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What you Really Need to Know About S-Corp Tax Savings

 

If you are self-employed, an independent contractor, or operating a sole proprietorship you may be interested in learning more about a well-known tax saving strategy—forming a corporation or LLC and electing to be taxed under Subchapter S of the Internal Revenue Code (“IRC”). This is commonly referred to as forming an S-Corp. Although the tax savings of operating an S-Corp are very real (under the right circumstances), it does come with additional compliance costs (filing fees, other taxes, returns, etc.). As a tax attorney that has represented several hundred individuals and small businesses, I felt it would be helpful to provide an honest and detailed breakdown of the requirements and identify some of the common mistakes people make.

Disclaimer: This article was drafted for informational purposes only.  It is not a substitute for legal representation.  The concepts and laws discussed in this article are generalizations and may not apply the same way for each factual scenario.  Therefore, when assessing whether forming an S-Corp is the best option for you, it is important to seek legal advice outside of this article.

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Best Business Entities For Beginning Streamers and Influencers

With social media and streaming platforms becoming a huge part of the world we live in, many people have created their own channels to not only entertain but also make money. Those that do choose to embark on the journey of becoming a professional streamer or influencer should be aware of how to personally limit themselves to lawsuits and how they will be taxed on the income they receive. In this blog, we will identity different business entities that streamers/influencers can utilize at the beginning of their journey and as their channel grows.

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S-Corp Shareholder Loans – Mistakes and How to Avoid Them

Owning and operating an S-Corp provides many business owners significant benefits. These benefits primarily relate to tax savings and limited liability protection. However, there are strict rules applicable to maintaining an S-Corp in order to preserve all the benefits. In this blog, I am going to discuss a common mistake made by S-Corp owners – failing to properly setup S-Corp loans to and from shareholders. This mistake can have a devastating impact on an S-Corp and its owners, ranging from increased taxes to loss of the corporate veil.

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Why You May Receive A CP2000 Notice and What You Should Know

Though it typically isn’t intentional, there are times when a taxpayer does not include income information on a tax return. This can happen due to the taxpayer having not received the tax information at the end of the year, records of income sources being improperly kept, or the taxpayer simply forgot about the income they received. When this occurs the IRS will most likely issue a CP2000 notice stating there was income information left off of a tax return that was filed. Should you find yourself in this situation, here are a few things you should know.

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Is Unemployment Taxable? Coronavirus Unemployment Changes

With a large number of taxpayers across the country being affected by Covid-19, weather economically or medically, it has forced millions to file for unemployment. In fact, over 43 million people have applied for unemployment since the beginning of the pandemic. In response to this, the Coronavirus Aid, Relief, and Economic Securities (CARES) Act was passed, which created temporary changes to how taxpayers receive unemployment and when they can apply. Most importantly though, taxpayers need to be aware of whether these changes could cause them tax issues at the end of the year.

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California Franchise Tax Board Tax Refunds

You may be due a refund when filing a California personal income tax return if you overpaid during the tax year. It is important to remember that receiving a refund typically means you are getting back money that you lent to the state interest free for the year. The easiest way to receive your refund is by direct deposit (entering in your banking information on your tax return). You may also elect to receive your refund in the form of a check in the mail. Finally, you can even elect to apply your refund to your next year’s tax obligation.

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California FTB Income Tax Audits

Trying to resolve a tax issue can be a very difficult and time consuming task. One of the more common reasons for a tax issue occurring is your personal income tax return being audited. By going through the audit process you may be able to avoid the assessment of tax or at least reduce the amount of the proposed assessment.

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California Franchise Tax Board Offer In Compromise

A question often asked by our clients is can we reduce the amount of taxes owed to the California Franchise Tax Board (FTB) through an Offer in Compromise (OIC). The short answer is yes, it is possible. However, there are eligibility requirements that must be met, financial documents that must be gathered and reviewed, and finally a lengthy process for having the offer accepted. In this blog, we will go through each of these steps and how a tax attorney may be able to help.

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California EDD Audit Representation

Running a business requires a lot of attention, especially when you have employees. Any business who has employees is sure to be familiar with the California Employment Development Department (EDD). The EDD is the California state taxing authority responsible for the collection and accounting of employment taxes and enforcement of California’s employment tax laws. When a business is suspected of not complying with the employment tax laws, the EDD will begin an audit to ensure everything is being reported properly. In this blog, we will discuss what issues the EDD may audit a business for, what the process of the EDD audit entails, and why representation from a California EDD tax attorney can help you.

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IRS Payment Plan Calculator: Finding your Minimum IRS payment

Thousands of taxpayers fall short of their federal and state tax obligations each year. And although the IRS has a reputation as a hard headed collection agency there are still options available to those that owe. However, the options become more and more limited if taxpayers ignore notices and wait too long. In this blog, I will discuss how to calculate a minimum monthly payment, based on IRS guidelines and personal experience, which should help taxpayers avoid bigger issues down the road.

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