Tax

Tax

Tax Due Dates for November 2019

Tax Due Dates for November 2019

Anytime

Employers – Income Tax Withholding. Ask employees whose withholding allowances will be different in 2020 to fill out a new Form W-4. The 2020 revision of Form W-4 will be available on the IRS website by mid-December.

November 12

Employees who work for tips – If you received $20 or more in tips during October, report them to your employer. You can use Form 4070.

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the third quarter of 2019. This due date applies only if you deposited the tax for the quarter in full and on time.

November 15

Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in October.

Employers – Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in October.

Business Tax

Rental Real Estate Qualifies as a Business

Rental Real Estate Qualifies as a Business

A safe harbor is now available for taxpayers seeking to claim the section 199A deduction with respect to a “rental real estate enterprise.” What this means is that certain interests in rental real estate – including interests in mixed-use property – are allowed to be treated as a trade or business for purposes of the qualified business income deduction under section 199A of the Internal Revenue Code.

Rental Real Estate Enterprise Defined

For the purposes of this safe harbor, a rental real estate enterprise is defined as an interest in real property held to generate rental or lease income. It may consist of an interest in a single property or interests in multiple properties. The taxpayer or a relevant pass-through entity (RPE) relying on this revenue procedure must hold each interest directly or through an entity disregarded as an entity separate from its owner, such as a limited liability company with a single member.

Qualifying for the Safe Harbor

The following requirements must be met by taxpayers or RPEs to qualify for this safe harbor:

  • Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise.
  • For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year. For other rental real estate enterprises, 250 or more hours of rental services are performed in at least three of the past five years.
  • The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following: hours of all services performed; description of all services performed; dates on which such services were performed; and who performed the services.
  • The taxpayer or RPE attaches a statement to the return filed for the tax year(s) the safe harbor is relied upon.

If all the safe harbor requirements are met, an interest in rental real estate will be treated as a single trade or business for purposes of the section 199A deduction. If an interest in real estate fails to satisfy all the requirements of the safe harbor, it may still be treated as a trade or business for purposes of the section 199A deduction if it otherwise meets the definition of a trade or business in the Section 199A regulations.

Help is just a phone call away.

If you would like more information about the qualified business income deduction, safe harbor requirements, or any other aspect of tax reform, don’t hesitate to call.

Tax

Expat Compliance With US Tax Filing Obligations

Expat Compliance With US Tax Filing Obligations

Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime. If you’re an expat who has relinquished — or intends to relinquish — your US citizenship but still has US tax filing obligations (including owing back taxes) you’ll be relieved to know there are new IRS procedures in place that allow you to come into compliance and receive relief for any back taxes owed.

Here’s what you need to know:

Background

Intended for anyone who has relinquished, or intends to relinquish their United States (U.S.) citizenship, the Relief Procedures for Certain Former Citizens apply to taxpayers who want to come into compliance with their US income tax and reporting obligations and avoid being taxed as a “covered expatriate” under section 877A of the U.S. Internal Revenue Code (IRC).

Intended Use

The Relief Procedures for Certain Former Citizens apply only to individuals (not estates, trusts, corporations, partnerships, and other entities) who:

  • Have not filed U.S. tax returns as U.S. citizens or residents;
  • owe a limited amount of back taxes to the United States; and
  • have net assets of less than $2 million.

Furthermore, only those US taxpayers whose past compliance failures were non-willful can take advantage of these new procedures. Typically, this situation involves someone born in the United States to foreign parents or someone born outside the United States to U.S. citizen parents, who may be unaware of their status as U.S. citizens or the consequences of such status.

The Details

Eligible individuals wishing to use these relief procedures are required to file outstanding U.S. tax returns, including all required schedules and information returns, for the five years preceding and their year of expatriation. Provided that the taxpayer’s tax liability does not exceed a total of $25,000 for the six years in question, the taxpayer is relieved from paying U.S. taxes. The purpose of these procedures is to provide relief for certain former citizens. Individuals who qualify for these procedures will not be assessed penalties and interest.

There is no specific termination date associated with the new IRS procedures; however, a closing date will be announced prior to ending the procedures. Also, individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible as long as they satisfy the other criteria of the procedures.

Relinquishing U.S. citizenship and the tax consequences that follow are serious matters that involve irrevocable decisions. Please contact the office if you have any questions about this topic.

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