I’ve had that happen with several clients. First red flag was not faxing the 2553 and reiterate with the customer about receiving the 2553 and to make the CPA aware when the form is received to have a copy. The IRS oftentimes does not send 2553 acceptance letter with many clients. And you’re right it’s that second year it rejects when the IRS doesn’t process it. At that point it is always a good idea to send the 2553 again with reasonable cause with 2nd attempt letterhead and that works
I have a tax business and when I submit these forms for clients I always Fax AND mail. On the mail copy I add a cover letter stating “duplicate submission, original faxed on (enter date)”. I usually file extensions automatically for my clients early and that’s when you can find out they don’t have “s-status” because extensions will be rejected if your status doesn’t match (they have you as a C Corp, and try to extend as an SCorp). Thanks for your content Jasmine.
I’m 61 years old and carrying $98,000 in debt, $45,000 in credit cards, $20,000 on a car loan, $18,000 in personal loans, $15,000 from a failed business venture. I’m seeking guidance should I tackle high-interest debts first or smaller balances for momentum? How can I negotiate with creditors to ease the burden?
I have also been advised on that. Finding one who understands what I want and can work with me to achieve it is essential, although I'm yet to find one. Any recommendations, please?
My CFA, Joseph Nick Cahill, is a renowned figure in his field. I recommend researching his name online; you'll find all his credentials and everything you need to work with a reliable professional. With many years of experience, He is a valuable resource for anyone looking to navigate the financial market.
My brother started working with Joseph Nick Cahill a few years ago He's managed to reduce his taxable income significantly by making smarter investment choices and taking advantage of deductions he didn't even know existed.
I have worked at a couple firms and have noticed that some CPA firms bite off more than they can handle and do not have the time to follow up on items like this and try to blame it on clients by saying they let them know, but i think its our duty to walk them through these matters as the best CPAs actually care about their clients and dont just view them as billable hours. (CA CPA)
The IRS Taxpayer Advocate Service might be appropriate in this case if they had done everything right; however, some risks in their fact patterm: they don't have a copy of the first 2553, the later 2553 didn't have the full SSN or percent of ownership or shares, they didn't ink-sign it, no reasonable cause for late filing. Also, need to explore the risk that she should have been an employee instead of 1099, with hindsight giving a clear answer.
Another awesome episode of you helping people keep these videos coming. They provide a lot of good insight and even for myself to be able to better advise people.
Passing the CPA exam doesn't make you a tax expert and less if it has to do with IRS procedures. It's a misconception society have on CPA. An EA have more knowledge than a CPA in tax matters because Part 3 of the EA exam talks about representation in the IRS, the CPA exam doesn't have that.
It does go over some basic processes like 30 day letter and 90 day letter and the court procedure but nothing like this or all the different forms you have to fill out and how.
@@K7ZHK The CPA exam cover Part I and Part II of the EA exam but in lesser depth as REG have other matters apart from Tax. There is a new discipline part that a CPA candidate can choose if desired that one that talks about Tax planning, but that is just it. The benefit of hiring a CPA still is that they are bound to a more stricter ethical code than just Circular 230 that can make your point valid.
@@christiancarrion291 I’ll have to look into the differences more - thanks for the comments. I’m in the middle of my EA exams so maybe it’s just because it’s so fresh in the mind that I thought of the EA part 3 penalty sections.
I love the grounded reality of this channel!!! *If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you..prevent inflation.*
I feel sympathy and empathy for our country, low income earners are suffering to survive, and I appreciate Wayne. You've helped my family with your advice. imagine investing $30,000 and receiving $95,460 after 28 days of trading.
