Michael Gray, CPA's Tax and Business Insight
September 5, 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 autumn! Summer ends and autumn begins on September 23.
- Family celebrations
- Live Michael Gray, CPA lunchtime seminar about proposed SECURE Act regulations.
- October 16 will soon be here!
- September 15 and 30 due dates.
- California passthrough entity payments due October 16, 2023.
- Trusts and estate tax returns due September 30.
- Individual and C corporation tax returns due October 16.
- Foreign bank account form due October 16.
- Avoid California e-pay requirement by making smaller estimated tax payments.
- Hawaii wildfire victims get tax relief.
- Idalia storm victims get tax relief.
- Be wary of Employee Retention Tax Credit scams.
- Using an intermediary for an installment sale? The IRS wants to know.
- Most federal Reports of Cash Payments Over $10,000 must be electronically filed for 2024.
- Do you sell services or software to CPAs?
- Attention CPAs-would you like help with marketing your services?
- Attention CPAs-do you need support for tax issues?
- Attention Accountants! Speed up processing your business closings!
- Please share your good experiences with Michael Gray, CPA.
- Financial Insider Weekly past episodes.
- Visit our new book review: Flow
- Follow me on social media!
- Check out my blogs.
- Subscribe/Remove from Michael Gray, CPA's Tax & Business Insight
My granddaughter, Minerva Siemer, dressed up for "The Barbie Movie" at the Pruneyard Cinema in Campbell, California Happy autumn! Summer ends and autumn begins on September 23.
The year is 2/3 over! Are you ready for the year end?
Family celebrations.
My daughter, Holly Baker and her son, Kyan, are both celebrating birthdays during September. Happy birthdays! Thi Nguyen and her husband, Allen Le, are celebrating their wedding anniversary during September. Happy Anniversary!
Live Michael Gray, CPA lunchtime seminar about proposed SECURE Act regulations.
The IRS issued Proposed Treasury Regulations implementing the provisions of the SECURE Act of 2019 on February 24, 2022. Some of the provisions of the Proposed Treasury Regulations relating to retirement accounts (including IRAs and 401(k)s) surprised specialists in planning for retirement accounts. The IRS recently announced the Proposed Treasury Regulations won't be effective before 2024. Michael Gray, CPA, past president and past chairperson for the Tax Interest Group of the Silicon Valley San Jose Chapter, CalCPA and co-author of How To Use Roth & IRA Accounts To Provide A Secure Retirement, 2023 Edition, will explain the highlights of the Proposed Treasury Regulations and how planners should apply them for estate planning and administering accounts after a death.
The lunchtime seminar for the Personal Financial Planning interest group of the Silicon Valley San Jose chapter of CalCPA will be at Marcum Accountants/Advisors, 111 W St John St. Suite 515, San Jose, CA 95113 from noon to 1:30 p.m. on Wednesday, October 18, 2023. Advance registration is required. (No walk-in registration.) Registration is $30 for CalCPA members and $65 for nonmembers. Registration includes lunch. Plan to pay a small fee for parking.
Here is a link to register. https://store.calcpa.org/catalog/activity/svsj-financial-planning-interest-group--secure-act-proposed-regulations---n2181023
October 16 will soon be here!
The extended due date for 2022 individual income tax returns is October 16, 2023. Most California residents automatically received that extension as disaster relief. If you've been putting off getting your tax returns finished, now is the time to get in motion.
September 15 and 30 due dates.
The due date for extended income tax returns for calendar-year partnerships and S corporations is September 15. Most California resident S corporations and partnerships have an extended due date of October 16, 2023 as disaster relief.
Federal estimated tax payments for individuals are also due September 15. There is no California regular estimated tax payment due September 15 because estimated payments for April and June are "front loaded." For 2023, most California residents will have a "catch up" federal and California estimated tax payment due on October 16, 2023 as disaster relief.
The federal estimated tax payment can be based on the income tax reported on the 2022 federal income tax return. If the 2022 federal adjusted gross income was more than $150,000 (or $75,000 if married filing separately), the payment can be based on 110% of the income tax on the 2022 federal income tax return. Alternatively, the payment can be based on 90% of the actual tax for 2023. Although the tax payment is 25% of the annual tax liability, the computations can be made using income and deductions through August 31. (The computations have become so complex that I recommend using the "protected estimate" based on 2022 tax approach.)
Individuals with California adjusted gross income for the current year that is equal to or exceeding $1 million ($500,000 for married persons or registered domestic partners filing a separate return) must figure their California estimated tax based on their current year tax and aren't eligible for estimated tax payments based on their 2022 income tax.
If you aren't making your payments based on your 2022 income tax, you might want to get professional help with your estimated tax payments this year.
California passthrough entity payments due October 16, 2023.
Most California passthrough entities qualify for extended payments of their passthrough entity taxes on October 16, 2023 as disaster relief. The first payment is normally due on or before June 15 of the year of election. That payment is the greater of $1,000 or 50% of the elective tax paid for the prior year. The second payment is due on the due date of the business's income tax return, without extensions (March 15 for calendar-year S corporations and partnerships). The extension applies to applicable payments for 2022 and 2023. Be sure to use the correct form when mailing a payment or to correctly identify the year for electronic payments.
