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Just venting. Lady I know from non-tax work came to me quite some time ago with a final 1040 and estate income return for her dad. They've been all done and about ready to print for a while, just waiting to know if they need K-1's for beneficiaries or if the estate held the income (not much, so not a huge deal). I got an email from her about two months ago saying she HAD K-1's from who-knows-where?! Said I needed to see them before finalizing - because this is NOT a tax person, for all I know she meant a 1099-R from an IRA distribution. Now there's a new email saying the sister - wants her accountant to review my work before they send anything in. I'm still waiting for K-1's - or whatever the bleeping forms were - before releasing anything! Can I dope slap her now? Give her a Rita hug? *Something*? Argh. Not the way I wanted to start my week. Thanks for letting me vent.

You have my permission, Catherine.........Just make one of these and sneak it into her house....

This is a great reminder of the work Eric does for us behind the scenes, so I am donating toward his efforts and the new hardware. Thank you, Eric. The donation link is at the top of the forum or by clicking here.

Copied from Forbes: Late December’s Fleischer v Commissioner involves facts that are common among many small business service-providing taxpayers wishing to minimize self-employment liability by setting up S Corporations and funneling service income to those corporations. Unfortunately for Fleischer, the Tax Court found that he faced a sizable self-employment tax liability as it reallocated income that was reported on the S Corporation’s 1120-S to his Form 1040. The case is in the category of who is the appropriate taxpayer, an issue that sometimes gets murky when taxpayers are dealing with closely or solely-held separate entities. I will summarize and simplify the facts somewhat and hone in on why the taxpayer lost despite the plans of both a CPA and lawyer advising on his tax structure. The Facts of Fleischer: Setting up an S Corp to Avoid Self-Employment Tax Fleischer is a licensed financial consultant. Based on the advice of his CPA and lawyer, he set up an S Corporation. Fleischer was the president, secretary, treasurer and sole shareholder of the corporation. Fleischer entered into an employment agreement with the S Corporation, and pursuant to that agreement the S Corp paid him a salary in his capacity as financial advisor. In his individual capacity, Fleischer also entered into contracts with financial service companies Mass Mutual and LPL. Those contracts generated significant commissions, which Mass Mutual and LPL reported to the IRS and to Fleischer individually on various Form 1099’s over the years. The key to the employment tax savings when all works well in this structure is that the S Corp pays a salary less than the gross receipts it receives. The shareholder/employee has employment tax liability to the extent only of the wages that the S Corp pays to the shareholder/employee. Fleisher paid employment tax on his wages from the S Corp. And while Fleisher’s status as sole shareholder meant that all of the S Corp’s income would flow through to him, the nature of the income matters. Individuals who earn service income directly have to pay Social Security and Medicare taxes, which are often referred to collectively as the self-employment tax. [Note that the tax rate for Social Security taxes is 12.4% and the rate for Medicare taxes is 2.9%; for 2017 Social Security taxes are levied only on the first $127,200 while the Medicare rate applies to all service income]. If the S corporation, rather than the individual, earns that income, then the S corporation does not have a separate employment tax liability and the shareholder does not have self-employment tax liability on his share of the S corporation’s income. Fleischer’s S Corp paid him a salary of about $35,000. The net income the S Corp earned varied over the years, going as high in one year as about $150,000. When, as was the case here, the S Corp’s wages paid are less than its net service income, the shareholder/employee can potentially avoid the self-employment income tax if that income were earned directly by the shareholder/employee or the employment tax if the S Corporation does not pay a salary commensurate with the corporation’s net income. Underlying this form, however, is the IRS’s ability to allocate the income to the party who truly earns the income. In addition, the compensation the S Corporation pays to its shareholder/employee must be reasonable; if too low IRS can argue that some of the distributive share should be characterized as compensation (Peter Reilly discusses one such situation in S Corporation SE Avoidance Still a Solid Strategy). The taxpayer’s reporting of the income and the mere creation of a separate entity do not give the taxpayer unlimited discretion to treat the income in the way most favorable to the taxpayer. As an important aside, the consequences of an LLC earning service income differ from that of an S Corporation. When an LLC earns service income, the distributive share of partnership income allocated to members of an LLC is generally subject to self-employment tax. This is a key difference between S Corporations and LLCs in this context The IRS position has been pretty consistent for some years. However as a practical matter the audit rate for S Corporations has been very low, less than 1 % I believe. As a result, I think that there are probably thousands of similar S Corporation returns that have been filed who are using this exact strategy. I don't know if the IRS even has enough manpower to audit all of these returns ?

Just a quick heads up -- I'll be upgrading my server to PHP 7 this evening, which will require a little bit of downtime. I'll be performing the work in the evening to reduce the burden on the bulk of my clients, so some time after 10pm Eastern Time (probably closer to 11pm). And then tomorrow there will be some additional downtime, although very short, when I upgrade to the latest version of the forum software. Sorry for the inconvenience! EDIT: It's a relatively minor forum upgrade. Mostly performance enhancements and bug fixes, but also some (very) minor new features that I doubt anyone will notice. After the upgrade: Ctrl+ENTER keyboard shortcut to submit a reply Some additional logic to help reduce double-posting If you're using multiple devices to browse the forum, you'll now be less likely to be logged out

Oh Catherine! We must accept each client with gratitude and bear their eccentricities with equanimity.

Christian, you left off the /s to show that was sarcasm.

@Elrod - Love it!!!

Yes, there are at least two methods to input the VA-6 directly to the website. If the client has a Business iFile account with the state, you can log into that account the same way you would to deposit their state withholding taxes or sales taxes, go to the same place you would pay the state withholding taxes and file the annual return. Another method is to use the Forms tab at the top of the Virginia site, the first item eForms, and scroll down to the VA6 and complete it as an eForm. If you have any problems let me know; I will be glad to walk you through this.

Something else I learned here - I did not even know left handed playing cards were a thing. Makes sense, once I looked them up and saw how they worked.

So you are required to have ID to file taxes, or more specifically, get your refund, but you do not need ID in NY to vote?