareholder taxed on income distributed to another shareholder.
- IRS issues new written information security plan templates.
- Franchise Tax Board email address for San Diego County disaster notice assistance.
- Passthrough entity elective tax "fix" dead for 2024.
- Do you sell products, services or software to CPAs?
- Attention CPAs-would you like help with marketing your services?
- Attention CPAs-do you need support for tax issues?
- Attention Accountants! Speed up processing your business closings!
- Please share your good experiences with Michael Gray, CPA.
- Financial Insider Weekly past episodes.
- Visit our new book review: Playing to Win
- Follow me on social media!
- Check out my blogs.
- Subscribe/Remove from Michael Gray, CPA's Tax & Business Insight
Janet and me at Multnomah Falls in Oregon on August 10, 2024. This was the beginning of our American River Cruise on the Columbia and Snake Rivers. Happy autumn!
Summer ends and autumn begins on September 22. The year is 2/3 over! Are you ready for the year end?
Family celebrations.
My daughter, Holly Baker and her son, Kyan, are both celebrating birthdays during September. Happy birthdays! Thi Nguyen and her husband, Allen Le, are celebrating their wedding anniversary during September. Happy Anniversary!
Michael Gray's calendar.
Michael Gray won't be available from September 2 to September 5, 2024.
Attention CPAs, Enrolled Agents, tax advisors.
I have information about a valuable service that you're probably not providing for your clients. This is a way to generate additional revenue in you practice and really help your clients' families. No special licensing is required. To get the details, please send an email saying "Please send me the information" to mgray@taxtrimmers.com.
September 16, 2024 due date.
The due date for extended income tax returns for calendar-year partnerships and S corporations is September 16.
Federal estimated tax payments for individuals are also due September 16. There is no California regular estimated tax payment due September 16 because estimated payments for April and June are "front loaded."
The federal estimated tax payment can be based on the income tax reported on the 2023 federal income tax return. If the 2023 federal adjusted gross income was more than $150,000 (or $75,000 if married filing separately), the payment can be based on 110% of the income tax on the 2023 federal income tax return. Alternatively, the payment can be based on 90% of the actual tax for 2024. Although the tax payment is 25% of the annual tax liability, the computations can be made using income and deductions through August 31. (The computations have become so complex that I recommend using the "protected estimate" based on 2023 tax approach.)
Individuals with California adjusted gross income for the current year that is equal to or exceeding $1 million ($500,000 for married persons or registered domestic partners filing a separate return) must figure their California estimated tax based on their current year tax and aren't eligible for estimated tax payments based on their 2023 income tax.
If you aren't making your payments based on your 2023 income tax, you might want to get professional help with your estimated tax payments this year.
Trusts and estate tax returns due September 30.
The due date for 2023 calendar-year trusts and estates for which timely extensions were filed is September 30, 2024.
October 15 will soon be here!
The extended due date for 2023 individual income tax returns is October 15, 2024. If you've been putting off getting your tax returns finished, now is the time to get in motion.
The extended due date to report foreign financial accounts on FinCEN 114 is also October 15, 2024.
Are you eligible for an extended due date as disaster relief?
The IRS has a web site where you can look up disaster relief by state. https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
Need help with getting your extended tax returns, amended returns, and elections done?
To make an appointment, contact Thi Nguyen, CPA at thi@atl-cpa.com.
Tax proposals and the Presidential election.
I've been seeing some panicky social media posts relating to the Presidential election candidates' tax proposals.
Please remember they are only proposals and will only become law if Congress passes them. I don't expect Congress to pass Kamala Harris's most extreme tax increase proposals. Depending on whether or not Republicans control Congress after the election, Donald Trump also might not be able to have his proposals passed into law.
I do expect to see a huge debate in Congress next year, after the election is over, about what the tax law will be. Most of the provisions in the Tax Cuts and Jobs Act of 2017 will expire after 2025, which potentially could increase tax rates for everyone, except C corporations. That tax rate cut was permanent, pending a change by Congress. I don't think anyone in Congress wants a tax increase for low income or middle class taxpayers.
