Is My Charity Legitimate with the IRS

Now is a GREAT TIME OF YEAR TO MAKE A CHARITABLE DONATION if you are so fortunate. When you make a donation to a charity you may be able to take a deduction for it on your tax return as long as you secure the proper documentation substantiating the donation and its subsequent value. In…

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Tax Practitioner Fraud and Incompetence US Treasury Circular 230

Lately I’ve been getting deluged with cases involving blatant US Treasury Circular 230 violators of regulations governing practice before the Internal Revenue Service. The perpetrators it seems come from all walks of life, some are unregulated tax return preparers while others carry multiple licenses, designations and/or degrees. The accumulated data however indicates that the most…

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IRS Request for Miscellaneous Determination – IRS Form 8940

The IRS has released Form 8940, Request for Miscellaneous Determination that tax-exempt organizations will use to request certain determinations about their tax-exempt status.  In addition to foundation status issues, organizations will use this new form to obtain advance approval of certain activities and exemption from IRS Form 990 filing requirements.  Organizations applying for recognition of exemption and at the same…

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IRS Collection Limitations

There are several options available through the IRS to resolve delinquent tax obligations and/or request relief.  One of the many reasons you need to be careful when engaging the IRS in these regards is because many of the programs including offer in compromise, collection due process appeal, and innocent spouse request extend the amount of…

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Severance Payments and FICA Tax

Generally severance payments made to terminated employees have been held by the US Tax Court to be FICA wages because the definition of “wages” for FICA purposes found in the Internal Revenue Code is so broad. “Wages” include all remuneration or money paid for employment with 23 listed statutory exceptions to the definition. A federal…

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Mortgage Interest Allocation

I received a very interesting question from my last post on mortgage interest concerning allocation for tax deduction purposes. This post is a summary of research conducted in these regards on the National Association of Enrolled Agents web site. For example sake generally speaking if you have a $110,000 mortgage outstanding on your personal residence and this…

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Mortgage Refinancing Tax Deductible Expenses

With mortgage rates at levels not seen in generations and the banks finally starting to lend again many people have been calling with questions about the tax implications of refinancing. It can be a little confusing and this is my best attempt at explaining it in general terms without hitting line item detail of a…

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Municipal Bond Interest Can Be Taxable – Make Sure You Trust Your Broker Is Competent

I am so sick and tired of late night commercials selling snake oil. My latest angst comes from claims of tax free municipal bonds. Not all municipal bonds offer tax free interest so the next time slick Rick the broker harasses you to buy his latest municipal bond be sure to ask him if the…

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Foreign Income Reporting IRS Publication 515

IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, includes a table of income source rules, including pay for personal services, interest, rents, royalties, income from natural resources, scholarship and fellowship grants, and guarantees of indebtedness. I must write from experience that identifying income is best accomplished if the type of income named on an invoice is…

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IRS Audit Guidelines Assessing Asset Dissipation

If you are delinquent on taxes you may be considering some IRS payment arrangement whereby your total tax liability will be considered satisfied in exchange for a payment plan that is less then the full amount owed. Two different plans that I have had success with lately are Offers In Compromise and Partial Payment Installment Agreements. Usually…

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