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Video instructions and help with filling out and completing Unpaid trust fund taxes

Instructions and Help about Unpaid trust fund taxes

Today is March 17th 2022 and I'd like to welcome to this webinar on resolving 941 tax debts my name is Jason Bowman from tax marketing hq.com and for the next 15 minutes we're going to be discussing the special situations involved in resolving 941 tax liabilities why the liabilities are such a huge enforcement priority for the IRS and exactly how you can go about helping your clients with these employment tax problems so we're also assessing some specific penalties and some appeals options and of course we cannot discuss the 941 landscape without also talking about the trust fund every penalty the trust fund recovery penalty itself is a topic worthy of an hour or two of its own but again it's it's impossible to discuss the employment tax liability resolution without delving into the the trust fund world so we will be covering that there are there are a lot of trust fund items that are outside the scope of specifically what I'm going to be talking about day and so in the future I will be doing another webinar specifically on trust fund issues because there's just so much to cover within that all right so real quick the suck penalties first the first couple you should already be familiar with the failure to file and failure to pay penalties the failure to file penalties add up pretty quick it's 5% per month for the 25 percent cap there's also a minimum in case the the balance due on the return is that a really low or the original balance due on the return I mean and again mine were talkin 941 taxes here so minimum penalty 135 dollars or 100 percent of the tax view whichever is less the failure to pay penalty the failure to pay penalty is on top of the federal tax deposit penalty and this is 0.5% per month with the 25 percent cap now keep in mind that the the 25 percent cap on on the failure to file in the failure to pay penalties is aggregate between the two penalties okay the other thing that's very specific to employment tax situations is the federal tax deposit penalty and the the FTD penalty is interesting because it's if the only it scales very rapidly okay and it is also the only penalty that we have that really gives us a look inside why employment taxes are such a big issue to to the IRS okay because you see how quickly they escalate if federal tax deposits and this applies by the way to monthly depositors semi-weekly depositor doesn't matter what their deposit schedule is so if the deposit is between 1 in 5 days late the penalty is only 2% if it's six days to 15 days late 5% 16 days or more it's 10% now once the IRS sends a bill you know they actually send a notice of deficiency on the lack of federal tax deposits usually.

FAQ

Is the IRS Trust Fund Recovery Penalty in addition to original tax amount? For example, if the unpaid taxes were $2500, and I was accessed a TFRP of $2500, is the total due $2500 or $5000?
A Trust Fund Recovery Penalty equals the unpai d amount of witheld income tax and social security tax withheld by an employer from employees in trust for the government. Employer contributions, penalties and interest are not considered trust funds.When it is apparent that an employer cannot pay withholding taxes due, a Revenue Officer will conduct an investigation to determine who was responsible. A Trust Fund Recovery will be asserted against the responsible person or persons.
How can I find out what happened to an old tax ID number from a trust fund?
If you can prove you are a trustee or otherwise authorized to speak on behalf of the fund, you can call IRS and ask.
How do I set up a trust fund and do I have to pay taxes?
Trust funds are set up for other reasons than tax avoidance and the reasons range from a public good activity like environmental protection to preserving assets in common for a family. Any property held by a Trust that earns an income as defined by IRD/IRS is liable for tax, unless the Trust is for charitable purposes, and then the Trust must be specifically registered as a charity. Ultimately there is no escape from death and taxes.
Why don't schools teach children about taxes and bills and things that they will definitely need to know as adults to get by in life?
Departments of education and school districts always have to make decisions about what to include in their curriculum.  There are a lot of life skills that people need that aren't taught in school.  The question is should those skills be taught in schools?I teach high school, so I'll talk about that.  The typical high school curriculum is supposed to give students a broad-based education that prepares them to be citizens in a democracy and to be able to think critically.  For a democracy to work, we need educated, discerning citizens with the ability to make good decisions based on evidence and objective thought.  In theory, people who are well informed about history, culture, science, mathematics, etc., and are capable of critical, unbiased thinking, will have the tools to participate in a democracy and make good decisions for themselves and for society at large.  In addition to that, they should be learning how to be learners, how to do effective, basic research, and collaborate with other people.  If that happens, figuring out how to do procedural tasks in real life should not prmuch of a challenge.  We can't possibly teach every necessary life skill people need, but we can help students become better at knowing how to acquire the skills they need.  Should we teach them how to change a tire when they can easily consult a book or search the internet to find step by step instructions for that?  Should we teach them how to balance a check book or teach them how to think mathematically and make sense of problems so that the simple task of balancing a check book (which requires simple arithmetic and the ability to enter numbers and words in columns and rows in obvious ways) is easy for them to figure out.  If we teach them to be good at critical thinking and have some problem solving skills they will be able to apply those overarching skills to all sorts of every day tasks that shouldn't be difficult for someone with decent cognitive ability  to figure out.  It's analogous to asking why a culinary school didn't teach its students the steps and ingredients to a specific recipe.  The school taught them about more general food preparation and food science skills so that they can figure out how to make a lot of specific recipes without much trouble.  They're also able to create their own recipes.So, do we want citizens with very specific skill sets that they need to get through day to day life or do we want citizens with critical thinking, problem solving, and other overarching cognitive skills that will allow them to easily acquire ANY simple, procedural skill they may come to need at any point in their lives?
Do I need to pay taxes on a trust fund?
The answer to this one, is like so many things in taxes: it depends.If you have what’s typically known as a grantor trust, estate trust, or estate bypass trust, where you are the person who formed the trust, have control of the assets, and are the beneficiary of the trust until you die, then, yes, you pay the taxes as Susan Yeatts has pointed out. The trust is simply a holding entity used to keep title, avoid probate, and simplify estate administration.Now, let’s make this more complex. Suppose you formed the trust, put assets in, and named someone else as the beneficiary ( such as a child ). Now, depending upon whether you can personally take money out, the trust income may become taxable to the beneficiary. In other words, you have given the money to the beneficiary, they just can’t get their hands on the principal ( or corpus ) yet, but it’s theirs…. and you have relinquished ownership to it.Let’s suppose you are the beneficiary. You will probably pay taxes on the income of the trust. The basic rule here is that the beneficiary pays the taxes on the income of the trust. You will receive a K-1 showing your proportionate share, assuming there are more than one beneficiary.But, of course, in taxes, it gets even more murky. There are two kinds of trusts: a simple trust ( which we have discussed so far ) and a complex trust. Basically, a complex trust can retain part of the income, and not distribute it. A complex trust pays taxes on any capital gains it incurs. The “ordinary” income, like dividends, interest and royalties, are generally passed through to the beneficiaries. However, a complex trust may be able to distribute the capital gains and pass the taxation along, just like a simple trust. Are you confused yet?Most CPAs and attorneys are close to clueless when it comes to how all these things work. Trusts are the brain children of clever attorneys and they can be very complex and the taxation mirrors this. Especially when it comes to estate planning, some of these things are marvels of obfuscation.If you are the beneficiary of a trust, you probably need a good CPA. If you are the grantor or trustee of a trust, you also need a good attorney.
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