For this post, Brandon Rains, founder of the Rains Laws Firm and an expert on business formation, espouses his observations about business structure changes and I address the income tax reporting requirements of those changes therein.
Archive for Tax Provision/Tax Reporting
A Practical Guide To The Enhanced R&D Tax Credit Program For Eligible Small Businesses And Eligible Start-Ups
The Federal-Level Research and Development Tax Credit Program (hereinafter “RTCP” or “RTC”) was originally enacted into the Internal Revenue Code (hereinafter “the Code”) through the Economic Recovery Tax Act of 1981 as a temporary provision of the Code at a time when research and development jobs were significantly declining throughout the United States. Notably, the RTCP was introduced into the Code to encourage businesses to invest in significant research and development efforts with the high expectations that such an advantageous tax incentive program would facilitate in stimulating economic growth and investment throughout the United States and prevent further jobs from being outsourced to other countries.
Unless Congress passes legislation to extend them, the following provisions are set to expire on December 31:
Taxes are complex. Accounting for income taxes, the ASC 740, is difficult. But with Tax Prodigy, the process becomes easy, comprehensive, and accurate. If you have the tools to help you, why would you choose to ignore them?
Whitepaper- Controlling the “Out-of-Control” Tax Provision Or How to Make Your Auditors Love You & Your Tax Provision!
The PCAOB is using the type of logic that made you feel clever in 4th grade when you finally grasped that a square is a rectangle but a rectangle is not necessarily a square.
The general premise of the PCAOB is this; Restatements will most likely arise when there are material weaknesses in the internal controls environment. But the existence of a material weakness won’t necessarily lead to a restatement. In other words, you might still get things right in spite of poor internal controls.
If this logic holds true, there should be more general control issues (e.g., significant deficiencies) than material weaknesses and similarly more material weaknesses than financial restatements. In 2015 this did not hold true. Here is a troubling pattern:
The Protecting Americans from Tax Hikes Act (PATH) contains a number of tax provisions that are designed to reduce the amount of taxes paid by United States taxpayers. This act was signed by the President in December 2015. The provisions in the act are not new incentives, but made existing incentives permanent. This can be seen as somewhat significant as there is sentiment in Congress and elsewhere to reduce the tax benefit from charitable contributions. I would add that “permanent” in tax lingo means the provisions do not expire, but may be changed at any time by Congress.
More than 50 tax provisions, including the tax rate schedules, and other tax changes are adjusted for inflation in 2016. Let’s take a look at the ones most likely to affect taxpayers like you.
The tax rate of 39.6 percent affects singles whose income exceeds $415,050 ($466,950 for married taxpayers filing a joint return), up from $413,200 and $464,850, respectively. The other marginal rates–10, 15, 25, 28, 33 and 35 percent–and related income tax thresholds–are found at IRS.gov.
The standard deduction remains at $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly. The standard deduction for heads of household rises to $9,300, up from $9,250. Read more
On Tuesday, December 1, 2015 we posted Have An Unpaid Tax Bill? Your Passport Could Soon be Revoked! where we discussed that a recent bill known as the H.R. 22, Fixing America’s Surface Transportation Act (FAST Act), which It includes amendments to the tax code that would allow authorities to revoke or deny the passport of any US taxpayer who has unpaid taxes in excess of $50,000 or who have not obtained or won’t provide a Social Security number, has been approved by the conference committee. The applicable provision in the FAST Act is entitled “Revocation or denial of passport in case of certain unpaid taxes (sec. 52101 of the Senate amendment, sec. 32102 of the House amendment, sec. 32101 of the conference agreement and secs. 6320 and 6331 and new secs. 7345 and 6103(k)(11) of the Internal Revenue Code)”
Well the highway funding bill was signed by President Obama on December 4, 2015, which now gives the US Read more
On December 15th of 2015, House Speaker Paul Ryan, R-Wis., announced to the Republican lawmakers during a conference meeting that negotiators have reached an agreement in principle on a tax-extenders package worth approximately $800 billion. In addition, an agreement was also reached that would fund the federal government through September 30th of 2016. The bills are expected to arrive on the House floor as early as December 17th with the Senate consideration expected before Congress adjourns for recess.
As a synopsis, the proposed tax-extenders package called for making permanent a number of tax extenders equally split 50-50 between business entities and individuals. Under the proposal, the tax-extenders package would make permanent the Research and Development Tax Credit Program; I.R.C. § 179 Read more
If you have accounts receivables from a US entity, you may get the request for a W8-BEN or a W8-Ben-E form. Without this form, the payor of your accounts receivable will withhold a non-resident tax. The only way to get the refund of the tax is to file a US non-resident return, either a 1040NR for individuals or a 1120F for corporations. The waiver form indicates to the payor that you are exempt from US taxation under the Canada/U.S. tax treaty.
Note that if you are considered to be carrying on business in the United States, then the waiver may not apply if it is considered that you also have a permanent establishment in the United States by virtue of Article V of the treaty. In this regard you should obtain professional advice on Read more
More than 50 tax provisions that Congress routinely extends on a yearly basis expired at the end of 2014. The big problem is each year they are extending the provisions later and later in the year creating uncertainty for taxpayers on whether they can depend on these tax incentives or not. This makes tax planning unclear and leaves taxpayers wondering about their projected tax liability.
For 2014, Congress waited almost to the end of the year to apply many of the provisions to the 2014 tax year. This was not only a problem for taxpayers but also for the IRS, which needed to adjust its forms and tax filing software at the last minute and actually had to delay the start of the tax season. Read more
The Broad Tax Extenders Coalition Urges Congress to Take Immediate Action on Tax Extenders Legislation
The Broad Tax Extenders Coalition (hereinafter “the Coalition”) are recommending to lawmakers on Capitol Hill to take immediate action on over fifty tax provisions that previously expired on December 31st of 2014. In a recent letter dated September 10th of 2015, the Coalition comprised of over two thousand organizations informed members of Congress that failure to timely extend the tax provisions will result in a significant increase in tax liabilities on both business entities as well as individuals.
As a background it should be duly recalled that previously on July 21st of 2015th, the Senate Finance Committee overwhelmingly passed a tax extenders bill with a bipartisan vote of 23 to 3 that planned to extend over fifty previously expired tax provisions for a two year period (e.g., retroactively to cover all of calendar year 2015 and prospectively to cover Read more