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 |  Bizink  |  graduates,  NJ Homestead Rebate,  NYS PTET,  NYS Senate Bill S8948,  Tax Penalty Relief,  tax planning,  Tax Season 2022,  Weekly Take-Away

Weekly Update – June 16th 2022 and Happy Father’s Day

We as family and friends been talking about our grads of 2022; making celebration and travel plans. For our recent grads these are exciting and scary times.  They are possibly facing a summer starting with a short break, then preparing for a seasonal job or the beginning of their career.  This “rite of passage” happens every year,  but for graduates of 2022,  economic uncertainty looms large. This weekend we flew to Ohio for just such an event. The ceremony was held at the Toledo Glass Pavilion Museum, a museum constructed of glass, housing various glass art forms. This week’s take away and tips for grads reflect my experience on my trip and in my office…

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Toledo Glass Pavilion at the Toledo Museum of Art

And don’t you just love a great photo opp…

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Our Graduates!

I am hoping you have great plans to celebrate our dad’s this weekend with a bar-b-q or breakfast in bed, or maybe just let them sleep a bit later…

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Grilled Branzino

WEEKLY TAKE-AWAY

“Any day I learn something new is a good day” is a favorite expression in our office.  As I listened to the graduates and educators the theme repeated “I learned so much from my students”, I learned so much from my classmates”, I learned so much from my professors”.  Just last week I was scheduled for a consult with an attorney friend of mine in support of a specific client circumstance. Before we started he asked for clarification on a current tax issue. We rescheduled the consult as his question lead to us researching the issue together.  I prepared a summary of the law update which I emailed to me office followed by a training session with my entire team.  At the end of our office training session we smiled and said “This is a good day!”

TAX ISSUES/TAX PLANNING

Penalty Relief Available for Employee Retention Credit Claims

In general penalty relief is granted when reasonable cause for underpayment of tax exists.  As we have seen, the IRS was slow to process amended payroll tax returns requesting Employee Retention Credits (ERC) for both 2020 and 2021.  Those credits reduce wage expense for the year of the related payroll, causing a timing difference between when the net profit is reported (2020 and/or 2021) and date the funds were received (2022).  We assisted our clients in preparing for the timing difference, but if you were caught unawares then IR 2022-89 may be a good option.

NYS Resident Owners of Pass Through Entities with Non-New York State Sourced Income Have a New Opportunity to Elect Meaningful PTET

We know that tax legislation is used to influence behavior, so what better way to keep our NYS residents here, help with those high tax rates…

Under new legislation S8948, effective for tax years beginning on or after January 1,2022 an “electing S corporation” is amended to include either an electing resident S corporation of an electing standard S corporation.  In plain English under the new law even non-NYS sourced income is eligible for the PTET.

We already know that the deadline for the extension has been extended, now those NYS residents with pass through entity income generated outside of NYS but includable on their NYS personal tax returns have access to the State and Local Tax (SALT) workaround.

For 2023 this will be expanded to NYC corporations as well!

Many NJ Residents Will Receive Property Tax Rebate Increases

Gov. Phil Murphy and his fellow Democrats who lead the state Legislature announced Wednesday they are expanding a new proposed annual relief program — a big step toward striking a deal on a new state budget.  This means that approximately 2 million New Jersey homeowners and renters would get larger property tax rebates.

Murphy introduced the ANCOR program, in early March; the initial plan was to phase it in over three years. Homeowners making $250,000 or less would have received an average rebate in the first year of $700, which would have ramped up to $1,150 by fiscal year 2025. Renters making up to $100,000 would have received $250. In all, it would have cost the state $894 million in the first year and $1.5 billion by the third year.

The state’s recent tax revenue surge to put $2 billion into the program right away, increasing rebates to a maximum of $1,500 for homeowners and $450 for renters beginning in the new fiscal year that starts July 1.

In all, officials said, the program would benefit more than 1.1 million New Jersey homeowners and about 900,000 renters in the state.

Tax Bill Introduced to Tax Assault Weapons

Representative Don Beyer, (D-Virginia), introduced a bill to impose a 1,000% excise tax on manufacturers, importers or producers of assault weapons and high-capacity magazines in the wake of a string of mass shootings across the country.

