The Federal government will require a new report for small businesses, called the Beneficial Ownership Information Report under the Corporate Transparency Act, effective January 1, 2024.
Tax tips and developments relating to S corporations
Federal tax return due date further extended for certain disaster area taxpayers
The IRS announced on February 24, 2023 the filing due date for 2022 federal income tax returns and certain payments of taxpayers in certain disaster areas has been further extended from May 15, 2023 to October 16, 2023. (IR-2023-33.)
California conforms to federal income tax return filing extension
The California Franchise Tax Board, which administers California's individual income tax and corporate franchise tax, has announced it will conform to the federal extension of time to May 15, 2023 for making payments and filing income tax returns that are due during the period January 8 to May 14, 2023.
IRS filing deadlines extended for many Californians
The filing deadline for federal individual and business income tax returns (including Form 5500) of certain California taxpayers with a due date on or after January 8, 2023 is extended to May 15, 2023.
IRS relief for domestic passthrough entity reporting requirement
The IRS is waiving the requirement to include international tax information Schedules K-2 and K-3 for most domestic partnerships and S corporations for tax year 2021 (IR-2022-38, February 16, 2022.)
California expands the passthrough entity tax
The passthrough entity tax is a workaround for the $10,000 individual income tax limit on the deduction for state taxes adopted in the Tax Cuts and Jobs Act of 2017. On February 9, 2022, Governor Newsom signed SB 113, which fixes some of the issues with California's passthrough entity tax.
Domestic passthrough entities must include new international forms
According to the new instructions, domestic partnerships (including most LLCs) and S corporations must include new Schedules K-2 and K-3, reporting the owner's share of international transactions, even when the entity had no foreign activities.
Oopsie! California wages aren’t reduced for Employee Retention Credit
According to 2020 FTB Publication 1001 (Revised November, 2021), page 13, the federal reduction of wages doesn't apply on the California income tax return.
IRS employee retention credit guidance confounds tax professionals
According to the Notice, whether wages of controlling owners of a business and their spouses qualify for the employee retention credit depends on whether they have certain relatives.
Tax deadline extended, but not really
Most significantly for individuals who are small business owners and investors, the extension doesn't apply to the first estimated tax payment for 2021