The 2018 tax reform known as the Tax Cuts and Jobs Act (TCJA) allows for a new 20 percent deduction on certain business income, known as the Section 199A deduction. One should have the right type of business and the right taxable income.
In our past blog article Christmas Came Early In 2018, we discussed different choices in conducting business when it came to taxation and the new tax legislation in great detail. We also explained the differences in taxation of each business entity structure, and if you have been paying attention, you will recall that the S corporation is a pass-through entity which is typically a great choice for most small business owners.
We are an S Corporation with a fiscal year end of September 30th. Is there a way that the existing S Corporation shareholders can take distributions to pay the estimated income taxes, and the new shareholders would not take distributions until next year? Can this be done without breaking the S election?
I need to dissolve a NYC S corporation. I think there are additional steps that need to be taken into consideration. Please advise.
The IRS recently released an update on the tax rules for health reimbursement accounts in relation to the Affordable Care Act (ACA) and S Corporations. This update addresses small businesses that do not offer healthcare coverage, but do reimburse employees for insurance purchased on the healthcare exchanges. The IRS is waiving noncompliance penalties for the 2014 tax year and the first half of 2015.
Yes, the IRS has provided relief for businesses to transition to the new ACA rules. Moreover, an employer with less than 50 full-time employees will not be subject to the infamous $36,500 Section 4980D penalty per employee. The relief applies to employers that are conducting an employee reimbursement plan for 2014 and through June 30th, 2015. However, penalties will still be applied beginning on July 1, 2015.
Many existing C Corporations and new businesses elect to be taxed as an S Corporation. However, some of these businesses fail to meet the filing deadline, which is 75 days after incorporating or 2 months and 15 days after the beginning of the tax year. Fortunately, there are exceptions to this rule in which businesses may qualify for late election relief.
The company will need to file a Form 2553 with the IRS to elect to be taxed as an S Corporation. After this is completed, the IRS sends a CP261 Notice to businesses to confirm acceptance of the S Corporation election. If the business owner and/or accountant did not receive the letter or do not have record of it, they should contact the IRS directly at their Business and Specialty Tax Line at (800) 829-4933 (M-F, 7am-7pm).
One of the most common questions we receive from S Corporation owners is, “Why do I need to file my corporate taxes before I file my individual taxes?”
It’s important for us to first define a subchapter S Corporation (S-Corp). An S-Corp is a “pass through” entity that is generally not subject to federal or state taxes. However, New York City does have an income tax for S-Corps because the city of New York does not recognize the S-Corp status and treats the S-Corp as a regular corporation. There are several other states that also do not recognize the S-Corp status.