Trusts and estate tax returns due September 30.
The due date for 2022 calendar-year trusts and estates for which timely extensions were filed is September 30, 2023. Most California calendar-year trusts and estates have an October 16, 2023 due date as disaster relief.
Individual and C corporation tax returns due October 16.
The due date for 2022 individuals and calendar year corporations for which timely extensions were filed is October 16, 2023.
Foreign bank account form due October 16.
FinCEN Form 114 is due April 15, and the due date is automatically extended to October 6, 2023 for 2022. FinCEN Form 114 is required to be filed when an individual has $10,000 or more of foreign financial assets, including foreign bank accounts and foreign brokerage accounts. See your tax advisor about foreign insurance policies, annuities and retirement accounts.
Avoid California e-pay requirement by making smaller estimated tax payments.
California requires corporations and individuals to make their tax payments electronically after the taxpayer either has:
- Made a single estimated tax or extension payments exceeding $20,000, or
- Filed an original return with a tax liability exceeding $80,000.
In 2023, taxpayers in 55 counties were granted disaster relief extending the tax return filing and estimated tax payment due date to October 16, 2023.
If a taxpayer makes a combined estimated tax payment exceeding $20,000, all future California tax payments will be required to be made electronically!
Taxpayers who don't expect to otherwise exceed the thresholds in the future can avoid exceeding the threshold during 2023 by breaking down their estimated tax payments and making several smaller payments instead of a big one. To avoid having your bank question whether your payments are fraudulent, consider making the payments a few days apart.
Taxpayers who exceed the thresholds may request a waiver from the requirement to make future payments electronically for a "reasonable cause." Why subject yourself to having to make that request when it can be easily avoided?
If you have any questions about this matter, consult with your tax advisor.
(Podcast: The e-pay mandate: don't combine California estimates, Spidell Publishing, September 3, 2023.)
Hawaii wildfire victims get tax relief.
The IRS has announced tax relief for Hawaii wildfire victims in Maui and Hawaii counties. The due dates for already extended income tax returns, payroll tax and excise tax returns and for estimated tax payments have been extended to February 15, 2024.
(IR-2023-151, August 18, 2023.)
Idalia storm victims get tax relief.
The IRS has announced tax relief for individuals and businesses affected by Idalia in 46 counties in Florida. The due dates for already extended income tax returns, payroll tax and excise tax returns and for estimated tax payments have been extended to February 15, 2024.
(IR-2023-159, August 30, 2023.)
Need help with getting your extended tax returns, amended returns, and elections done?
To make an appointment, contact Thi Nguyen, CPA at thi@atl-cpa.com.
Be wary of Employee Retention Tax Credit scams.
The IRS has erroneous ERTC claims on the top of its annual "dirty dozen" abusive tax schemes and is ramping civil audits of ERTC claims. Promoters are charging significant fees, such as a percentage of the refund claimed, for preparing the claims. Be sure to confirm with a good tax advisor that your business qualifies for the credit before going ahead with a claim. Remember wages claimed as deductions for federal income tax reporting are reduced by the ERTC, so at least two tax returns will be amended.
Using an intermediary for an installment sale? The IRS wants to know.
The IRS has issued proposed Treasury regulations that would make "monetized" installment sales a listed transaction. This type of transaction is structured so the seller initially transfers the property to an intermediary in exchange for an installment obligation. The intermediary sells the property to an ultimate buyer. The buyer could even pay cash to the intermediary. The seller reports the transaction as an installment sale and defers the taxable income from the sale. The IRS might take the position the intermediary received the cash from the ultimate buyer as the seller's agent.
(IR-2023-139., August 3, 2023.)
Most federal Reports of Cash Payments Over $10,000 must be electronically filed for 2024.
The IRS has announced that, effective January 1, 2024, businesses will be required to submit most Form 8300, Report of Cash Payments Over $10,000, electronically when they're required to file at least 10 information returns other than Form 8300.
(IR-2023-157.)
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.
Attention CPAs-would you like help with marketing your services?
Maybe I can help with writing promotional material and marketing ideas, including encouraging referrals from your current clients. Call me, Michael Gray, at 408-918-3161 or email mgray@profitadvisors.com.
Attention CPAs-do you need support for tax issues?
Michael Gray, CPA can help you with research and guidance on complex tax planning and tax return reporting issues. mgray@profitadvisors.com.
Attention Accountants! Speed up processing your 2019 business closings!
Do you still have 2019 business income tax returns on extension that need to be done? Check out this trial balance software, EZ Trial Balance, that's super-easy to set up and use. There is a desktop version and an online version. The online version includes consolidations and ratio analysis for analytical review. http://www.eztrialbalance.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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Michael Gray, CPA2482 Wooding Ct.San Jose, CA 95128(408) 918-3162FAX: (408) 938-0610email: mgray@taxtrimmers.comHours: 8am - 5pm PDT Monday - FridayFind us on Facebook
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