So far, Kamala Harris is saying she will honor Joe Biden's pledge to avoid tax increases for individual taxpayers with income below $400,000. Donald Trump will seek an extension of the 2017 tax cuts.
IRS announces another Voluntary Disclosure Program for Employee Retention Credit errors.
The IRS has announced a second Voluntary Disclosure program for employers to resolve erroneous but non-willful claims for refund for the employee retention credit. The program applies for ERC claims filed for tax periods in 2021. It expires on November 22, 2024. The taxpayer who claimed the credit may retain 15% of the claimed ERC amount.
(IRS Announcement 2024-30.)
S corporation shareholder taxed on income distributed to another shareholder.
An S corporation had three shareholders. Two of the shareholders, who were the CFO and the Secretary of the corporation, made unauthorized distributions of income to themselves. The Tax Court ruled the shareholders (husband and wife) who didn't receive distributions must report their share of the corporation's income. The Court said the disproportionate distributions didn't result in creating a second class of stock and termination of the S election.
(Maggard v. Commissioner, T.C. Memorandum Decision 2024-77.)
IRS issues new written information security plan templates.
Tax return preparers are required to have written security plans to protect client information from identity theft and other online risks. The IRS has issued new templates for written security plans.
(IR-2024-208, August 13, 2024.)
Franchise Tax Board email address for San Diego County disaster notice assistance.
The California Franchise Tax Boad has created an email address for taxpayers who receive a penalty notice from the Franchise Tax Board when they are eligible for disaster relief. The email address is FTBSanDiegoDisasterRelief@ftb.ca.gov.
(Spidell's Flash E-mail, "FTB creates dedicated e-mail address for San Diego County disaster notice assistance", August 9, 2024, Franchise Tax Board Tax News Flash, "San Diego County disaster notice assistance", August 8, 2024.))
Passthrough entity elective tax "fix" dead for 2024.
On Thursday, August 15, 2024, the Assembly Appropriations Committee voted to hold SB 1501 "under submission." This means a hoped-for fix to the June 15 passthrough elective tax won't happen for the 2024 tax year.
If a passthrough entity failed to pay the greater of $1,000 or 50% of the amount of passthrough entity elective entity tax due for the prior year by June 15 of the current tax year, it will be ineligible to qualify to make the election for the current tax year (so the passthrough entity owners will have to deduct state income tax payments on their individual income tax returns, subject to the $10,000 federal itemized deduction limit.)
(Spidell's Flash E-mail, "Passthrough entity elective tax "fix" dies in the California Assembly", August 19, 2024.)
Do you sell products, services or software to CPAs?
Maybe I can help with writing promotional material and marketing ideas. Call me, Michael Gray, at 408-918-3161 or email mgray@taxtrimmers.com.
Attention CPAs-would you like help with marketing your services?
Maybe I can help with writing promotional material and marketing ideas, including encouraging referrals from your current clients. Call me, Michael Gray, at 408-918-3161 or email mgray@profitadvisors.com.
Attention CPAs-do you need support for tax issues?
Michael Gray, CPA can help you with research and guidance on complex tax planning and tax return reporting issues. mgray@taxtrimmers.com.
Attention Accountants! Speed up processing your 2019 business closings!
Do you still have 2019 business income tax returns on extension that need to be done? Check out this trial balance software, EZ Trial Balance, that's super-easy to set up and use. There is a desktop version and an online version. The online version includes consolidations and ratio analysis for analytical review. http://www.eztrialbalance.com
Please share your good experiences with Michael Gray, CPA.
As you know, more and more people are going to the internet to find information about service providers. We hope you will share some good words about experiences that you have had with our firm. One of the sites where you can share your experiences is yelp.com.
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Financial Insider Weekly past episodes
After eight years of production, I have discontinued producing new interviews for Financial Insider Weekly. Doing the show has been a rewarding experience and I consider back episodes to be my legacy of financial literacy education to our community. Back episodes available at https://www.youtube.com/user/financialinsiderweek.
Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.
For your questions about dependent exemptions, see IRS Publication 501 at www.irs.gov.
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- Playing to Win Book Review at www.profitadvisors.com/playing.shtml
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