Michael Gray, CPA's Tax and Business Insight
March 3, 2023
© 2023 by Michael C. Gray
ISSN 1539-395X
A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!
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Table of Contents
- Happy St. Patrick's Day!
- Family celebrations
- Trust distribution deadline is March 6, 2023.
- Have you received your tax preparation materials?
- Tax return filing deadlines have been extended for some taxpayers.
- Remember federal income tax returns for calendar-year S corporations and partnerships are due March 15.
- The election to be an S corporation for calendar-year corporations is also due March 15.
- Due date for 2022 individual, calendar year estates and trusts, and calendar year corporation income tax returns is April 18, 2023.
- Remember that an estimated tax payment is also due on April 18.
- Remember the second California real estate tax payment is due April 10.
- Cutoff for preparing tax returns will soon be here!
- U.S. Supreme Court rules on FBAR penalty.
- IRS announces relief for refund claims.
- New service industry tip reporting program.
- IRS guidance for EV credit.
- Do you sell services or software to CPAs?
- Please share your good experiences with Michael Gray, CPA.
- Financial Insider Weekly past episodes.
- Visit our new book review: Millennials Are Not Aliens
- Follow me on social media!
- Check out my blogs.
- Subscribe/Remove from Michael Gray, CPA's Tax & Business Insight
Saw this interesting looking egret at Vasona Lake Park in Los Gatos, California on February 19. The lake is full. Happy St. Patrick's Day!
St. Patrick's Day is the occasion when all Americans celebrate being Irish! This year it falls on Friday, March 17. It's time for the wearin' of the green! The luck of the Irish be with ye!
Will you be droppin' by the pub for a pint of green beer? Or maybe a Guinness?
Family celebrations.
My sister Arlene Gray McLean and my brothers-in-law Wade Allison and Lane Johnston, are celebrating birthdays this month. Happy Birthdays!
Trust distribution deadline is March 6, 2023.
Estates and irrevocable trusts for which the trustee has discretion for making distributions can elect to treat distributions made within 65 days after the year-end as made during the previous year. Distributions generally reduce taxable income for the estate or trust and carry taxable income to the beneficiaries of the estate or trust, who might have a lower marginal tax bracket. For 2021 calendar year trusts and estates, the deadline for making a distribution to make the election is March 6, 2022. Trustees and executors should consult with their tax advisor about whether their trust or estate and its beneficiaries would benefit from making such an election.
Have you received your tax preparation materials?
If you haven't received a tax data organizer or instructions to submit information online and want tax return preparation service by my successor, Ms. Thi Nguyen, CPA, please contact her at thi@atl-cpa.com.
Tax return filing deadlines have been extended for some taxpayers.
I sent a separate notice that the IRS has announced the federal filing deadline for tax returns and tax payments for residents of certain disaster areas in California, Alabama and Georgia has been extended to October 16, 2023, so the reminders listed below won't apply to those taxpayers. Most California residents should qualify for the extension due to flood damage in their areas. Here's a link to the IRS web site to find the affected areas. https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
California has announced that it will conform to the federal extension.
(Spidell's Flash E-mail: "California will conform to October 16 deadline extension", March 2, 2023.)
Remember federal income tax returns for calendar-year S corporations and partnerships are due March 15.
(Federal income tax returns for calendar-year C corporations are due April 18.)
The election to be an S corporation for calendar-year corporations is also due March 15.
Due date for 2022 individual, calendar year estates and trusts, and calendar year corporation income tax returns is April 18, 2023.
Remember that an estimated tax payment is also due on April 18.
The first 2023 estimated tax payment for individuals and most other calendar year entities is also due on April 18, 2023. The penalties for late payment of estimated taxes are computed as simple interest, but the interest rate has been increasing. The federal estimated payment can be based on 25% of last year's tax liability. California "front loads" the first estimated tax payment as 30% of last year's tax liability. California taxpayers with taxable income of $1 million or more must make their estimated tax payments based on their actual income and deductions.
Remember the second California real estate tax payment is due April 10.
There is a nasty penalty for paying real estate taxes late, and the date slips past us because we're thinking about April 18. Why not make this payment now, so you don't forget it?
Cutoff for preparing tax returns will soon be here!
If you provide complete information for preparing your 2021 income tax returns by March 15, your tax returns should be finished in time to file them by April 18. Otherwise, an extension form should be submitted with a payment of any estimated balance of tax by April 18.
U.S. Supreme Court rules on FBAR penalty.
The nonwillful failure to file a compliant report of foreign bank and investment accounts is subject to a maximum penalty of $10,000. The Treasury Department tried to assess the penalty for each unreported account. The U.S. Supreme Court has ruled the penalty applies for each unfiled report.
(Bittner v. U.S., 598 U.S. February 28, 2023.)
IRS announces relief for refund claims.
The time to file a claim for credit or refund is within the later of three years after the time the taxpayer's return was filed or two years from the time the tax was paid.
Considering the filing date postponement as COVID-19 relief, which technically was not an extension, the IRS has announced relief for affected income tax returns.
For taxpayers with a due date postponed by Notice 2020-23 and who didn't file an extension form, the period beginning on April 15, 2020 and ending on July 15, 2020 will be disregarded when determining the amount of credit or refund. (Three months is added to the lookback period.) Withheld income taxes for 2019 would have been deemed paid on April 15, 2020. Taxpayers who had withholding will have three additional months to file a refund claim.
The relief is automatic, so no correspondence with the IRS should be necessary.
(Notice 2023-21.)
New service industry tip reporting program.
The IRS has issued a proposed revenue procedure establishing the Service Industry Tip Compliance Agreement, SITCA. SITCA is a voluntary tip reporting program between the IRS and employers in various service industries. Employers in service industries, such as restaurants and hotels, should consult with their tax advisors about the procedures. The IRS is asking for comments by May 7, 2023.
(Notice 2023-13.)
IRS guidance for EV credit.
The IRS has issued guidance FAQs relating to which vehicles qualify for the New Clean Vehicle Credit, the Previously-Owned Clean Vehicle Credit and the Qualified Commercial Clean Vehicles Credit.
(IR-2023-18 and Fact Sheet 2023-4. Modifies Notice 2023-01.)
Do you sell services or software to CPAs?
Maybe I can help with writing promotional material and marketing ideas. Call me, Michael Gray, at 408-918-3161 or email mgray@taxtrimmers.com.
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Financial Insider Weekly past episodes
After eight years of production, I have discontinued producing new interviews for Financial Insider Weekly. Doing the show has been a rewarding experience and I consider back episodes to be my legacy of financial literacy education to our community. Back episodes available at https://www.youtube.com/user/financialinsiderweek.
Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.
For your questions about dependent exemptions, see IRS Publication 501 at www.irs.gov.
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