Dare Johnson

The IRS's current position - a loan to an employee where forgiveness is contingent on employment is considered compensation at the time the loan is made (loan forgiveness is based on performing personal services). This would be reported on a W-2. The employer would receive a deduction at the end of three year window. See Technical Advice Memorandum 20040004.

For NJ, the self employed 401k deductions are deducted on Sch NJ-BUS-1. From the instructions: Make the following adjustments to your federal Schedule C (or C-EZ or F): 5. Deduct your qualified contributions to a self-employed 401(k) Plan. Contributions that exceeded the federal limits are not deductible for New Jersey purposes.

I am with CuseFan on this - they are either an employee or an independent contractor. Sometimes there are clients you don't want....

We use the FT Williams for 1095s. Fairly easy to use and the import feature is nice. Good luck - we have had several of these old filings to do over the last year. They can be a pain.

The updated version usually comes out in the first week of June.

Lou is correct - if the return is filed before the original due date then the extension is not valid. Is this a C-corp or S-corp? C-Corps have a 4/15 (4/18 this year) filing deadline and S-corps are 3/15.

As long as you use Line 34 of Sch F you will be ok. Cattle that is purchased and later sold is reported on Form 4797 and not subject to SE. Since farming is a capital intensive business, it is important to coordinate with the CPA or you will do all of the work to later learn he has a loss from depreciation deductions.

Code Section 3121(a)refers to the social security tax and how to calculate the self employment tax, so the self employed are snagged.

If the return is not filed under extension, then the extension is invalid.

Payroll uses cash basis - reportable in the year the employee receives the cash. Since the paydate was 1/6/23, the payroll company was correct in using 2023 HSA amounts.

The Form 5500 instructions cover this - if the election is made to defer the accountant's report, the 5500 must be filed following the requirements for a large plan.

This could cause a reject since the years do not match and result in late filing penalties. I would use an online program to file 1099s with the IRS - it is not that expensive and you have a confirmation of filing. Most will allow the data to be imported.

The IRS has not issued guidance on how to handle Roth employer contributions. If the employer is required to add to the W-2s, this would create an administrative headache.

One of our client's has an individually designed profit sharing plan and non-vested balances were forfeited after 1 year break in service, so yes, it is permissible.

I agree with Lou - basis is distributed first.

I think the participant is a little confused about the distribution of stock with NUA. The participant distributes the stock and pays tax on the cost basis of the shares - $10,000 in this case (this is the plan's cost basis, not his tax basis). As long as the participant hold the stock for 1 year plus 1 day, any stock sale will be at LTCG rates with a $10,000 tax basis. The 1099-R will list a taxable amount of $10,000 and NUA of $90,000. Is the stock publicly traded? If not, the participant will hold in his personal name. I don't think there is any issue on timing of stock distribution vs. rollover to IRA.

If the disability plan is fully insured, Guardian issues a W-2 and makes the tax deposits using their tax ID #. If the plan is self-funded, the W-2 is issued by the employer.

I agree than an amended W-2 needs to be filed. This is a payroll tax issue so I would not drag the plan into it by reclassifying the deferrals as pre-tax. My thoughts are that the employee bears a little responsibility for not speaking up about deferrals being deducted pre-tax so the employer shouldn't be responsible for all the penalties and interest.

First the IRS has to find the employees, then train them. I think this new batch of agents will have their hands full for the next 5 years auditing the Employee Retention Credit - this is an easy target and they can raise a lot of revenue clawing the refunds back and adding penalties and interest. Hopefully they will leave TE/GE alone.

The IRS agent is correct - if you file a tax/information return (even if not required to file), then penalties can be assessed. The plan sponsor's options depend on the notice #. If a CP 283 notice, then the plan sponsor has 2 choices - write a letter begging for abatement of penalties (if denied, keep writing letters and maybe another agent will approve) or request the one time penalty abatement.

I was just dealing with Schwab on this week. All you need is a letter of instruction signed by the trustee to transfer the assets into another 401k brokerage account. This will not generate a 1099-R.

Sounds like they need a new CPA. Rental real estate is not considered a trade or business and is not subject to SE Tax.

We have recommended several companies we work with to adopt a priority list for voluntary deductions. The majority of their employees were hourly with health insurance premiums, 401k deferrals, 401k loan payments, and some had court ordered child support payments and garnishments. The link below is from the US Commerce Department and the companies we dealt with used it. https://www.commerce.gov/hr/practitioners/compensation-policies/general-pay/order-of-precedence-from-gross-pay The companies have not had an IRS or DOL audit over 401k deferrals being limited but I would think as long as a company has a procedure in place it would be okay.

Disregarding the deductions would increase income tax and SE taxes that would not be overcome by additional retirement income deductions. The tax code requires SE income to be reduced by deductions that are allowed or allowable and I don't think a taxpayer has the option to not deduct expenses. If audited, the IRS would make adjustments.

Since all company shares are held by the ESOP, the deduction is not an issue since there is no income tax. I would find out how the company (and accountant) are treating the funding. Most ESOPs with S-corp stock only allow cash distributions as the company would not want a lot of ex-employees owning and receiving a K-1 for their share of earnings. In addition, S-corps cannot have more than 100 shareholders but that is not an issue with this S-corp.