Are you a Real Estate Investor or a Real Estate Dealer?
You can have in your real estate portfolio both investor and dealer properties. This distinction is significant for tax purposes. Here is a snapshot of the potential tax differences: Suppose you profit $90,000 from a property sale: As a dealer, your tax...
Should You Repair Your Real Estate Property or Improve it?
The distinction between repair expenses and improvement costs can impact your tax benefits. The tax law categorizes repair and improvement costs differently. Repair expenses are generally more beneficial for tax purposes, providing greater after-tax cash value than...
Getting a Tax Penalty Abatement
Taxpayers in many situations are receiving notices of tax due from the Internal Revenue Service after filing a tax return, when they did not file, when they did not pay, or when they fail to deposit employment tax (TFR- Trust Fund Recovery). Unfortunately, many...
Is your Real Estate Activity a Business or an Investment?
The ability to deduct the costs of your real estate seminars, boot camps , or similar expenses largely depends on the nature of your real estate activities. Are they considered a business or an investment? This distinction is crucial for understanding your tax...
Are Corporate Advances to the Owners Salary, Loans, or Dividends?
If you operate your business as a C or an S corporation, and if you loan money to the corporation or the corporation loans money to you, you need documentation that the loan is indeed a loan. With the S corporation, the loan that fails as a loan can result in taxable...
Tax Filing Implications for US Citizens and Resident Aliens Working Abroad
Many taxpayers who live and work in various parts of the world, such as Switzerland, have concerns about their U.S. tax obligations. We want to alert you to the tax implications you might encounter as a U.S. citizen or resident alien living or working abroad. We are...
Proving your Business Travel Expenses to the Internal Revenue Service
This tax tip provides some crucial information on how to document expenses during a business travel. Corporation or proprietorship - If you operate as a corporation, the corporation should reimburse you for the travel expenses or pay for them directly. Remember, you...
A False Payment Plan Statement is Evidence of Tax Evasion
In United States v. Crandell, 2023 PTC 178 (5th Cir. 2023), the Fifth Circuit held that a district court did not abuse its discretion by denying a taxpayer's motion for mistrial after a jury convicted him of tax evasion under Code Section 7201 for...
Taxpayer Properly Excluded canceled Debt from Income
In White v. Commissioner (White v. Comm'r, T.C. Memo. 2023-77), the Tax Court held that the discharge of White's indebtedness of $14,433 was excluded from gross income. The taxpayer was entitled to exclude cancellation of indebtedness income resulting from the...
Abused Taxpayer Gets Tax Debt Relief
In Gans v. Commissioner, the taxpayer prevailed over the Internal Revenue Service by establishing that she was abused by her husband, among others, and consequently qualified for relief from joint tax liability. Married taxpayers are jointly and severally liable for...
Innocent Spouse Tax Relief
Marriage could bring heavy tax consequences that could be alleviated through careful tax planning strategies. Marriage planning should include discussion about tax. The subject of tax is even more important if you plan to execute a prenuptial or premarital agreement....
Tax Treatment of Property in a Divorce – Part 2 of 2
Generally, no gain or loss is recognized by either party on a transfer of property from an individual to a spouse, or a former spouse if the transfer is incident to divorce. When nonrecognition treatment applies under this rule, the spouse who receives the property in...
Tax Treatment of Property Transferred in a Divorce
Taxpayers' tax liabilities could be drastically changed after a divorce. However, when a couple is contemplating a divorce, a discussion with their lawyers and tax advisors related to tax implications of their divorce could greatly help in controlling the tax...
Why Taxpayers Need Representation to Resolve Tax Problems?
Getting a letter from the IRS could be very stressful. It gets worse when you spend time trying to resolve the problem yourself and you are not getting any positive result. IRS tax debt affects many aspects of our life. IRS problems could be extremely complicated....
The Tax Audit Procedure
The Internal Revenue Service would, in some cases, audit tax returns to ensure that taxpayers adequately pay their tax. Knowing what the IRS will look for during an audit and getting prepared in case of an audit save taxpayers time and money. A tax audit can go on for...
