Randall

Thanks. I didn't know that. Actually he prepared his own return by hand and paper filed it. After reviewing things, I'm not going to amend the return at all. I agree with the client and I'll just compose a letter for him to respond to the IRS letter.

I could use my eleven volume History of Philosophy.

What about the 941? Do we have to wait until Jan 23?

Client received a letter from IRS regarding 2021. He prepared his own return. I want to prepare an amended return for 2021. Should I efile the amended return and reference the efiled amended return in the letter responding to the IRS letter? Of should I include a paper return with the letter to IRS? I'm thinking the efiled return will be processed quickly and already be in the IRS system by the time IRS receives the letter and they can refer to it.

I'm still waiting on the client talking to his Fiduciary. But I keep seeing that the 25% of compensation applies to the limit the employer can take as a deduction. In other words, employee elects to defer $20,500 so that is a deduction as Salary. The employer can contribute up to 100% of compensation (assuming the plan allows). So an additional $40,500 (getting up to the overall limit of $61,000). But the employer would only be allowed to deduct $15,687 (25% of the salary of $62,750). This would leave an allowed contribution of $24,813 but not allowed as a deduction. So the S Shareholder would be reporting an additional pass thru income of $24,813. Not a big deal except if the person wants to then convert it all to a Roth. Then would the $24,813 be double taxed.

Yes, I've referred him to his Fiduciary for the Plan specifics and to verify with the Fiduciary's tax department, not just his rep.

I'm still puzzled as to what the 25% applies to. Seems contradictory.

Does the Jan 23 date include efiling an amended 2021 return?

It was probably a boilerplate. Client is talking to the Fiduciary and they will have the plan. Ha.

Thanks for your comments. I understand the busy time. I did find Pub 4222 which seems to support your comment about if employee elected zero contribution, then employer could still contribute $61,000. The wording in Pub 4222 says employer decides the percentage of compensation to contribute, which could be 100%. Client is talking to Fiduciary and will have the plan documented. His question to me was if he has already contributed too much and if he needed to withdraw the excess. Thanks again for your help.

I'm not sure he has a formal plan. I asked him to contact the Fiduciary. But I still can't find the Tax references to the limits in the way you're stating.

I'm still a little confused on the difference between EmployER matching and EmployER nonelective contributions. cbslee, are you saying if the employer plan desginates the employer will match the employee's elective deferral amount, then the employer can also contribute up to 25% of the employee's salary in addition to the matching amount? So in my case, the employee has elected to defer $20,500 (2022 dollar limit). If the plan allows for matching, the employer can then match the $20,500. This would total $41,000. Then the emloyer can make a nonelective contribution up to 25% of his salary (Salary of $62,750 at 25% or $15,687. This would total $56,687, still within the total limit of $61,000 for 2022. I'm still not finding a reference for this distinction in your links.

I'll check. But if anyone else has some thoughts on this, let me know.

I'm not seeing any difference in my situation. A solo plan is simply a 401k plan that has only one participant (or spouse) and is self-employed. I don't think an S Corp shareholder is considered a self-employed person. A safe harbor plan is one that has employer contributions fully vested and doesn't have to deal with nondiscrimination rules. I'm still left with my original question.

An S Corp, one shareholder, one employee, himself. My understanding of the 401 limits is a dollar limit for the employee contribution of $20,500 as long as there is W2 compensation to that limit. His W2 is $62,750. My understanding is that the employer contribution is limited to 25% of the compensation ($62,750 at 25% = $15,687). My reading says this limit is the allowable deduction. But does this mean the employer can contribute more, just can't take the excess as a deduction? The max dollar amount for the employer is $40,500. Does this mean the employer can contribute $40,500 but can only take a deduction of $15,687? If so, the S Corp profit will increase by $24,813 and shareholder will pay tax on the additional $24,813 as pass thru income. Further, client has employee contribution going into a Roth. He wants to convert the employer contribution to a Roth each year. If I understand this correctly, I want to advise him to keep the employer contribution to the 25% limit. Otherwise, I think he'll pay double tax on the $24,813. As pass thru income (higher S Corp profit) and again when the conversion from regular to Roth account.

Will these tax changes be effective for 2023? Hopefully none to affect 2022.

If the Estate Return 1041 is not required, do you file anyway and mark 'Final' just to close out the Tax ID number? I usually recommend it but I know others don't bother with the filing.

My experience on the tax side is many have trusts set up but don't understand what they are, how they work or the tax implications. Grantor, revocable, irrevocable, living?

I only have back to 2018.

A princess kept a view.

Can we renew PTIN yet or do we have to wait until Nov 1?

Congratulations. My ten year plan has 3 more years left. That's not definite but I'll play it by ear.

Thanks for the replies.

A general article indicated that the regs gave real estate agents the non-SSTB category. When I looked at 199A and the regs, I didn't see anything specifically listing RE agents one way or the other.

RE Agent is not specifically listed as a SSTB. But principal asset is their personal skill. I can't find anything specifically discussing a RE agent. Anyone have anything specific on this?