Those with foreign financial accounts now have longer to file FBARs. A 2015 law changed the due date for filing FinCEN Form 114, “Report of Foreign Bank and Financial Accounts,” to April 15 of the following year, with a 6 month extension allowed. The due date was previously June 30 of the next year … Continue reading FBARs

Apple Appeals EU Tax Ruling

Apple appeals EU tax ruling that it owes Ireland $14 billion. Apple has launched a legal challenge to a record $14 billion European Union (EU) tax demand. The mega company argues that EU regulators ignored tax experts and corporate law and deliberately picked a method to maximize the penalty. The European Commission said on Aug. … Continue reading Apple Appeals EU Tax Ruling

Corporate Tax Reform

  A shift of the tax burden? A brief from Washington, D.C.-based Tax Policy Center advocates shifting much of the tax on corporate income from corporations to shareholders, which “could be acceptable to both [major political] parties.” Corporate tax liability is “easy to manipulate” says the brief, “by the location of the corporation’s legal residence … Continue reading Corporate Tax Reform

Self-Employed Taxpayers

  Prove it! Self-employed taxpayers can generally lower their taxes by deducting reasonable business costs from their income, if they document the expenses. But when an artist deducted expenses related to traveling to France (with his family) to attend art classes, the IRS denied the deduction. The cash method taxpayer’s only evidence was “vague and … Continue reading Self-Employed Taxpayers

Payroll Tax Penalty Imposed

  Payroll tax penalty imposed. A person responsible for collecting and paying payroll tax can be held personally liable for willfully failing to do so. The penalty is 100% of the tax due. In one case, a doctor learned the employee he’d entrusted with these duties had instead embezzled $10 million. The doctor personally lent the … Continue reading Payroll Tax Penalty Imposed

Health Savings Accounts

  Bill would allow vets to contribute to Health Savings Accounts (HSAs). The U.S. House is considering the “Veterans TRICARE Choice Act of 2016.” After Dec. 31, 2016, the bill would allow individuals who are eligible to be covered under TRICARE (the Department of Defense health benefits program) and who aren’t on active duty to: … Continue reading Health Savings Accounts

Expecting Tax Cuts Next Year?

  Expecting tax cuts next year? President-elect Trump declared one of his top priorities to be passage of a “major tax bill lowering taxes in this country.” Affected taxpayers who believe that promise will kick in for 2017 should revisit their 2016 year-end tax plans as a way to maximize possible windfall savings next year. … Continue reading Expecting Tax Cuts Next Year?

Some Tax ID Numbers Expire Soon

  Some tax ID numbers expire soon. The IRS issues Individual Taxpayer Identification Numbers (ITINs) to those required to file or report information to the IRS, but who don’t qualify for Social Security numbers. Some taxpayers who use ITINs to file or report taxes must reapply before the end of 2016 because their numbers will … Continue reading Some Tax ID Numbers Expire Soon

Maximize Education Tax Benefits

  Maximize education tax benefits. According to the U.S. Treasury Department, many students may be forgoing education-related tax credits they qualify for, such as the American Opportunity tax credit and the Lifetime Learning credit. The Treasury has developed a fact sheet offering strategies that students and their families can use to maximize those credits and … Continue reading Maximize Education Tax Benefits

Calls Supposedly from the IRS

  Have you ever received a call, supposedly from the IRS, saying you owe taxes and need to pay NOW? A federal grand jury just indicted 61 individuals and entities, alleging they conducted such a fraud scheme. The U.S. Justice Dept. stated the criminal organization based in India claimed nearly 50,000 victims in the U.S. … Continue reading Calls Supposedly from the IRS

Charitable Easement Deduction Denied

  Charitable easement deduction denied. Contribution of a partial interest in property may yield a charitable writeoff, if the donation is for conservation purposes and meets certain conditions. But when a partnership took a $4.2 million deduction for a donation of a façade preservation easement on a historic district building, the IRS denied the deduction, … Continue reading Charitable Easement Deduction Denied

New IRS Numbers Are In

  New IRS numbers are in. The IRS just released its list of inflation-adjusted figures for 2017. Because of recent low inflation, some figures changed only slightly or remain unchanged from 2016. The announcement lists figures for more than 50 tax provisions, including tax rate schedules, the personal exemption and standard deduction amounts, figures related … Continue reading New IRS Numbers Are In

Divorce Didn’t Bar Foreclosure

  Divorce didn’t bar foreclosure. Both spouses in a community property state are liable for most debts incurred by either spouse, while married. In one case, federal liens were filed against a couple’s home because of the husband’s tax debt incurred during the marriage. After the divorce, the wife was awarded the house, which was … Continue reading Divorce Didn’t Bar Foreclosure

Oct. 17th Tax Filing Deadline

  Oct. 17 tax filing deadline coming up fast! The IRS reminds roughly 13 million taxpayers who requested an automatic 6-month extension for 2015 tax returns that, in most cases, they must file by Monday, Oct. 17. Extensions can’t exceed 6 months, but exceptions exist, including for members of the military serving in combat zones … Continue reading Oct. 17th Tax Filing Deadline

Concurrent Elections OK for Estates

  Concurrent elections OK for estates. IRS guidance modifies procedures for disregarding, for transfer tax purposes, a Qualified Terminable Interest Property (QTIP) election when the election isn’t needed to reduce the estate tax liability to zero. QTIP elections won’t be disregarded if the estate executor has made the portability election under tax law. Estates can … Continue reading Concurrent Elections OK for Estates

Olympians and Taxes

  Olympians and taxes. Currently, when U.S. Olympic athletes earn medals, they’re taxed on the value of the cash prizes. On Sept. 29, the Senate unanimously approved the “United States Appreciation for Olympians and Paralympians Act.” The House previously passed it. The bill eliminates tax on medals or other prizes awarded to Team USA athletes … Continue reading Olympians and Taxes

