To help struggling taxpayers affected by the COVID-19 pandemic, the IRS has issued a notice, which provides penalty relief to most people and businesses who file or filed certain 2019 or 2020 returns late.
This includes nearly 1.6 million taxpayers who will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September.
A frequent question that arises when borrowing money is whether or not the interest will be tax deductible. That can be a complicated question, and unfortunately not all interest an individual pays is deductible. The rules for deducting interest vary, depending on whether the loan proceeds are used for personal, investment, or business activities. Interest expense can fall into any of the following categories:
If someone were to craft a “Mount Rushmore” featuring the likenesses of some of the most influential musicians of all time, Aretha Franklin would undoubtedly be on it.
Born in 1942, Franklin was more than just another singer or songwriter. She was a brilliant pianist. She penned some of the most influential songs of all time. She became a massive commercial success after signing with Atlantic Records in the 1960s, essentially creating her own genre along the way. The list goes on and on.
Having said that, it’s important to note that Franklin passed away in 2018 and when she did, she left some financial troubles behind her that her estate had to take care of. How much did Aretha Franklin owe to the IRS and what eventually became of the situation? The answers to those questions require you to keep a few key things in mind.
Aretha Franklin’s Estate Tax Problems: An Overview
When Aretha Franklin passed away a few years ago, the IRS quickly determined that her estate owed almost $8 million in back taxes. All of this further complicated a situation that was already ongoing, where family members were battling it out in court (and in the public eye) to see who was owed what in terms of the assets that the esteemed singer had left behind.
Aretha Franklin left behind four children – all boys – who quickly entered into negotiations with the IRS. After years of jumping through legal hoops, it seems like all parties have reached a conclusion that they are satisfied with. After the estate makes an immediate payment of $800,000 to the IRS, Franklin’s sons are allowed to continue to question the amount that they say is owed. So while it does not seem like the situation is well and truly over, it does appear that things are moving in the right direction.
All of this paints a very interesting picture of what happens to celebrities in these types of situations. Since Aretha Franklin died, her estate has been steadily making payments to address a long-term tax bill that was left behind. As of December 2021, it was estimated that the balance was still close to $4.75 million.
Of course, a situation like this one is unique because the estate will continue to generate revenue long after Franklin herself has left us all behind. When you’re talking about an average person, someone’s ability to generate revenue essentially ends when they pass away. When you’re talking about a recording artist like Aretha Franklin, her artistry will give for generations. Companies will continue to put out new compilations of her work, monetizing those songs along the way. People will continue to buy them. Her songs will get sold to streaming services that again generate revenue.
All of this begs the question – how do you stay out of trouble with the IRS if even someone like Aretha Franklin can’t? By hiring the right professional to make sure that everything is in order all throughout the year, of course.
At that point, the question becomes – what happens to all of that money moving forward? What percentage of it is allocated to pay off the tax bill that the IRS claims the singer/songwriter owes and what percentage goes to her sons?
If you’d like to find out more information about everything going on with the Aretha Franklin estate and taxes, or if you’d just like to discuss your own situation with an expert in a bit more detail, please don’t hesitate to contact our firm today.
If you pay attention to the financial news, you’ve likely heard that we may — or may not — be in the midst of a recession. While experts argue over whether or not two consecutive periods of falling gross domestic period necessarily confirm an overall decline in economic activity, small business owners have more pressing questions, like, “How is a recession going to affect my business?” and “What can I do to make sure my business survives?”
If you are an employee who works for tips and received more than $20 in tips during July, you are required to report them to your employer on IRS Form 4070 no later than August 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
For small business owners, in particular, growing a business has always been something of a challenge. On the one hand, you don’t want to grow too quickly – doing so can significantly damage the trajectory that you’ve set out on. But at the same time, you also don’t want to grow too slowly as this too can cause you to remain stagnant and get passed by some of your competitors.
August 10 – Report Tips to Employer
If you are an employee who works for tips and received more than $20 in tips during July, you are required to report them to your employer on IRS Form 4070 no later than August 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.
August 1 – Social Security, Medicare, and Withheld Income Tax
File Form 941 for the second quarter of 2022. Deposit or pay any un-deposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until August 10 to file the return.
The United States economy is nothing if not cyclical – which can be a good thing or a bad thing depending on when, exactly, you’re trying to operate a business.
According to one recent study, roughly 57% of small business owners say that they fear the U.S. economy will only get worse over the last year. Many are worried that if something doesn’t change, things could get as bad as they were in April 2020. Keep in mind that many of these small business owners are still very much feeling the impact of the onset of the COVID-19 pandemic that took place during that period of time.
This is the time of year for many couples to tie the knot. When you marry, here are some post-marriage tips to help you avoid stress at tax time.
