Chicago CPA and Tax Accountant

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Chicago CPA and Tax Accountant

Chicago CPA (Certified Public Accountant) and tax accountant prepares individual, partnership, corporate and S corporation state and federal income tax returns.  Save money on your state and federal income taxes.  Tax law is complex. Therefore, you need a tax accountant and CPA on your side.

Chicago CPA tax accountant
Chicago CPA and tax accountant

Personal Income Taxes

Claim all of the income tax deductions that you legally qualify for and minimize your state and federal income tax bill.   Federal tax laws are complex so work with a Chicago CPA to file your income tax returns each year.

What Business Expenses Can I Deduct?

What business expenses can you deduct? The general rule is all ordinary and reasonable business expenses are tax deductible.  However, the details of the tax laws are complicated.    Therefore, I work with businesses to minimize their tax bills.

Chicago CPA for Small Business Tax Preparation

What do I need to provide my tax accountant for business tax preparation?  Provide your accountant with a business income statement, balance sheet, estimated tax payments details, if applicable, and ownership information.

How to Find a Good CPA or Tax Accountant

Ten Tips for Choosing a Tax Return Preparer

Illinois CPA Society – Top 10 Questions to Ask a Tax Preparer

Check IRS Balance Owed

Individual taxpayers can check how much they owe the IRS and the balance due by tax year with this IRS website tool:

https://www.irs.gov/payments/finding-out-how-much-you-owe

Pay IRS Online

If you want to pay the IRS online from your bank account or with your credit card or debit card:  https://www.irs.gov/payments/

Past Due Unfiled Income Tax Returns

Finally, let me prepare your past due unfiled tax returns.  Don’t delay because federal law provides that the IRS may assess a penalty if a taxpayer fails to file, fails to pay or both.  If you do not file your income tax returns by the due date, a failure-to-file penalty may apply.  In addition, if you do not pay your income taxes by the due date, a failure-to-pay penalty may apply.  For more information on IRS penalties, see discussion below.

Chicago CPA and tax accountant. Tax law is complex.  Therefore, contact Chicago CPA and attorney Brian J. Thompson for an initial free consultation via phone or email (Brian@BrianThompsonLaw.com).

IRS Tax Refund Tracker

IRS tax refund tracker – the IRS offers several options to track your tax refund.  The IRS2Go app can be used to check IRS tax refund status, make payments to the IRS, and receive tax tips from the IRS.  Download the IRS2Go app:  http://www.irs.gov/uac/IRS2GoApp

In addition, taxpayers who don’t have a smartphone or prefer not to download the IRS2Go app can use this IRS refund tracker: http://www.irs.gov/Refunds

Illinois Income Tax Refunds

Another useful tool to check on your Illinois tax refund status is available from the Illinois Department of Revenue:

http://www.revenue.state.il.us/Individuals/Refunds.htm

Finally, most taxpayers recognize income tax return preparation and tax law can be confusing. Therefore, I recommend you retain an experienced professional. Chicago CPA and attorney Brian J. Thompson prepares income tax returns and advises clients regarding tax planning issues.

Estimated Taxes Due Dates

Wondering about the due dates for paying estimated taxes?  Talk to a Chicago CPA about your tax situation and estimated taxes.  Self-employed taxpayers should make quarterly estimated tax payments to the IRS.  Per the IRS, the due dates for quarterly estimated tax payments are as follows:

Payment Period                                                    Due Date

  1. January 1 – March 31                                  April 15
  2. April 1 – May 31                                             June 15
  3. June 1 – August 31, 2016                         September 15
  4. September 1 – December 31                  January 17

https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-answers/estimated-tax/individuals/individuals-2

Furthermore, self-employed taxpayers must pay federal income taxes, state income taxes and social security taxes.  Therefore, self-employed taxpayers should contact a Chicago CPA regarding estimated taxes and federal income tax issues.

IRS Penalties

IRS penalties are designed “to encourage voluntary compliance by supporting the standards of behavior required by the Internal Revenue Code.” (IRM 20.1.1.2).  In other words, IRS penalties make noncompliance more costly and painful than paying voluntarily and on-time.  IRS tax penalties include the failure-to-file penalty and the failure-to-pay penalty.

Failure-to-File Penalty

The failure-to-file penalty is generally more than the failure-to-pay penalty.   Therefore,  even if you cannot pay all the taxes owed, timely file your tax return.  Also, pay as much as possible.  Next, consider an installment agreement or offer-in-compromise.

The penalty for filing late is usually 5% of the unpaid taxes for each month or partial month that your federal income tax return is late. This penalty will not exceed 25% of unpaid taxes.

If you file your tax return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

Failure-to-Pay Penalty

A failure-to-pay penalty of 0.5 percent of unpaid taxes results for each month or partial month after the due date. This penalty can be as much as 25 percent of your unpaid taxes.

If you request an extension of time to file by the tax deadline and paid at least 90 percent of your actual tax liability by the original due date, no failure-to-pay penalty results when the taxpayers pays the remaining balance by the extended due date.

If both penalties apply in any month, reduce the 5 percent failure-to-file penalty by the failure-to-pay penalty.  However, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax for tax returns filed more than 60 days after the due date or extended due date .

IRS Penalty Abatement

No penalty is due if you failed to timely file or pay because of reasonable cause rather than willful neglect.   “Reasonable cause” depends on the circumstances and IRS discretion.  Regarding abatement of IRS penalties, please email me the details of your tax matter.

