taxes Archives - EricJohn Ltd | Tax and Accounting Services

March 7, 2019March 8, 2019

A Special Dispensation For Farmers and Fishers

Both the Internal Revenue Service and Minnesota’s Department of Revenue agree. Taxpayers who farm or fish for a living deserve a break this time around!

Most Individual farmers and commercial fishermen make a single estimated tax payment on Jan. 15 each year. If they don’t pay by March 1, they normally can be hit with penalties.

But, the IRS changed some rules for 2018 returns and apparently sowed some confusion into the mix for many of those taxpayers. Specifically, the IRS says it “anticipate(s) that farmers and fishermen may have difficulty accurately determining and paying their tax liability for the 2018 taxable year by March 1, 2019.”

So, now, if they missed that estimated tax payment, it’s OK. Farmers and fishers won’t face any federal penalties if they pay their full tax load by the normal April 15 deadline. The waiver does come with another form, though. Taxpayers invoking it must add IRS Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to their 2018 tax returns. There’s a box to be checked for a waiver.

We should note that, to qualify as a commercial farmer or fisherman, at least two-thirds of his/her gross income must come from farming or fishing. For more information, see IRS Notice 2019-17 at https://www.irs.gov/pub/irs-drop/n-19-17.pdf

Following the feds, Minnesota Revenue also is willing to waive penalties. But the state tax agency is telling those taxpayers NOT to file the normal state forms for underpayment (Forms M15 or EST). Instead, they can just file their normal Minnesota M1 or M2 returns and attach the federal form – plus any tax payment, of course.

To navigate the new tax break, feel free to contact Eric and EricJohn Ltd. who is an Enrolled Agent accredited by the IRS.

April 6, 2017April 6, 2017

SEP: A deadline loophole for self-employed taxpayers

Last week, we at EricJohn Ltd. suggested making contributions to traditional IRAs as a last-minute tactic to cut some income – and taxes – on a 2016 return. This year, those dollars must be deposited by April 18, so there is some urgency.

But taxpayers who are self-employed can stretch out that deadline for months if they have an SEP (or Simplified Employee Pension) plan, which is a specialized variety of IRA. They can create those extra months by requesting an extension for filing the tax return.

The Internal Revenue Service says that, unlike other types of IRAs, contributions to SEP-IRAs can be made until the due date for the return including extensions. This year, that’s October 16.

Sole proprietors and other self-employed business people with SEP-IRAs might find the longer period to be valuable. “Many clients will delay filing so they can collect from customers (sales) enough money to put a large sum into a SEP, thus significantly reducing their taxes,” says Eric Buechler, EricJohn Ltd.’s founder.

There are some technicalities affecting contributions from self-employed owners to their own SEPs. The IRS has thoughtfully put together an FAQ covering those and other SEP-related issues. Check online at https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps-contributions for that quick-answer sheet. For a more general explanation of SEPs, go to https://www.irs.gov/retirement-plans/choosing-a-retirement-plan-sep

But, for the personal touch, Eric is experienced in dealing with SEP-IRAs for small business clients. To pursue that strategy, now is the time to seek filing extensions.

February 3, 2017February 15, 2017

Warning! Warning!

The Internal Revenue Service says it is especially worried about the spread of an email phishing scheme to schools, hospitals and nonprofit organizations. The federal tax agency today issued an “urgent alert” warning employers about the potential for identity theft from W-2 forms.

“This is one of the most dangerous email phishing scams we’ve seen in a long time” said IRS Commissioner John Koskinen. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns.”

Employees of those institutions – particularly those working in payroll or human resources departments – should be especially wary in dealing with requests for W-2 forms, the IRS announced.

The online thieves typically send an email to a worker in a payroll or HR department, asking for a list of employees and their W-2s. The main trickery involves email addresses. The thieves “spoof,” or disguise, the address to look like the email came from a company executive.

When the worker sends the list, the scammers get valuable information, such as Social Security numbers, wage data, residential names and addresses, etc., which can be used to file phony tax returns, open credit cards or steal in other ways,

The phishing ploys were around last year, too, but they occurred heavily in the corporate world. Now they’ve spread to school districts, hospitals, nonprofits, employment agencies and even tribal organizations, among others. This year, the online thieves not only are bilking a broader range of businesses, but they also are striking earlier in the tax reporting season, the IRS and a group of cooperating tax agencies and industry groups called the Security Summit warned.

Some scammers also have used a more sophisticated version. They’ve teamed up the phishing scam with a wire transfer of money, again supposedly requested by the organization’s executive. “Some companies have lost both employees’ W-2s and thousands of dollars due to wire transfers,” The IRS said in its alert.

Feel free to contact us at EricJohn Ltd. for more information about business and individual taxes.