Tax Court Ruled Doctor Misclassified Workers
In Cardiovascular Center LLC v. Commissioner of Internal Revenue Service, the Tax Court had to determine the employment status of the workers at cardiovascular Center, LLC pursuant to IRC section 7436. In a Notice of Employment Tax Determination of Worker...
Hiring your Children to Reduce Tax Liability
Business Owners Can Hire their Children to Lower their Tax Liabilities Summer is coming! If you have not taken advantage of the tax benefit of hiring your kids because you want them to focus on their school activities, why not change your focus to get a huge tax...
The Expanded Home Energy Tax Credits
Taxpayers can save in tax by making certain energy efficient upgrades to their homes. The Inflation Reduction Act of 2022 expanded the credit amounts and types of qualifying expenses. Taxpayers can claim the Residential Clean Energy Credit and the ...
Understanding Offer in Compromise (OIC)
There are many ways to resolve a tax debt. We discussed several of them in previous tips. on this tip, we turn to Offer in Compromise (OIC). Taxpayers could consider applying for an Offer in Compromise when paying the full tax due could cause financial hardship. An...
You Could be Qualified for an Abatement of the Tax Penalty
The Internal Revenue Service will send notices to taxpayers in many situations after filing a tax return, when they did not file, when they did not pay, or when they fail to deposit (TFR- Trust Fund Recovery). Unfortunately, many taxpayers ignore the notices to their...
Could a Taxpayer Shift the Liability to the Tax Preparer for a Tax Problem?
Taxpayers are liable for every position taken on their tax return. You take a position on the return by reporting certain items of income and taking some deductions. When a taxpayer signs the return, the taxpayer attests under penalty of perjury that the statement...
Tax Collection Enforcement on the Rise and the Need for Representation
The 2023 tax filing season has come to its end. Many taxpayers have not filed their returns or have a tax due. The Internal Revenue Service (IRS) has been actively hiring employees, in part, to help in the collection of taxes due. In his address to Congress recently,...
An Installment Agreement Could be a Best Option When there is a Tax Due
The Internal Revenue Service send notices to some taxpayers after filing a tax return or when they did not file. Unfortunately, many taxpayers ignore the notices resulting in some severe consequences. Taxpayers must answer to correspondence from the Internal Revenue...
Are you Requesting an Extension to File Your Tax Return?
The deadline for taxpayers to file their tax return is April 18, 2023. An extension could be requested to file by October 16. It is reported by the IRS that an estimated 11,000,000 taxpayers do not file their tax return each tax year. As a result, every tax year...
How is your Lawsuit Settlement Taxed?
Lawsuit settlements are not all taxed similarly. Taxpayers may receive a substantial amount of money resulting from a lawsuit. There are some tax consequences of which you should be aware. The money you receive may be taxable and, in many cases, the attorney fees that...
An Overview of the IRS Audit Process
Taxpayers, in general, are in a partnership with the Internal Revenue Service. However, unlike in the case of traditional partnerships where two or more individuals mutually agree on the terms of the partnership, in this partnership with the IRS, the IRS sets the...
How to Resolve a Tax Issue
Taxpayers should explore their tax resolution options available. Million of taxpayers could not pay their taxes or failed to file their tax returns. The number gets higher every year. Some taxpayers incorrectly filed their return. Unfortunately, many taxpayers ignore...
A Lesson for New Business Owners
New business owners could learn from Gregg M. Kellett’s court experience (Gregg M. Kellett, T.C. Memo. 2022-62). In 2013, while working for the Bloomberg Industry Group, Kellett purchased the vizala.com domain name and formed Vizala, LLC of which he was the sole...
The Foreign Tax Credit
Your tax filing obligations follow you worldwide. However, there are several tax rules to avoid double taxation and to lower your tax liabilities. Taxpayers should keep track of their worldwide financial transactions. There are 7 categories of income: 1- Section 951A...
The Education Tax Credits
There are two (2) types of education related tax credit that taxpayers may claim for qualified tuition and related expenses paid or incurred during the tax year: The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The Protecting...
The Earned Income Tax Credit (EITC)
The earned income tax credit (EITC) is not for every taxpayer. As your income increases, the credit is reduced and it is phased out at an income level. Taxpayers should be more alert by looking for any schedule A and schedule C on their tax return if they are not...