Capital Gains Tax Rate

First of all, what are capital gains?  Capital gains are the profits from the sale of an asset other than inventory such as land, shares of stock, or a business.

Why do capital gains matter?  Generally, capital gains are considered taxable income. Federal income tax law generally applies lower tax rates to long-term capital gains income. Long-term means assets held longer than one year.

The federal income tax on long-term capital gains is either 0%, 15% or 20% for most assets held for more than a year.  The tax rate on short-term capital gains (most assets held for less than a year) correspond to the taxpayer’s ordinary income tax brackets (10%, 12%, 22%, 24%, 32%, 35% or 37%).  For details on the tax rate applicable to each income tax bracket by filing status, visit capital-gains-tax-rates.

Qualified Dividends

Furthermore, the federal income tax rate applicable to long-term capital gains (0%, 15% or 20%) also applies to qualified dividends. Qualified dividends are dividends from the stock of a domestic corporation or a qualifying foreign corporation.  In addition, the taxpayer must hold the stock “for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.”  IRS Publication 550, Investment Income and Expenses.

S Corporation Taxation

S corporation taxation is somewhat complex.  Since S corporations are pass through entities, there is no income tax at the corporate level.  Instead, they file an informational federal income tax return on IRS Form 1120S.  The gains and losses pass through to the individual shareholders’ returns.  On the other hand, C corporations pay taxes as a separate legal entity.  In addition, the shareholders pay taxes on any dividends received. Thus, C corporations suffer from “double taxation.”

S Corporation Form 1120S Instructions

IRS Form 1120S (2016) Instructions

Corporate Allocations of Income and Loss

An S corporation is permitted only one class of stock. However, it may have both voting and nonvoting common stock.  In addition, an S corporation must treat each share of stock the same with respect to allocations of income, loss and distributions.  Therefore, an S corporation cannot provide a preferential allocation of income, loss or distribution to any shareholder.

Due Date for S Corporation Tax Return

An S corporation must usually take a calendar year-end date unless the corporation can establish a reasonable business purpose for a different year-end date.    For 2016 tax year and subsequent years, S corporation and LLC tax returns are due and taxes are payable on the 15th day of the third month after the end of the company’s fiscal year. Therefore, an S corporation or LLC with a fiscal year-end date of December 31 must file its tax return and pay taxes by March 15 of the following year.

Business Records for S Corporation Tax Returns  

What business and financial records do I need to provide to my CPA?

  1. Financial statements (Income Statement & Balance Sheet);
  2. Capital accounts – complete transaction history and summary statement of each shareholder’s capital account; and
  3. Shareholder information – shareholder name, address, and social security number.

Contact Chicago CPA and business lawyer Brian J. Thompson at Brian@BrianThompsonLaw.com for S corporation tax return preparation.

Obamacare Penalty

Chicago CPA and attorney Brian J. Thompson on The Affordable Care Act Penalty also know as the Obamacare Penalty.

2015 Obamacare Penalty

In 2015, the penalty for failure to have health care insurance is $325 or 2 percent of taxable income.

2016 Obamacare Penalty

In 2016, the penalty for being uninsured rises to the greater of $695 or 2.5 percent of taxable income for someone who goes without health care insurance coverage for a full 12 months.

Obamacare Forms

In addition, starting early in 2016, you may receive certain health care coverage forms.  These new health care forms provide information related to preparation of your federal income tax return.  Also, like Forms W-2 and 1099, these new forms will be provided to the IRS by the entity that provides the form to you.  Especially relevant, are the following new forms:

Form 1095-A, Health Insurance Marketplace Statement.

The Health Insurance Marketplace sends this form to individuals who enrolled in coverage there with detailed information about the coverage.

Form 1095-B, Health Coverage.

Health insurance companies send this form to covered individuals and it details coverage information.

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.

In addition, certain employers send Form 1095-C to their employees, with information about what coverage the employer offered. Employers that offer “self-insured coverage” send this form to covered individuals and it details coverage information.

Finally, consult a Chicago CPA for more info regarding the Obamacare penalty and income tax preparation penalty.  Note – Congress repealed the ACA penalty effective for the 2018 tax year.

IRS Tax Relief Help

IRS tax relief help from a Chicago tax attorney and CPA.  I will investigate your tax matters, evaluate your alternatives, file your unfiled tax returns, and guide you the resolution process.  Tax relief help usually takes the form of an installment agreement or an offer in compromise.

IRS Installment Agreement

An IRS tax relief agreement a/k/a IRS installment agreement permits the taxpayer to pay his full federal tax debt in installments.

Installment Agreement Fees

In addition, the IRS charges a setup fee for installment agreements. The IRS raised its fees for installment agreements and offers in compromise. Effective January 1, 2014, the Internal Revenue Service increased the processing fees for standard installment agreements from $105 to $120 and doubt as to collectability offers in compromise from $150 to $186.  The fees for a direct debit installment agreement remains unchanged at $52. Note – the IRS raised the offer in compromise fee to $206.

Offer in Compromise

In addition to the installment agreement, the IRS Fresh Start Program allows taxpayers relief from tax debt.  An offer in compromise allows a taxpayer to settle tax debt for less than the full amount owed.

Finally, IRS tax resolution begins with my analysis of your current tax debts.  Therefore, please contact Chicago CPA Brian J. Thompson.

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