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Tax Articles

Is Your Filing Status Head of Household – IRS Publication 501

According to IRS Publication 501 if you are not married, but provide a home for a qualifying dependent, you may be able to use the head of household filing status. The head of household filing status provides a higher standard deduction, lower tax brackets, and generally a better tax outcome than the single filing status or married filing separately status…

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IRS Form 8863 + Publication 970 – Hope and Lifetime Learning Credits

According to IRS Publication 970 the modified version of the Hope Credit is now referred to as the American Opportunity Tax Credit (AOTC) and extended through 2012. The AOTC is available for the first four years of post-secondary education. It has been expanded so that qualified tuition and related expenses now include expenses for course books, supplies, and equipment needed for a course…

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IRS Interim Changes for Individual Taxpayer Identification Number Application (ITIN)

Interim changes for issuing Individual Taxpayer Identification Numbers (ITIN) have been announced by the IRS. ITINs are only issued to people who are not eligible to obtain a Social Security Number. During this interim period WHICH IS TO LAST UNTIL THE START OF THE 2012 TAX FILING SEASON, the IRS will only issue ITINs when applications…

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Service Fee v. Tip – IRS Guidance to Examiners

According to IRS administrative guidelines to its examiners concerning Rev. Rul. 2012-18, published in the 2012-26 Internal Revenue Bulletin, when performing a tip examination (aka audit), IRS examiners must ensure that service fees or charges are properly characterized as wages and not tips. If the payment is not a tip then it is a service charge and…

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Tax Implications of Inherited IRAs

Taxpayers who inherit IRAs also inherit the decedent’s basis or amount invested in those IRAs, regardless of the relationship between the beneficiary and the decedent. Ideally, the decedent will have filed IRS Form 8606 (Nondeductible IRAs), showing the amount of basis in the IRA. Any remaining basis in the IRA shown on Form 8606 then becomes the beneficiary’s basis. However, if the decedent…

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First-Time Home Buyer Credit – Nievinski v. Commissioner

According to Cary A. Nievinski v. Commissioner TC Summary Opinion 2011-10 even though IRS Form 5405 and IRS Publication 4819 provide only general instructions and do not address all the rules and limitations applicable to the first-time home buyer credit, the apparent failure of some IRS publications to explain the “no-purchase-from-family” limitation of the first-time home buyer credit has no effect on the authority…

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US Treasury SS-8 Determination of Worker Status for Purposes of Federal Employment Tax

In my dealings with the US Treasury Department regarding worker classification disputes I have learned that although in reality there may be shades of gray distinguishing between what constitutes an employee and what constitutes an independent contractor the US Treasury has some very specific positions.  Here are four that will hopefully help you make the…

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