Your Tax Filing Status
Taxpayers tax filing status is extremely important. They are 1) Single, 2) Married Filing Jointly, 3) Married Filing Separately, 4) Head of Household, and 5) Qualifying surviving spouse. Your filing status determines your filing requirements, your tax rates,...
Knowing Your Tax Return Could Save You Money
The IRS (IR-2023-05) announced on Thursday, January 12 that 2023 tax filing season will officially start on Monday 23, 2023. Tax returns could be very complicated for taxpayers. Regardless of the level of complication, all taxpayers could benefit by partially...
Tax Law Changes Affecting 2022 Tax Return
It is important to note that some tax credits return to 2019, post Covid-19, levels. Consequently, affected taxpayers will likely receive a significantly smaller refund this tax season compared with the previous tax year. Some changes include amounts for...
Getting Ready to File 2022 Tax Return
Taxpayers should only prepare their tax return when they have all their required tax documents. The IRS has not yet published the beginning and the end of the 2023 tax season. The returns cannot be sent to the IRS before the official start date of the tax season....
Year End Tax Planning Strategies. Part 4 of 4.
It is that time of year again where you should consider meeting with a tax professional to discuss any year end strategies that might reduce your 2022 taxes. The following are some of the tax breaks from which you may benefit, as well as the strategies that you could...
Year End Tax Planning Strategies. Part 3 of 4.
It is that time of year again where you should consider meeting with a tax professional to discuss any year end strategies that might reduce your 2022 taxes. The following are some of the tax breaks from which you may benefit, as well as the strategies that you could...
Year End Tax Planning Strategies. Part 2 of 4.
It is that time of year again where you should consider meeting with a tax professional to discuss any year end strategies that might reduce your 2022 taxes. The following are some of the tax breaks from which you may benefit, as well as the strategies that you could...
Year End Tax Planning Strategies. Part 1 of 4
It is that time of year again where you should consider meeting with a tax professional to discuss any year end tax planning strategies that might reduce your 2022 taxes. The following are some of the tax breaks from which you may benefit, as well as the strategies...
The IRS Could Levy on Taxpayers Social Security Benefit Beyond SOL.
The IRS could levy taxpayers social security benefit even after the expiration of the statute of limitation (SOL) In Ward Franklin Dean v. United States (USCA11 Case: 20-1442) on Appeal from the United States District Court for the Northern District of...
Why Taxpayers Need Representation before the IRS?
IRS Tax Collection Enforcement is on the RiseThe Internal Revenue Service has been actively hiring employees, in part, to help collect taxes due. IRS tax debt affects many aspects of our life. IRS problems could be extremely complicated. People often do not know where...
Getting Tax Penalty Relief Using Reasonable Cause Exception
Taxpayers are liable for every position taken on their tax return. When a taxpayer signs the return, the taxpayer attests under penalty of perjury that the statement made or the position taken on the return is accurate to the best of his or her ability. However, the...
Understanding what to Do when you Receive an IRS Notice
Taxpayers should take their tax notices seriously and explore their resolution options available. The 2021 tax season is officially over. Taxpayers who requested an extension had until October 17, 2022 to file their returns to avoid the late filing penalty. The...
2022 Inflation Reduction Act. Part 4 of 4
President Biden signed into law the 2022 Inflation Reduction Act (the Act), a major tax, healthcare, and climate bill that includes numerous provisions affecting businesses. Much of the Act is paid for by a minimum tax on corporations with more than $1 billion in...
2022 Inflation Reduction Act. Part 2 of 4
President Biden signed into law the 2022 Inflation Reduction Act (the Act). The Act includes numerous tax provisions for individuals - most notably an array of new tax credits relating to energy efficient homes, businesses, and vehicles. It also provides several new...
2022 Inflation Reduction Act. Part 1 of 2
President Biden signed into law the 2022 Inflation Reduction Act (the Act). The Act includes numerous tax provisions - most notably an array of new tax credits relating to energy efficient homes, businesses, and vehicles. It also provides several new healthcare and...