tax planning - Linkenheimer LLP CPAs & Advisors

Employers: Be Aware (or Beware) of a Harsh Payroll Tax Penalty

If federal income tax and employment taxes (including Social Security) are withheld from employees’ paychecks and not handed over to the IRS, a harsh penalty can be imposed. To make matters worse, the penalty can be assessed personally against a “responsible individual.”

If a business makes payroll tax payments late, there are escalating penalties. And if an employer fails to make them, the IRS will crack down hard. With the “Trust Fund Recovery Penalty,” also known as the “100% Penalty,” the IRS can assess the entire unpaid amount against a responsible person who willfully fails to comply with the law.

Some business owners and executives facing a cash flow crunch may be tempted to dip into the payroll taxes withheld from employees. They may think, “I’ll send the money in later when it comes in from another source.” Bad idea!

No corporate protection

The corporate veil won’t shield corporate officers in these cases. Unlike some other liability protections that a corporation or limited liability company may have, business owners and executives can’t escape personal liability for payroll tax debts.

Once the IRS asserts the penalty, it can file a lien or take levy or seizure action […]

By Linkenheimer LLP|2020-09-03T20:03:55+00:00June 6th, 2019|employer, social security, tax, tax planning|0 Comments

Disabled Veterans in California Get a Tax Break

Disabled veterans in California get a tax break. The California State Board of Equalization has announced increases in the property exemption amounts and the household income limit for disabled veterans’ exemptions for 2020. For the 2020 assessment year, the exemption amounts are $143,273 for the basic exemption (up from $139,437 for 2019) and $214,910 for the low-income exemption (up from $209,156 for 2019). The household income limit for those claiming the low-income exemption is $64,337 (up from $62,6147 for 2019). Contact your Linkenheimer CPA with questions.

By Linkenheimer LLP|2020-09-03T20:03:55+00:00June 3rd, 2019|tax planning, taxpayer|0 Comments

The Chances of IRS Audit are Down But You Should Still be Prepared

The IRS just released its audit statistics for the 2018 fiscal year, and fewer taxpayers had their returns examined as compared with prior years. However, even though a small percentage of tax returns are being chosen for audit these days, that will be little consolation if yours is one of them.

Latest statistics

Overall, just 0.59% of individual tax returns were audited in 2018, as compared with 0.62% in 2017. This was the lowest percentage of audits conducted since 2002.

However, as in the past, those with very high incomes face greater odds. For example, in 2018, 2.21% of taxpayers with adjusted gross incomes (AGIs) of between $1 million and $5 million were audited (down from 3.52% in 2017).

The richest taxpayers, those with AGIs of $10 million and more, experienced a steep decline in audits. In 2018, 6.66% of their returns were audited, compared with 14.52% in 2017.

By Linkenheimer LLP|2020-09-03T20:03:56+00:00June 3rd, 2019|audit, irs, tax planning, taxpayer|0 Comments

Three Questions You May Have After You File Your Return

Once your 2018 tax return has been successfully filed with the IRS, you may still have some questions. Here are brief answers to three questions that we’re frequently asked at this time of year.

Question #1: What tax records can I throw away now?

At a minimum, keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. In general, the statute of limitations is three years after you file your return. So you can generally get rid of most records related to tax returns for 2015 and earlier years. (If you filed an extension for your 2015 return, hold on to your records until at least three years from when you filed the extended return.)

However, the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%.

You’ll need to hang on to […]

By Linkenheimer LLP|2020-09-03T20:04:06+00:00April 18th, 2019|irs, New Tax Laws, tax planning, tax time|0 Comments

Disaster Relief Continues for Certain Californians

Disaster relief continues for certain Californians. The CA Franchise Tax Board has updated its Disaster Loss webpage, for victims of storms and fires that plagued the state in recent months. The updated list now includes many CA counties that suffered storm damage in 2019, and several counties which suffered wildfires in late 2018. Taxpayers directly affected by federally declared disasters may be eligible for tax relief, including extensions of time to file and pay taxes until 4/30/19. If you have questions, please contact your Linkenheimer CPA. Here’s the full list and more information: https://bit.ly/298JVSt

By Linkenheimer LLP|2020-09-03T20:04:06+00:00April 11th, 2019|disaster, tax, tax planning|0 Comments