Leaderboard

Problem Resolved: My client finally went back to the Credit Union who had issued the personal loan for the truck. The Credit Union made a business loan to the Corporation which paid off the personal loan. Then my client transferred the title from himself to the Corporation. Big Sigh - I was really not looking forward to dealing with this mess !

I think a parent can hire his/her child with FICA exemption and age restrictions, including a husband-wife only partnership. But, not an S- or C-corporation, even if parent is only shareholder.

Medlin is correct IF this isn't for household help. The employer isn't the child's parent, so that rule wouldn't apply and the entire $5,500 would be taxable for SS and Medicare. However, IF this is for household help, see the rules on this page that detail the age issue regarding SS/Medicare withholding: https://www.irs.gov/taxtopics/tc756

4. Taxable, IIRC grandchildren employees do not get the family exception. Of course, I am of the thought using the exception is not a good idea when the wages are not trivial. Less zero years for SS calculations, should benefits be needed before (if) the year drops out of the calculations.

https://www.nbcnews.com/news/us-news/fbi-agents-raid-home-ceo-connected-payroll-processing-fraud-n1055591

Ugly situation, but should end up teaching employers and employees a few hard truths. It makes Abagnale's suggestions very worth revisiting. We should all revisit our banking choices, as there are very easy to manage things we can do to protect our own positions.

I liked the old schedule. I'd send them out. Then get the calls about I Moved, Changed My Name When I Got Married or... But, still had time to correct the government file before sending. But I see their point. And, I hated those teeny, tiny verification codes that are only on one copy, so I miss them or the client didn't even give me the copy with the code. Good riddance.

I thought we always had to report W2s by Jan 31st! Those verification codes were a royal PITA and I still missed a quarter of them. Good riddance!

The problem is this is a semi-retired Corporate President, who doesn't come to work every day and when he does it's just for an hour or two. In addition the driver of the truck is his son who is the shop manager.

Agree with Max, and it could also be that he wouldn't get the best deal as a corporate customer, whether because of price or because of the interest rate on the loan. Aside from the tax implications, if your client is going to lease to the company, make sure that lease is formalized and includes a clause releasing him from personal responsibility in the event of accidents. He doesn't want to place his personal assets at risk because the vehicle is still titled in his personal name.

Sales people can be dishonest. It is not in their interest to prepare license and insurance papers for a corporate customer. Both of these would add to a higher price tag on the vehicle and could kill the sale. Many sales have died because of small things. With a nice commission hanging in the balance, the salesman doesn't want to see the customer walk.

"I learn something new every day." I try as well. I had not thought about household help, as it is not something I run across often. One of my umpire mentors always said it is better to be on the way up - the two choices were to be on the way up (learning), or on the way down (not learning)...

This won't answer your specific question, and presupposes the client will both listen to you and act in time. You can have people take out the excess for the two years from the later year's contribution, and then re-characterize (letter to the custodian should do it) the excess from the earlier year to be a regular, non-excess contribution for the later year. Example: $50 overcontib for 2017 and $75 overcontrib for 2018. Take $125 out of 2018, letter to custodian saying $50 of contrib for 2017 was really for 2018. Poof! It's done.

Nah. No war. Everything's copacetic. And you are right ("to thine ownself be true" - who was it said that? Howdy Doody? Hamlet?). As you said; it's important to keep on keepin' the kids straight. Mine are gone now--only IRS left to confuse. I'll mention the SE (and the warner) but it's like trying to sell overcoats at a July rummage sale - SE is "later", this is "now". Anyway I'm keepin' my fingers crossed -- don't want to break a winning streak. Friend, Bart

It skeered me when I saw I got quoted again, Buddy. I thought I had started a big ole war in our family here. Nope, I'm not always right, but I've got three kids watching me, and I try not to confuse them. Best regards to you, too, my friend, and thank you. You are so much fun. Your kinds words and sense of humor mean a lot to me. Just tell your cabin-flippers their danged SS checks are gonna be slim, and Rita warned em. I ain't even mad when people shoot themselves in the foot. They'll be posting those memes on The Facebooks asking, "How come Congress expects me to live off $12,000?!" Cause you been swearing you do, bless your heart...

There's no need to change the designation from passive to active. Keep it as "passive" if that is the client's actual participation. Even though your client is passive, he still has a share in the S corp's trade or business income that is flowing through to him as reported on his K-1, and he may have the QBI deduction depending on his taxable income. Enter everything as it is reported on his K-1. The specified service trade or business designation (SSTB) means that and the QBI deduction has additional limitations. If the taxable income is at or below $315,000 for joint filers ($157,500 all others), then the SSTB limitation on QBI deduction does not apply. Above that, the limitation on QBI begins to phase in between $315,000-$415,000 for joint filers and 157,500-207,500 for others.

Ha-ha! Girl, I just hate to argue with you about tax because you're always just so...so... (what's the word?) conscientiously right! And I have to give you credit 'cause those thinned-out Tennessee filers surely can't be as easily replaced as Lion's high-rollers from New York. So anyhow, keep that integrity intact; meanwhile I'm gonna see if I can scratch out a few dollars from cabin-flippers near Dogpatch. If it doesn't work out, stop by sometime on visitin' day. Best regards, BB