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We Can’t Do It Without You!

Joining with colleagues to attend CPE webinar in the comfort of your home or office.

We are looking for webinar topics for the upcoming year. Please share your concerns and interest so we can continue to provide targeted continuing professional education. We hope to run at least two webinars per month in 2022, serving up timely information and giving you the CPE credits you need.

We can’t do it without you!

Two ways you can help…
1. Please send any topic ideas to Dave Brown, davebrown@tacpa.net
2. If you know of a good speaker who can address timely information, please let Dave know. (Email is best/quickest), but you can also leave a comment in the box below.)

IRS and WISP

Check out the 8/11/23 article in the Journal of Accountancy titled “Location of millions of tax records uncertain, TIGTA says in IRS critique”.

This comes at a time when the IRS and the AICPA is pushing all tax preparers to have their Written Information Security Plan (WISP) in place!

New tax ethics rules

The International Ethics Standards Board (IESBA) issued an exposure draft on a new ethics rule that would make CPA’s responsible for the work done for a client by someone the CPA referred the client to. The effect is the CPA could be held responsible for the work of an estate attorney he refers his clients to. There is no statute of limitations in this draft.

The AICPA is bound by agreement to make these rules part of their Code of Conduct when finalized. Since most state boards of public accountancy adopt the AICPA Code of Conduct this will impact you even if you are not an AICPA member.

This draft is currently inder review after receipt of many comment letters opposing it.

Stay tuned!

New 529 Rollover

The Secure Act 2.0 made it possible to roll over unused 529 plan assets to a Roth IRA.
Effective 2024
529 plan must be at least 15 years old
Lifetime rollover limit $35,000
Roth must be in name of plan beneficiary
last five year contributions not eligible
Contribution limits are aggregated
Trustee to trustee transfer required
Beneficiary income limitations do not apply

Have fun with this tax planning opportunity!

New FinCEN reporting!!

The Financial Crimes Enforcement Network has come out with proposed rules regarding the reporting of beneficial ownership information (BOI) in response to the Anti-Money Laundering Act of 2020 . These rules apply to domestic reporting companies which are defined as entities created under the laws of the United States or an Indian Tribe, as well as foreign reporting companies. (Reporting Companies).

There are 23 entities exempt from the Reporting Companies classification. These include banks, money transmitting businesses, RIA’s, investment companies, and large corporations. Large corporations are defined as corporations that employee more than 20 full time employees in the US, filed a tax return reporting more that $5 million in gross receipts in the previous year and have a physical office in the US.

Change in beneficial ownership must be reported within 30 days of the change. Beneficial owners include anyone who exercises substantial control over a Reporting Company or owns or controls at least 25% of such company. Failure to report is subject to a $10,000 fine and 2 years jail time.

As you can see this will impact most small businesses and will be a significant reporting burden which will ultimately fall to the CPA. The AICPA, NCCPAP, TACPA and many other organizations are working to minimize the impact of these proposed changes. The AICPA sent a letter to FinCEN on 2/4/22 with recommendations.

The final effective date has not been set. Presumably, the database FinCEN will use to capture the reports is not yet fully operational. It is not known if there will be data sharing between FinCEN and the IRS.

STAY TUNED!!!

IRS Announces New Unemployment Compensation Exclusion

The IRS has just published brand new guidance on the exclusion of $10,200 of Unemployment Compensation.

If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200. If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.

For much more information, please CLICK HERE.

Checking the Economic Impact Payment

The IRS now allows taxpayers to view their Economic Impact Payment amounts online, if any, by using their online account. Online account is an online system that allows taxpayers to securely access their individual account information. Taxpayers can view:

  1. The amount they owe, updated for the current calendar day
  2. Their balance details by year
  3. Their payment history and any scheduled or pending payments
  4. Key information from their most recent tax return
  5. Payment plan details, if they have one
  6. Digital copies of select notices from the IRS, and
  7. Their Economic Impact Payments (EIP 1 and EIP 2), if any

Use: https://www.irs.gov/payments/view-your-tax-account

Taxpayers can also:

  1. Make a payment online,
  2. See payment plan options and request a plan via Online Payment Agreement, &
  3. Access their tax records via Get Transcript. The amount of the Economic Impact Payment is needed when calculating the amount of the taxpayer’s Recovery Rebate Credit for 2020.

Warning. Taxpayers must first create an account with the IRS before accessing any information. Tax professionals are not allowed to access or create an account for their tax clients. The taxpayer must create his or her own account and is the only person allowed to access the information, even if the client provided their information to the tax professional to create or access an account, or consented to use their information to create or access the account. Unauthorized use of the online account system is prohibited and subject to criminal and civil penalties.

What Taxpayers Need To Know About Claiming The Credit For Other Dependents

Tax Tip 2021-18, February 11, 2021

Taxpayers with dependents who don’t qualify for the child tax credit may be able to claim the credit for other dependents.

The maximum credit amount is $500 for each dependent who meets certain conditions. These include:

  • Dependents who are age 17 or older.
  • Dependents who have individual taxpayer identification numbers.
  • Dependent parents or other qualifying relatives supported by the taxpayer.
  • Dependents living with the taxpayer who aren’t related to the taxpayer.

The credit begins to phase out when the taxpayer’s income is more than $200,000. This phaseout begins for married couples filing a joint tax return at $400,000.

A taxpayer can claim this credit if:

  • They claim the person as a dependent on the taxpayer’s return.
  • They cannot use the dependent to claim the child tax credit or additional child tax credit.
  • The dependent is a U.S. citizen, national or resident alien.

Taxpayers can claim the credit for other dependents in addition to the child and dependent care credit and the earned income credit. They can use the IRS Interactive Tax Assistant, Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?, to help determine if they are eligible to claim the credit.

More information:

Credit: IRS Tax Tips

Teacher Deductions !

Rev. Proc. 2021-15 was just issued. It expands the definition of what expenses qualify under IRC Sec.62(a)(2)(D) (ii) for the maximum $250 above line deduction for teachers. Protective items that are, or will be, used by the teacher to aid in preventing the spread of Covid-19 are now qualified expenses. This includes but is not limited to: face masks, disinfectant, soap, gloves, tape, chalk, barriers, air purifiers, etc. The expenses must paid paid or incurred after 3/12/20.