Subchapter S corporations offer a number of tax advantages, but they can also lead to complications. One longstanding concern is the question of “reasonable compensation” for S corporation shareholders who are also officers or employees of the company. Several provisions in the 2017 Tax Cuts and Jobs Act (TCJA) have drawn added attention to this issue—and to the sizable penalties that companies can incur if they do not manage officer compensation properly. (more…)
Partnerships and S Corporations: IRS Clarifies Schedule K-2 and K-3 Rules
Since the IRS first introduced them for the 2021 tax year, Schedules K-2 and K-3 have caused concerns—and confusion—for many partnerships and S corporations. The purpose of the two schedules is to report information related to foreign financial activities, but some pass-through entities found themselves subject to the forms’ requirements—even though they had no foreign interests or concerns. (more…)
Important Due Date Changes for 2017
By Sheba Dalaney, CPA, Principal
Recent legislation has made changes to due dates for some tax and information returns that will be filed for the 2016 and following tax years. These changes will require modifying the timing of the preparation work in many cases.
Payroll and information reporting returns (Forms W-2 and 1099)
These forms historically were sent to the recipients by January 31st of each year, and government reporting copies of these forms were transmitted by either February 28th or March 31st , depending on whether they were mailed or electronically filed. For 2016 returns filed in 2017, all copies of the forms must be sent to recipients and filed by January 31st. This change was made to combat identity theft by allowing the IRS to match withholding information when tax returns are filed and reject fraudulent refund claims. The due dates for filing all other information reporting returns remain unchanged. See the table below for specific details: (more…)