Insight into IRS Seizures

  Insight into IRS seizures. The collection of unpaid tax by the IRS generally begins with collection notices. The IRS considers a taxpayer’s ability to pay the tax and discusses alternative payment options, such as an installment agreement or offer in compromise. If these actions don’t produce results, the IRS has the authority to levy … Continue reading Insight into IRS Seizures

Information Security Plan

  Does your business or organization receive and store taxpayers’ personal information? The IRS just issued revised Publication 4600 with tips on safeguarding it. For example, limit access to the information to specifically authorized and designated individuals. Specify in contracts with service providers the safeguards they must follow and monitor how they handle information. Have … Continue reading Information Security Plan

Greater Proction for Some Taxpayers

  Greater protection for some taxpayers. The IRS set Oct. 24 as the target date for implementation of strengthened protection for e-Service users. All current e-Service users (individuals and businesses) are affected and must re-register and validate their identities. This includes individuals registered as: electronic return originators, transmitters, large business taxpayers with e-file mandates, software … Continue reading Greater Proction for Some Taxpayers

Ponzi Scheme Loss is Deductible

  Ponzi scheme loss is deductible. An estate was allowed to claim a theft loss deduction for losses incurred by a limited liability company (LLC) in which it held a 99% interest. The LLC’s sole asset was an account managed by Bernie Madoff, which, due to his Ponzi scheme, became worthless during the settlement. The … Continue reading Ponzi Scheme Loss is Deductible

Can the IRS seize a home?

  Can the IRS seize a home? Yes. In one case, a U.S. District Court granted approval to levy the house of a divorced man to satisfy his and his then-wife’s tax liabilities for multiple years when returns weren’t filed. In spite of valid IRS assessments, the amounts remained unpaid, which left the IRS no … Continue reading Can the IRS seize a home?

Bulk Land Sale

  Bulk land sale produced ordinary income. Assets such as land that are held for investment may qualify as capital assets and receive favorable tax treatment when sold. In one case, a taxpayer purchased 1,892 acres of property for development, but later sold most of the undeveloped land in bulk. The U.S. Tax Court held … Continue reading Bulk Land Sale

Government Accountability Office (GAO)

  The Government Accountability Office (GAO) performed undercover enrollment testing of Affordable Care Act insurance marketplaces for the 2016 enrollment year. “The health-care marketplaces’ eligibility determination and enrollment processes remain vulnerable to fraud,” a recent GAO report states. However, it notes “the results, while illustrative, cannot be generalized to the full population of enrollees.” Federal … Continue reading Government Accountability Office (GAO)

IRS Whistleblower Office

  Did you know Uncle Sam pays awards to people who provide “specific and credible information” about tax cheaters? The IRS Whistleblower Office issues awards of between 15% and 30% of the collected proceeds that stem from information regarding tax underpayments or violations of tax laws. The IRS just issued Publication 5251, The Whistleblower Claim … Continue reading IRS Whistleblower Office

Unsupported Business Deductions Denied

  Unsupported business deductions denied. Reasonable and ordinary expenses incurred in the conduct of business are generally deductible. However, one salesman was denied deductions for a number of expenses, including his cell and landline costs, due to a lack of substantiation. He presented invoices for several phones but didn’t show they were solely or substantially … Continue reading Unsupported Business Deductions Denied

Key 2017 Tax Items

  Key 2017 tax items estimated by Thomson Reuters Checkpoint based on inflation. Many tax items are adjusted annually for cost-of-living increases, using the average Consumer Price Index. Among key items projected for 2017 are the standard deduction at $6,350 for single taxpayers and $12,700 for joint filers (up from $6,300 and $12,600, respectively). The … Continue reading Key 2017 Tax Items

Ex-wife must pay tax on payments

  Ex-wife must pay tax on payments. The U.S. Tax Court concluded that payments by one spouse to another were alimony, deductible by the ex-husband and includable in the ex-wife’s income. The payments involved contingent legal fees paid to the ex-husband, an attorney, a portion of which were paid to the ex-wife in 16 payments. … Continue reading Ex-wife must pay tax on payments

Roth IRA Conversions

  Oversight group says Roth IRA conversion reviews need improvement. The IRS must strengthen how it handles potential noncompliance for Roth IRA conversions, the Treasury Inspector General for Tax Administration (TIGTA) said. The IRS allows some individuals to convert to traditional IRAs if they pay tax on the conversion. TIGTA found that an automated program … Continue reading Roth IRA Conversions

Tax-exempt claim rejected

  Tax-exempt claim rejected. The Court of Appeals for the First Circuit, affirming the U.S. Tax Court, ruled that a chemist who created herbal and other health supplements couldn’t retroactively assign income to a tax-exempt organization that he’d set up. The reason: The organization wasn’t incorporated until after the tax years in question. The appeals … Continue reading Tax-exempt claim rejected

Repeal to help seniors?

  Repeal to help seniors? The U.S. House of Representatives was slated to vote on H.R. 3590, the “Halt Tax Increases on the Middle Class and Seniors Act,” which repeals the Affordable Care Act’s raised income threshold (from 7.5% to 10%) for figuring the medical expense deduction for those age 65 and older. The 10% … Continue reading Repeal to help seniors?

Capital Loss Deduction

  Merger “break fee” may give rise to a limited capital loss. In guidance, the IRS determined that, when a canceled merger results in payment of a “break fee,” the corporation paying the fee has a capital loss, deductible to the extent of capital gains. In one case, two companies entered into a merger agreement. … Continue reading Capital Loss Deduction