The Assault Weapons Excise Act, introduced Tuesday in the House, faces steep odds of passing in Congress. Last week, the House passed a gun control measure that would raise the minimum age for buying most assault weapons from 18 to 21 and prohibit high-capacity ammunition magazines after lawmakers heard testimony from victims of the recent mass shootings in Uvalde, Texas and Buffalo, New York. Beyer’s bill could pass in the Senate with a simple 50-vote majority as a revenue measure via reconciliation, his office noted.

Neither bill is likely to pass in the Senate, but a group of senators has been negotiating a limited set of gun safety measures and reached agreement over the weekend on a broad framework that includes funds to allow states to pass so-called “red flag” laws to keep guns out of the hands of dangerous people, expand support for community behavioral health centers, close the so-called “boyfriend loophole” for unmarried people who are convicted of committing violence against a partner, and provide funding for school security.

First Few IRS Dirty Dozen of Tax Scams for 2022

Every year the IRS warns of phishing attacks and other fraudulent tax schemes…

  • Appreciated property is transferred to a charitable remainder annuity trust and taxpayers claim a step up in basis to fair-market value, then sell for -0- capital gain.
  • U.S. citizens or residents try to dodge taxes with contributions to foreign individual retirement arrangements in Malta (or other countries).
  • American owners of closely held entities enter a purported insurance arrangement with a Puerto Rican or other foreign corporation with cell arrangements or segregated asset plans.
  • Inappropriate use of the installment sale rules under Sec. 453 by a seller who, in the year of a sale of property, effectively receives the sales proceeds through purported loans.
  • COVID stimulus funds applied for using identity theft with bogus emails, social media posts and phone calls. Including filing for tax credits, PPP funds, or making false unemployment claims.
  • Full list here or wait until next week for more…

Extension Tax Returns with Balance Due

As we (and you) review your 2022 year to date income and expected tax liability you may find you have additional or updated 2021 tax information.  For those of you who have filed timely extensions you may find that new information may have caused insufficient funding.  Please pull together any additional documents so that the actual tax returns can be finalized and submitted.  Remember the extension was an extension of time to file, not an extension for time to pay, so any balance due will continue to accrue interest (don’t ask how much), let’s just get those returns finalized and submitted.

 IRS Penalty Relief Available for First Time Requests

Hopefully you will never need this tip, but nice to know it’s available.  In general, taxpayers may qualify for administrative relief from penalties for failing to pay on time under the IRS’s first-time penalty abatement program if the taxpayer:

  • Did not previously have to file a return, or had no penalties for the three prior tax years;
  • Filed all currently required returns or filed an extension of time to file; and,
  • Paid, or arranged to pay, any tax due.

Hopefully you will never need this tip, but nice to know it’s there

FOR OUR GRADUATES  Graduation

Congratulations and best of luck.  These are exciting and scary times under the best circumstances; this year we see and hear about factors which concern business owners and may effect your chances of landing your “dream job” or staring on the career you have spent years training for.  Be aware that the cost of doing business and creating sustainable profit centers may be the cause of your inability to land your best or final spot in the job market.

  • Remember this position may just be a stepping stone to help you along your career path
  • Take any reasonable opportunity to learn, grow and move on, but never burn your bridges
  • Ask for referrals about potential job offers from family, friends, other graduates.  Follow up a few weeks later as other opportunities may open up.
  • Consider taking several part time jobs in related areas to maintain your skill set and remain employed as it may be hard to explain employment lapses
  • Know your worth and be prepared to demonstrate your abilities via your resume and cover letter with short stories

Best of luck and keeping smiling 🙂

ECONOMY

Recession fears loom after Wall Street plunge

The S&P 500 sunk more than 20% below its record low on Monday, falling firmly into bear market territory. Experts warn a recession is likely on the horizon.

Bitcoin Plunges Further

Bitcoin plummeted to its lowest level in nearly two years on Monday, after news that inflation hit 8.6%. As stock market volatility continues, many investors have ditched riskier assets, including cryptocurrency.

Top Economist Warns Inflation Could Hit 9% and Blames the Fed

Mohamed El-Erian, chief economic advisor at Allianz, criticized the Federal Reserve for not acting soon enough to curb inflation.

Major Car Companies Request Rise in Electric Vehicle Tax Credit

The CEOs of General Motors, Ford, Chrysler, and Toyota are urging Congress to lift the cap on the number of vehicles that are eligible for a $7,500 tax credit. They say the credit is critical for consumer adoption of the cars and trucks.

GENERAL RESOURCES

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!

If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.

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