What is a Foreigner for US Tax Purposes? IRS Forms W-8BEN + 1042-S

I have had the pleasure of helping many people new to either living or conducting business in the USA determine their tax liability to the US Treasury and have grown increasingly surprised about the confusion over who or what type of entity is considered a foreigner for US Tax purposes. Correctly making this determination is…

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Alternative Minimum Tax – AMT and Unexpected Investment Income

It is no secret that the US Congress’ growing inability to agree on matters of substance is both disturbing and frustrating. The Alternative Minimum Tax (AMT) problem of not automatically adjusting for inflation is yet another example of the collective ineptitude of our elected officials. Without a comprehensive solution this FLAT TAX will eventually hit…

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Retirement Savings Required Minimum Distributions (RMD’s)

Many people turning 70 see themselves in the prime of their life. A pervasive problem among this group is this idea of a Required Minimum Distribution (RMD) from their retirement savings accounts. Many people do not like to withdraw money from their retirement accounts particularly with investments still negligibly recovering from the crash of 2008.…

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Nonprofit Formation – IRS Form 1023

Your organization can indeed be a nonprofit organization within your state but not be tax-exempt with the IRS. The only way to obtain FEDERAL 501(c)(3) tax-exempt status is to file IRS Form 1023. I’ve done this many times and felt compelled to blog about it today because the general confusion in these regards is astounding and the fees…

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IRS Offers in Compromise Work Under the Right Circumstances, but ….

The Offer In Compromise (OIC) is prepared on IRS Form 656 and must include a detailed statement of financial position with substantiating documentation (bank statements etc.) prepared on one of the many IRS Form 433’s. To know which 433 to fill out I suggest reading the OIC booklet produced on IRS Form 656-B. Not every…

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Late Filing 1120 Penalties

For those of you just now starting to get failure to timely file notices for your Subchapter S Corporation, the only relief available to the S corporation for the failure to timely file penalty under §6699 is reasonable cause. There are no provisions like those in partnership laws that allow the penalty to be abated…

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Reconstruction of Tax Records

Treasury Regulation 1.274-5 allows for a deduction without complete documentation if you can show that you have ‘substantially complied’ with adequate adequate record keeping requirements. This statute is code for … be nice to your examiner. Basically the practice of disallowing amounts claimed because there is no documentary evidence available to establish precise amounts beyond a…

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IRS Form 8941 Small Business Health Care Tax Credit

Check out IRS Form 8941, Credit for Small Employer Health Insurance Premiums (PDF) if you are interested in the small business health care tax credit. Many small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for the small business health care tax…

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2011 Per Diem Rates for Employee and Business Expenses

Revenue Procedure 2011-47 provides rules for using a per diem rate to substantiate the amount of an employee’s expenses for lodging, meals and incidental expenses that an employer reimburses. Employees and self-employed individuals who deduct un-reimbursed expenses for travel away from home may use a per diem rate for meals and incidental expenses under this revenue…

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Surviving Spouse Estate & Gift Tax Exclusion

IRS Notice 2011-82 makes available the ability for taxpayers to pass along their unused estate & gift tax exclusion amounts to their surviving spouse if an estate tax return is filed. This new portability election allows estates of married taxpayers to pass along the unused part of their exclusion amount ($5 million cap in 2011) to…

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