Honestly, our government has no idea how people are suffering these days. I feel sorry for disabled people who don't get the help they deserve. All thanks to Mr Michael Wayne, imagine investing $1000 and receiving $5700 in a few daysday
Did someone just mention Mr Wayne!? Damn! You just made my day; what a coincidence.. I've worked with him for over 2years and I can tell how good he is
This was great! Thank you. There was so much confusion when I filed for s classification too. I sent the 8832 and got no response into an employer told me they couldn’t process my company without an election letter. I still have to get with my CPA because I got a 900 tax bill from 2022 and I think this is why
I'm retired at 47, This video here reminds me of my transformation from a nobody to having over 65,000 biweekly profit, a honest partner and a good daughter full of love ❤
Another red flag is her employer treating her as a 1099, does she fully meet the IRS definition of an independent contractor or did her employer just tried to avoid paying their share of payroll taxes?
I have friends in a similar situation, they have intellectual property owned by the LLC which the “employer” is paying for besides just labor. The IP value is not subject to payroll taxes. I don’t know the details of this couple, but it could be similar.
What if you filed a late election and accidentally marked it as 1/1/23 when you meant to write 1/1/24? Do you wait or resubmit form to hopefully override the first 2553?
So what was the justification for the S-Corp over Schedule C in the beginning? The S has to pay out all the income to the taxpayer, where it is taxed, just the same as if the same income (and deductions) were on the Schedule C, doesn't it? Would the IRS really penalize you for filling out the forms incorrectly, if the liability didn't change?
There are apparently no retained earnings. So, while if the C-Corp paid out all it's net income as dividends, there would be a corporate tax, but if the surplus is paid as wages, then the C-Corp would have had no net income and no corporate tax liability. Since it would be required to pay out reasonable compensation, I expect the later would be the case for this taxpayer.
#jasminedilucci, Thanks so much for posting this. I filed for S corp election this year and never got a confirmation from the IRS. So glad you are posting this info for all of us to be aware. My accountant also said that year one of an S corp you do not need to pay reasonable salary as the owner. I can't get a straight answer from anyone else if this is correct or not. What do you think?
I am a CPA. honestly, i do not know of any regulations or cases or anything that lend credence to that. I do believe the IRS would be pretty lenient on that first year filing about “reasonable comp”, but if you have 0 or very low salary while showing tax free distributions from the s corp in very high amounts i would not expect the IRS to give that a pass if it were brought up in an assessment/audit. the substance over form in that case would be intentional avoidance of a lot of self employment tax so i can’t see that flying
With the GOP and incoming administration threating Social Security my question is. Can we or will we see the public sue the Federal Government for the SS payments to be returned? As SS admin charges interest and penalties, we the public should as well.
Here is a what would you do scenario. Taxpayer files a 2023 tax return and LLC on a Schedule C pays 25k in SE tax , made 200k net..... something told her that she overpaid in taxes so she filed to be an S election and although she claims that she asked to be an S-Corp as of 1/1/24 , IRS said she will be an S as of 1/1/23 So she said wow, IRS granted me free money and she prepared the late S-Corp, same net as the Schedule C and now wants me to prepare her amended 1040 to remove the sch-c, add the new K1 and boom get refunded all the SE taxes....of.course she argues that the IRS is making her do this and did not allow her time to act like an S corporation by doing reasonable salary. Want would the famous Jasmine do???? Or advise clients what to do?
I’ve had that happen with several clients. First red flag was not faxing the 2553 and reiterate with the customer about receiving the 2553 and to make the CPA aware when the form is received to have a copy. The IRS oftentimes does not send 2553 acceptance letter with many clients. And you’re right it’s that second year it rejects when the IRS doesn’t process it. At that point it is always a good idea to send the 2553 again with reasonable cause with 2nd attempt letterhead and that works
I have a tax business and when I submit these forms for clients I always Fax AND mail. On the mail copy I add a cover letter stating “duplicate submission, original faxed on (enter date)”. I usually file extensions automatically for my clients early and that’s when you can find out they don’t have “s-status” because extensions will be rejected if your status doesn’t match (they have you as a C Corp, and try to extend as an SCorp). Thanks for your content Jasmine.
Loving these client cases. Keep them coming!!
