We work diligently with our clients that have S entities to ensure that they receive reasonable compensation. You do recall that pass-through companies like S entities must pay their principals ‘reasonable compensation’ (a salary commensurate with their experience, capabilities, and time worked). In so doing, the rest of the profits of the firm can ‘pass-through’ to the principals, without being subject to employment (social security and Medicare) taxes, a savings of some 15+% to augment the pass-through revenue.
Tag Archives: audits
Really? Don’t investigate the corporations?
It’s time to call out the GOP. Oh, wait, I have to be more specific, since they have so many recent failings.
Continue reading Really? Don’t investigate the corporations?
Who’s that knocking at the door?
OK. So, everyone has finally filed their 2018 taxes.
What? You haven’t? Well, if you received a W-2 or a 1099, that is the absolutely most likely method to find yourself a target for the IRS. Because the system is designed to match every 1099 and W-2 filed with a tax return. And, if you received a 1099 showing you earned $ 20,000 in income- and you haven’t filed your taxes, you can expect a bill from the IRS for at least $ 4000. (You would receive a CP2000 Automated Underreporter [AUR] Notice from the IRS.) Not that you owe that much- because you probably have expenses to counterbalance that revenue – but because the IRS wants to scare the living daylights out of you.
State Audits
Why would a state tax bureau audit you?
Well, one of the easiest ways to get your … in a sling is to file federal taxes and omit sending in your state taxes. But, I assume you and your tax preparer (because WE would NEVER do that) are smart enough to realize that is a profoundly dumb idea.
TWO WEEKS????????
Yes, folks today is April Fool’s Day. Which means to me, that if you have not yet gotten your ducks in a row and have provided your tax professional (sniff, sniff- not me?) your data, you qualify as a prime fool.