BREAKING NEWS – Corporate Transparency Act on Hold
as of Monday, March 3, 2024
On Friday March 1, 2024, the U.S. District Court for the District of Alabama declared the Corporate Transparency Act (CTA) unconstitutional. In the case of National Small Business Association v. Yellen (Case No. 5:22-cv-01448) [1], initiated by the National Small Business United, the challenge was against the CTA’s mandate for small businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
The ruling has the effect of suspending all BOI filing requirements for now, all enforcement actions, and all compliance concerns including questions of “practicing law without a license.” Experts believe the ruling will be appealed, probably to the Supreme Court, so this is a temporary filing requirement suspension until a final appeal is exhausted. Voluntary filing appears to still be allowed if for some reason a client desires to file.
Summer Income Tax Reminder
Students and other young people who earn summer income, including gig economy and other self-employment income, should prepare now for potential federal tax obligations. As a reminder, parents and guardians cannot generally include their dependents’ income on their own tax returns. Instead, young people who earn enough income to trigger a federal filing requirement must submit their own tax returns.
In particular, minors and young adults with self-employment earnings (including gig economy income) of at least $400 must file a federal tax return. In addition to federal income tax, these filers may also owe self-employment tax, which replaces the FICA (Social Security and Medicare) taxes that employers withhold from employee paychecks.
Americans of all ages with income from self-employment may need to pay estimated tax on a quarterly basis in order to avoid IRS penalties. Alternatively, if you have self-employment earnings but also work as an employee, you may ask your employer to withhold additional tax from your paychecks. The IRS Withholding Estimator tool can help you determine the correct withholding amount to cover your income and self-employment tax responsibilities.
You may also qualify to reduce your tax by deducting business expenses. In order to claim these deductions, you must maintain detailed records. A tax professional can help you comply with record keeping requirements, and fully prepare for any tax implications of your summer endeavors.