I’m 61 years old and carrying $98,000 in debt, $45,000 in credit cards, $20,000 on a car loan, $18,000 in personal loans, $15,000 from a failed business venture. I’m seeking guidance should I tackle high-interest debts first or smaller balances for momentum? How can I negotiate with creditors to ease the burden?
Consulting a financial advisor can help tailor a strategy that aligns with your financial goals and circumstances.
You're speaking from experience?
I have also been advised on that. Finding one who understands what I want and can work with me to achieve it is essential, although I'm yet to find one.
Any recommendations, please?
My CFA, Joseph Nick Cahill, is a renowned figure in his field. I recommend researching his name online; you'll find all his credentials and everything you need to work with a reliable professional. With many years of experience, He is a valuable resource for anyone looking to navigate the financial market.
My brother started working with Joseph Nick Cahill a few years ago
He's managed to reduce his taxable income significantly by making smarter investment choices and taking advantage of deductions he didn't even know existed.
I have worked at a couple firms and have noticed that some CPA firms bite off more than they can handle and do not have the time to follow up on items like this and try to blame it on clients by saying they let them know, but i think its our duty to walk them through these matters as the best CPAs actually care about their clients and dont just view them as billable hours. (CA CPA)
This is super helpful even as bookkeeper for my clients to help them stay complaint.
If you were to teach tax procedure in an accounting program, what textbook or practice manual would you use or recommend? Thanks.
The IRS Taxpayer Advocate Service might be appropriate in this case if they had done everything right; however, some risks in their fact patterm: they don't have a copy of the first 2553, the later 2553 didn't have the full SSN or percent of ownership or shares, they didn't ink-sign it, no reasonable cause for late filing. Also, need to explore the risk that she should have been an employee instead of 1099, with hindsight giving a clear answer.
Another awesome episode of you helping people keep these videos coming. They provide a lot of good insight and even for myself to be able to better advise people.
Love your channel. Thank you for your great content. Please do more long form content like this
Long video to say, 3 year late election.
From now on im certifying mail all the time to the irs
That CPA honestly should be looking at fines for gross negligence. Idk how you pass the CPA exam and make those mistakes.
Passing the CPA exam doesn't make you a tax expert and less if it has to do with IRS procedures. It's a misconception society have on CPA. An EA have more knowledge than a CPA in tax matters because Part 3 of the EA exam talks about representation in the IRS, the CPA exam doesn't have that.
@ interesting - I didn’t know that. I thought the CPA exam was essentially the EA exam with additional information/tests.
It does go over some basic processes like 30 day letter and 90 day letter and the court procedure but nothing like this or all the different forms you have to fill out and how.
@@K7ZHK The CPA exam cover Part I and Part II of the EA exam but in lesser depth as REG have other matters apart from Tax.
There is a new discipline part that a CPA candidate can choose if desired that one that talks about Tax planning, but that is just it.
The benefit of hiring a CPA still is that they are bound to a more stricter ethical code than just Circular 230 that can make your point valid.
@@christiancarrion291 I’ll have to look into the differences more - thanks for the comments. I’m in the middle of my EA exams so maybe it’s just because it’s so fresh in the mind that I thought of the EA part 3 penalty sections.
I love the grounded reality of this channel!!!
*If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you..prevent inflation.*
I feel sympathy and empathy for our country, low income earners are suffering to survive, and I appreciate Wayne. You've helped my family with your advice. imagine investing $30,000 and receiving $95,460 after 28 days of trading.
Honestly, our government has no idea how people are suffering these days. I feel sorry for disabled people who don't get the help they deserve. All thanks to Mr Michael Wayne, imagine investing $1000 and receiving $5700 in a few daysday
I'm in a similar situation where should I look to increase income? Do you have any advice? What did you do? Thank you
I will recommend. Michael Wayne . Investing Services. to you. He is good at what he does.
