How to Determine What is a Business vs. What is a Hobby

Only by considering all the facts and circumstances of each situation can you determine whether an expense was incurred in a “trade or business,”and whether it was an “ordinary and necessary” expense for that business, making it a deductible expense. Before you

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Posted in Business Expense, Hobby

Questions Asked by the IRS in an Initial Interview Audit

The following is a sample set of questions the IRS uses when conducting an initial 'interview' Mandatory Statements/Questions by IRS: IRS Agent /Officer Name? Taxpayer Name? Audit Date/time? Do you have concerns regarding the audit process? I have enclosed a

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Posted in IRS Appeal, IRS Audit, IRS Collections, IRS Examination, IRS Penalties, IRS Penalty and Interest Abatement

Retirement Plan Early Distribution Tax Consequences

Payments received from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions. Early distributions must be reported to the IRS and are usually subject to an additional 10 percent tax.  Distributions you

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Posted in Retirement

Capital Gains and Losses – IRS form 1040 Schedule D

Everything you own and use for personal or investment purposes is a capital asset including a home, household furnishings and stocks and bonds held in a personal account.  When a capital asset is sold, the difference between the amount you

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Posted in Capital Gain, Capital Loss

Expanded 2011 Adoption Credit – IRS Form 8839

The Adoption Tax Credit in 2010 was increased to $13,170 and made refundable for qualified expenses paid to adopt an eligible child by the Affordable Care Act.  Basically this means that as a parent who completed an adoption in 2010

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Posted in Adoption

IRS Changes Lien Process

The IRS is making important changes to its lien filing practices that will lessen the negative impact on taxpayers. The changes include: Tax Lien Thresholds - The IRS will significantly increase the dollar thresholds when liens are generally filed. The

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Posted in IRS Levy, IRS Lien

Noncustodial Parent and the Dependency Deduction

The bottom line is that if your estranged spouse or X spouse is inappropriately claiming your child as a dependent you may encounter problems with the IRS.  If you are the custodial parent one solution that seems to help is

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Posted in Dependent

What Income is Taxable? What Income is NOT Taxable? IRS Publication 525

Generally, most income you receive is considered taxable but there are situations when certain types of income are partially taxed or not taxed at all.  Examples of NON Taxable income include: Adoption Expense Reimbursements for qualifying expenses Child support payments

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Posted in Taxable Income

What is an Enrolled Agent?

An enrolled agent (EA) is a federally licensed tax practitioner who has technical expertise in the field of taxation and is empowered by the US Treasury to represent taxpayers for audits, collections and appeals before the IRS.  Only enrolled agents

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Posted in Enrolled Agent

Documents Required When Negotiating Payment with the IRS

Alimony or Child Support Received Commission statement Completed Form 433- A, B or F Copies of delinquent tax returns and /or ASFR returns Explain in detail why the taxpayer is not able to full pay or borrow to pay Employer’s

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Posted in IRS Appeal, IRS Audit, IRS Collections, IRS Examination, IRS Levy, IRS Lien, IRS Penalties, IRS Penalty and Interest Abatement
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