Governor Newsom has announced that California is conforming to the federal extension of the due date for certain individual and business income tax returns and tax payments to October 16, 2023.
How you progress will depend more on your ability to get along with others, your social skills, than anything else.
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.)
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.
I'm going to focus on two tax provisions of the Infrastructure and Jobs Act that I expect will have the broadest impact.
Many high income and high net worth taxpayers will be relieved to learn that Biden's major revenue proposals are NOT included in the agreement.
If a taxpayer (same threshold for a single or joint return) has adjusted gross income of less than $150,000, up to $10,200 of unemployment compensation received is excluded from federal taxable income.
Effective for transfers after February 15, 2021, the exemption from reassessment only applies to the excess of the fair market value of a primary residence (qualifying for the homeowner's real estate tax exemption) over the transferor's assessed value up to $1 million.
Taxpayers located in California wildfire counties get tax return due date extension.
Normally distributions from IRAs that are required minimum distributions aren’t eligible to be rolled over. Required minimum distributions are amounts that are required to be distributed that are based on the life expectancy of the account owner once the account owner reaches age 70 ½ or usually based on the initial beneficiary’s life expectancy for an inherited IRA account.
As a relief measure, the CARES Act suspended required minimum distributions for 2020. The reason was the value of many IRAs had fallen and distributions would deplete the value of the account. The CARES Act was passed on March 27, 2020, so many IRA owners and beneficiaries had already taken distributions.
In addition to the prohibition from rolling over required minimum distributions, there are two other restriction blocking potential rollovers of the distributions. (1) Beneficiaries of inherited IRAs are prohibited from making rollovers and (2) Taxpayers are limited to one IRA rollover for a 12-month period.
The IRS provided additional relief from these requirements in Notice 2020-51. The IRS designates restoration of 2020 IRA required minimum distributions as “repayments.” As repayments, the restoration of the funds to an IRA is not a rollover. Since they are not rollovers, beneficiaries of inherited IRAs are permitted to make restorations and the limitation to one IRA rollover for a 12-month period doesn’t apply.
In order to qualify for this relief, a restoration must be completed by August 31, 2020.
If the deadline is missed, the only way to restore the funds will be as a rollover, subject to the once in a 12-month period limit and not available for inherited IRA accounts.
If you have a question about this matter, consult your tax advisor.