Did someone just mention Mr Wayne!? Damn! You just made my day; what a coincidence.. I've worked with him for over 2years and I can tell how good he is
First time here and your AWESOME at what you do thanks ❤❤
This was great! Thank you.
There was so much confusion when I filed for s classification too.
I sent the 8832 and got no response into an employer told me they couldn’t process my company without an election letter.
I still have to get with my CPA because I got a 900 tax bill from 2022 and I think this is why
I'm retired at 47, This video here reminds me of my transformation from a nobody to having over 65,000 biweekly profit, a honest partner and a good daughter full of love ❤
Another red flag is her employer treating her as a 1099, does she fully meet the IRS definition of an independent contractor or did her employer just tried to avoid paying their share of payroll taxes?
I have friends in a similar situation, they have intellectual property owned by the LLC which the “employer” is paying for besides just labor. The IP value is not subject to payroll taxes. I don’t know the details of this couple, but it could be similar.
What if you filed a late election and accidentally marked it as 1/1/23 when you meant to write 1/1/24? Do you wait or resubmit form to hopefully override the first 2553?
Ive esigned many 2553 but lately they've been rejecting it.
So what was the justification for the S-Corp over Schedule C in the beginning? The S has to pay out all the income to the taxpayer, where it is taxed, just the same as if the same income (and deductions) were on the Schedule C, doesn't it? Would the IRS really penalize you for filling out the forms incorrectly, if the liability didn't change?
The whole point is that the liability is different. The C Corp has double taxation and is generally less tax favored in most situations.
There are apparently no retained earnings. So, while if the C-Corp paid out all it's net income as dividends, there would be a corporate tax, but if the surplus is paid as wages, then the C-Corp would have had no net income and no corporate tax liability. Since it would be required to pay out reasonable compensation, I expect the later would be the case for this taxpayer.
#jasminedilucci, Thanks so much for posting this. I filed for S corp election this year and never got a confirmation from the IRS. So glad you are posting this info for all of us to be aware.
My accountant also said that year one of an S corp you do not need to pay reasonable salary as the owner. I can't get a straight answer from anyone else if this is correct or not. What do you think?
I am a CPA. honestly, i do not know of any regulations or cases or anything that lend credence to that. I do believe the IRS would be pretty lenient on that first year filing about “reasonable comp”, but if you have 0 or very low salary while showing tax free distributions from the s corp in very high amounts i would not expect the IRS to give that a pass if it were brought up in an assessment/audit. the substance over form in that case would be intentional avoidance of a lot of self employment tax so i can’t see that flying
@ thanks for the answer and I completely agree with your overall assessment. I am running payroll before the end of the year!
With the GOP and incoming administration threating Social Security my question is. Can we or will we see the public sue the Federal Government for the SS payments to be returned? As SS admin charges interest and penalties, we the public should as well.
If you want to take your parents house as your own when they die do you have to pay capital gains tax on?
Good morning. Love your channel. Insightful and I like to know more. So beautiful. ❤
Perfect.
Here is a what would you do scenario.
Taxpayer files a 2023 tax return and LLC on a Schedule C pays 25k in SE tax , made 200k net..... something told her that she overpaid in taxes so she filed to be an S election and although she claims that she asked to be an S-Corp as of 1/1/24 , IRS said she will be an S as of 1/1/23
So she said wow, IRS granted me free money and she prepared the late S-Corp, same net as the Schedule C and now wants me to prepare her amended 1040 to remove the sch-c, add the new K1 and boom get refunded all the SE taxes....of.course she argues that the IRS is making her do this and did not allow her time to act like an S corporation by doing reasonable salary.
Want would the famous Jasmine do???? Or advise clients what to do?
I want to open an LLC causeI want to start a business
You say "like" a lot. Is that a Cali thing?
😊
Are you aware of this law? th-cam.com/video/MdRhnB4-swI/w-d-xo.html
would like your opinion if this is true 🤷🏽♂️
Just get a pardon