Summer | 2018
(714) 505-9000 | 17501 East 17th Street, Suite 100 | Tustin, CA 92780
Are LLC members subject to self-employment tax?
Ambiguity in the tax code and regulations has led many limited liability company (LLC) members to take an aggressive position regarding self-employment (SE) tax. They claim that their distributive shares of LLC income — after deducting compensation for services in the form of guaranteed payments — aren’t subject to the tax. Recently, however, the IRS has been cracking down on LLC members it claims have underreported SE taxes. This article provides a definition of SE taxes and examines whether LLC members must pay SE tax. A sidebar notes proposed regulations that contemplate situations in which an active LLC member can exclude certain amounts from self-employment income.

Know your tax obligations before hiring household help
There are several reasons for hiring household help, including child or elder care or general cleaning and yard maintenance. However, when a person hires outside help, he or she becomes an employer. Thus, that person has specific tax obligations, such as withholding and paying Social Security and Medicare (FICA) taxes and possibly federal and state unemployment insurance. This article examines the tax-related responsibilities associated with hiring outside help.

Ease new itemized deduction limitations using a nongrantor trust

Record-high exemption amounts mean that fewer families are affected by gift, estate and generation-skipping transfer (GST) taxes. As a result, the estate planning focus for many people has shifted from transfer taxes to income taxes. One tool that can be effective in reducing income taxes is a nongrantor trust, which offers a way around the new itemized deduction limitations imposed by the Tax Cuts and Jobs Act (TCJA). This article explains the role nongrantor trusts play in easing the itemized deduction limitations. 

Tax Tips

These brief tips explain that home equity loan interest may still be deductible post–Tax Cuts and Jobs Act (TCJA), detail two changes the TCJA made to business losses, and discuss whether a qualified personal residence trust is still relevant today.

Firm News:
Nicolas K. Waldenmayer & Donald W. Watson Promoted to Partner 
Tustin, CA, - HMWC CPAs & Business Advisors is pleased to announce that Nicolas K. Waldenmeyer and Donald W. Watson have been promoted to partner at the firm.

Nicolas Waldenmayer - READ MORE
Donald W. Watson - READ MORE
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