May 2024 Tax Update - Key Changes & Insights

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Inside This Article

Welcome to the May Monthly Tax Update 2024, where we bring you the latest changes and insights in the tax landscape. Our experts, Jason Dinesen and Nicholas Preusch, have analyzed the newest updates to ensure you're informed and prepared. From new forms to legislative changes, we've got you covered.

Introduction

In this edition, we dive into the most significant tax updates for May 2024. Jason Dinesen and Nicholas Preusch provide their expert analysis on crucial changes affecting tax professionals. Whether you're dealing with the new Form W-9, the latest IRS releases, or corporate transparency updates, this blog will help you navigate these changes with confidence. Read on to discover actionable insights and key takeaways that will keep you ahead of the curve.

New Form W-9 & Employee Reimbursements

Understanding the New Form W-9

The IRS has released an updated version of Form W-9, and it’s essential for businesses to start using it immediately for new contractors and when updating information for existing ones. The form includes critical updates that reflect current compliance requirements. Unlike past announcements, there hasn't been a mandated start date for this new form, so adopting it as soon as possible is the best practice.

Employee Reimbursements

Expense reimbursements have also seen significant updates. It's crucial to distinguish between accountable and non-accountable plans:

Accountable Plan: Reimbursements under an accountable plan are not taxable to the recipient. These reimbursements require proper documentation, such as receipts or adherence to per diem rates, and any excess reimbursement must be returned within a reasonable time.

Non-Accountable Plan: If reimbursements do not meet accountable plan criteria, they are considered contract labor pay and are taxable. This means both the business and the contractor must handle these reimbursements differently for tax purposes.

Legislative Updates & New Publications

House Passes Disaster Relief Bill

The House has passed a crucial Disaster Relief Bill. This bill aims to provide significant aid and support for disaster-stricken areas. Although the Senate has yet to pass it, the bill has widespread support and is expected to bring much-needed relief once enacted.

New Offer in Compromise Book

The IRS has released a new Offer in Compromise (OIC) book. This publication is essential for professionals dealing with tax debt resolution. Ensure you are using the latest forms and guidelines from this updated resource to effectively manage OIC cases.

Corporate Transparency & ERC Audit Update

Corporate Transparency Update

Corporate transparency remains a hot topic. Despite ongoing debates and resistance, the push for greater transparency continues. Staying informed on these developments is crucial for ensuring compliance and advising clients appropriately.

ERC Audit Update

The Employee Retention Credit (ERC) audit process has undergone significant scrutiny. According to a recent ABA webinar, failing to show a nominal impact through declining gross receipts or other qualifying criteria results in unfavorable audit outcomes. It is imperative to maintain thorough documentation and clear justification for ERC claims.

Key Takeaways

Adopt the New Form W-9 Immediately: Begin using the updated Form W-9 for all new contractors and when updating existing contractor information.

Understand Reimbursement Plans: Ensure reimbursements meet accountable plan criteria to avoid unnecessary taxation and compliance issues.

Stay Updated on Legislative Changes: Keep an eye on the progress of significant bills like the Disaster Relief Bill to advise clients effectively.

Utilize New IRS Publications: Make use of the latest IRS resources, such as the new OIC book, for accurate and effective tax management.

Maintain Corporate Transparency: Stay informed about ongoing transparency requirements and their implications for businesses.

Prepare for ERC Audits: Ensure proper documentation and justification for ERC claims to avoid unfavorable audit outcomes.

Conclusion

Staying ahead in the ever-evolving tax landscape requires continuous learning and adaptation. The May Monthly Tax Update 2024 provides valuable insights and actionable information to help you navigate these changes. By understanding new forms, legislative updates, and audit processes, you can ensure compliance and provide the best advice to your clients. Stay tuned for more updates and insights from MY-CPE.

FAQs

When should I start using the new Form W-9?

Immediately. There hasn't been a mandated start date, but adopting the new form as soon as possible is recommended.

What is the difference between accountable and non-accountable plans?

Accountable plans require proper documentation and are not taxable to the recipient, while non-accountable plans are taxable and considered contract labor pay.

How does the new OIC book help in tax debt resolution?

The new OIC book provides updated forms and guidelines for effectively managing Offer in Compromise cases, ensuring compliance and efficiency.

What should I know about ERC audits?

Proper documentation and clear justification for ERC claims are crucial. Failing to meet qualifying criteria results in unfavorable audit outcomes.

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Jason Dinesen

President, Dinesen Tax & Accounting, P.C.

Jason Dinesen (LPA, EA) is an entrepreneur, tax expert, and CPE Presenter. Dinesen brings over 15 years of experience helping individuals and businesses with accounting, bookkeeping, tax preparation, and business advisory in various industries. Dinesen is a regular CPE Presenter at MYCPE ONE. He has coached more than 200k+ accounting, taxes, and HR professionals on various topics of accounting, individual taxation, corporate taxation, and professional ethics. Jason has developed a strong following within the professional community for tax-related subjects. Dinesen is known for sharp tax interpretations, and he quickly brings his analysis of the latest tax updates and IRS guidance to the professional community.