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Tax Articles

What is Self Employment Income

Some kinds of income may or may not be self-employment income. The source of your income and your involvement in the activity from which your income is received will determine whether it is self-employment income. INTEREST – Interest is not self-employment income unless you receive it in your trade or business, such as interest on…

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IRS Examination Techniques for Cash based business

Since many businesses in industry are cash oriented, have weak internal controls, lack an audit trail, and have inadequate books and records, the examiner’s audit should focus on probing for unreported income.  It is the responsibility of the business owner to maintain the documents needed to verify their reported income.  When the source documents are…

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Estate Tax Planning Opportunities

Being able to make transfers of up to $5 million ($10 million per couple) without having to pay gift taxes allows for planning opportunities that, combined with leveraging strategies, can transfer huge amounts of wealth. These include: Simple Gifts – Being able to give up to $5 million ($10 million per couple) in a lifetime…

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Tax Filing Status

The first step to filing your federal income tax return is to determine which filing status to use. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household…

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LOOKOUT SMALL BUSINESS OWNERS FILING IRS Form 1120-S or 1065 – Net Operating Loss (NOL) Carry backs trigger Alternative Minimum Tax (AMT)

Please be advised that Net Operating Losses carried back to previous tax years can trigger an Alternative Minimum tax liability in the previous tax year that the loss was carried to, even if you originally did not have a tax liability in the year the loss was carried to. More importantly the Internal Revenue Code…

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Who should and who must file an income tax return – refundable tax credits

To determine if you are obligated by law to file a US tax return and pay US income taxes you should consult the instruction book that accompanies the IRS form 1040.  You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age…

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Situations that would not qualify for IRS Fast Track Mediation

  1. Issues for which there is no legal precedent

  2. Issues where the courts have rendered opposing or differing decisions in different jurisdictions

  3. Industry Specialization Program issues

  4. An issue for which you filed a request for competent authority assistance

  5. Service Center penalty appeals cases

  6. Service Center Offer in Compromise cases

  7. Collection Appeals Program cases

  8. Automated Collection System cases

  9. Constitutional issues

Choosing a Tax Preparer

If you pay someone to prepare your tax return, know that you are legally responsible for what’s on your tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent…

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IRS USE OF HARD-CORE ENFORCEMENT TOOLS, ESPECIALLY TAX LIENS

The Taxpayer Advocate’s 2010 annual report to congress describes continuing concern that IRS collection practices inflict unnecessary harm on financially struggling taxpayers and fail to achieve the IRS’s overriding objective of increasing long-term voluntary compliance with the tax laws.  “Tax collection requires a delicate balancing of the government’s interest in collecting revenue and ensuring that…

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