Most owners of IRA accounts name a beneficiary or beneficiaries to receive the assets upon the death of the IRA owner. But much like the passing of other assets to heirs, IRA owners may be concerned about how the ultimate heirs will handle a potential lump sum of taxable money distributed directly to the heir or heirs upon the IRA owner’s death. Should a trust be an IRA beneficiary?

What is an IRA owner trying to accomplish by naming a trust as the IRA beneficiary?

A trust can be a useful planning tool, and I would argue it is a reasonable decision for persons who wish to direct or control how heirs are to receive assets…

Clients finding themselves in dire financial straits this fall? How about tapping into their IRAs or qualified plan accounts? Better hurry — the relaxed rules end December 31.

We are all painfully aware of the economic issues created by the coronavirus pandemic. You may find clients (or for that matter, yourself) in dire financial straits and wondering what alternatives might be available outside of filing bankruptcy. For you or your clients with IRAs or qualified plans, recent tax laws provide the means to access qualified plan money and perhaps avoid not just early withdrawal penalties but also tax on qualified plan distributions.

While I am not attempting to provide financial planning advice, and it could easily be argued that accessing qualified plans prior to retirement may be considered…

Why the Mixed Up Confusion? Well, More PPP Guidance: Enter the Paycheck Protection Program Flexibility Act (PPPFA) of 2020 (HR 7010)

[Want to listen to Bob Dylan while reading today’s blog post? Listen here.]

President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) of 2020 into law on June 5, 2020, which then becomes effective on the date of enactment.

The PPPFA makes the following changes to the PPP:

  • Time period (covered period) to use the funds for qualified expenses expanded from 8 weeks to 24 weeks
  • Borrowing deadline in still June 30, 2020.
  • The 75/25 Rule becomes a 60/40 rule with a “cliff”
  • The Period for Calculating FTEEs is extended
  • New FTEE Exceptions Based on Employee Availability Given Social…

Terms to watch for in this blog post: PPP, 75/25 Rule, Qualified Expenses, Covered Period, FTEE

On March 27, the federal government allocated $349 billion in forgivable loans to small businesses under the Paycheck Protection Program (PPP)(PL 116–136 §1102), which is part of the Coronavirus Aid, Relief, and Economic Stability Act (CARES)(PL 116–136). Unfortunately, it was depleted in less than a week and had to “recharged” with additional funds later in April.

Now that disbursement of the funds has begun, borrowers are shifting their focus (and their phone calls to us) on how to spend the money in the hopes…

Recovery rebate.
Economic impact payment.
Stimulus check.

No matter what they call it, if you have tax clients, they are asking you questions about the advance of a 2020 credit that they have received (or may not have received yet). Or maybe you have those questions yourself! In this post, Tom clarifies the parameters of these payments.

Towards the end of the video post, Tom shares some information on timing on when paper checks will be mailed out, depending on taxpayer AGI.

Give it a watch or check out the video transcript below.

Video transcription:

Hello again, everybody. I’d…

Tom walks us through the frequently asked questions as posted by the IRS regarding Notice 2020–18, which provides special Federal income tax return filing and payment relief in response to the ongoing COVID-19 emergency.


Filing and Payment Deadlines Questions & Answers:

State Tax Agencies:

Illinois Income Tax Filing and Payment Extension:

Tax School Facebook Group:


Tom O’Saben coming to you from my sheltering in place office in Maryville, Illinois. Hope you’re doing well and weathering this unprecedented circumstance in our country and for that matter in our world. And I’m hoping to give…

News Flash! Tax Professional Thinks He Sees His Shadow, but it’s the IRS…

Don’t be Punxsutawney Phil when it comes to potential identity theft. As a tax professional, you are required to have a data security plan.

Stop. Get a data security plan together.

Now, before you run back down into your burrow because you operate as a sole practitioner and believe these rules only apply to the ‘big boys,’ be aware that the IRS casts its shadow over you as well.

Remember the box you had to check when renewing your PTIN? …

Ever heard of a backdoor Roth IRA? Or for that matter, have you ever heard of a MEGA backdoor Roth IRA?

How does this work and is it legal?

The concept of the backdoor Roth IRA is designed for persons who have income too high to fund a regular Roth contribution. Remember that with a Roth, it’s not a question of whether or not the contribution is tax deductible (which it’s not). The issue is whether you can make a contribution at all. That issue is determined by the taxpayer’s modified adjusted gross income (MAGI). For 2019, a married couple filing jointly starts to lose the ability to fund a Roth IRA when MAGI reaches $193,000. By the time MAGI reaches…

Even before the TCJA introduced us to higher standard deductions, it has always been important for tax professionals to determine what borrowing against the primary residence has been used for, whether the loan was a first mortgage or a home equity line of credit (HELOC).

In this post, rather than concentrate on whether or not interest is deductible on Schedule A, I plan to concentrate on what the borrowing was used for. As we go through this, we’re going to assume your client’s principal residence is the collateral for the loan. …

New draft forms are here we say — doo dah doo dah
How do you think the final versions will play? Oh doo dah day
Comments they will fly
Changes they will try
I’m bettin’ we won’t know until next July oh doo dah day!

Draft 2019 Form 1040

On July 11, the IRS released a draft of the 2019 Form 1040. The comment period ended on August 15.

Notable Changes:

  1. Signature page moves back to page 2. Your signature indicates your numbers are accurate after you tell the government what your numbers are.
  2. IRA distributions are separated from pension distributions
  3. Capital gain line…

University of Illinois Tax School

University of Illinois Tax School is where tax professionals go to get timely updates and practical tips to help provide the best service to their clients.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store