Talking with TaxSpeaker (Video 111)
1. Question on Social Security benefits when a Fire Fighter Pension is involved. The Fire Fighter’s benefits will decrease due to the Windfall Elimination Provision. However, how does this affect the spouse’s SS benefits. Are the benefits decreased for the spouse as well, even if she has worked and paid into SS her entire life?
2. Client has a qualified plan which he rolled into a new IRA in 2020. The client now wishes to “repay” the RMDs he took earlier this year from that qualified plan. Can he repay them to this new IRA before August 31 without penalty?
3. $12,700 standard deduction (not “personal exemption”) and $19,000 (not $20,000) of taxable income?
4. For substantial gainful employment purposes – is that gross income or net? I have a client (age 34) who is disabled but has a few cattle doing what he can. We file the cattle activity on Sch F and generally shows a loss or minimal income as he ends up paying other people for most of the animal care. He also has a small W-2 job working in an office making $8,000-$10,000 per year.
5. I have a client who wants to change entity from a SMLLC to an S Corp. The SMLLC disregarded entity received an EDL and PPP loan but they appear to have been utilized fully for payroll costs. Does changing to an S Corp in the middle of the forgiveness period put the forgivable portion at risk even though the funds have been used prior to the change?
6. Client bought his home in 2001 for $129,500. Lived in it through 2013. In 2014 he made it a rental property. At that time the estimated market value was $112,000. He now sold it in 2019 for $169,900. What is the most correct way to calculate his “taxable” gain on this sale?
7. My client opened a new LLC without my input. It is a two owner LLC and he has received his Federal ID number with a partnership status. First tax return will be due 4/15/2021. The two owners have decided they no longer want to be in business together. The result is a single member LLC that should be taxed as a schedule C or S-Corp. Can I file form 8832 with late election relief to change this from a partnership to a single owner electing to be disregarded as a separate entity? And then from 2553, if the decision is to change it to a S-Corp? OR is there a better way to achieve the end result?
8. Client received 2 EIDL loans 10,000 each and 200,000 PPP loan. The 2 EIDL loans were for disaster relief 10,000 and later 10,000 for full time equivalent employees. Since he got a PPP loan, does he need to repay back either of the 10,000 EIDL loans?
9. Should we fill the SBA loan forgiveness application? Or should we wait for the bank to issue their customized PPP loan repayment application?
10. If you get a advance under the EDIL does that have to reduce the amount of forgiveness.
11. During one of the recent videos in the series, Bob mentioned an electronic filing cabinet he uses. It was under $200. Could you please remind me the name of the program?
12. I have a client who recently married. The new spouse sent me the 2019 returns prepared by one of the big tax prep firms advertised on TV. That partnership return for an LLC showed income in Box 1 and guaranteed payments of $12,000 and only the amount of guaranteed payments as net earnings from self-employment. The K-1 listed the member as “individual passive”; obviously trying to avoid self employment tax on all the earnings. The taxpayer is self-employed, does all the work and has a 99% share; the other 1% being held by a daughter. On the individual return there was no QBI calculation. The upshot is the taxpayer should have had a substantial amount more of tax due to self-employment tax. I advised the taxpayer as such, leaving it up to the taxpayer whether to amend the return or not. The question is whether or not to take on the joint return for 2020 for my current client and the new spouse if no amended return gets filed? What would you do? Anything other than advise of the inappropriate reporting of the partnership income?
13. What should we do about the new executive order exempting wages