For the first time, the IRS is registering all those who prepare tax returns for a fee. This will allow the government to monitor preparers and issue sanctions for bad behavior. However, the registration requirement does not extend to volunteer preparers who prepare taxes for seniors and low income individuals for free.
Tax Court rules in favor of taxpayer with rental property
January 30, 2012 By
Gains on sales of homes bought for rent, but never actually rented, can be considered passive income. This allows the taxpayer to net the gains against passive losses, which often carry forward unused. (Vandegrift,TC Memo 2012-14)
New Reporting Requirement for Offshore Assets
January 30, 2012 By
Taxpayers with foreign bank accounts have long been required to disclose them to the IRS. Now the disclosure extends to other assets as well. Married couples with foreign assets of at least $100,000 on the last day of the year, or $150,000 at any time during the year must file Form 8938.
Businesses should buy assets by December 31
December 3, 2011 By
If you are planning to buy qualifying assets it makes sense to purchase and put them into service before the end of the year. New assets with useful lives of 20 years or less qualify for 100% bonus depreciation.
Shift income if you can to 2012
December 3, 2011 By
Businesses who are able to delay billings can defer taxes until next year.
LIkewise, if you have the cash on hand to pay bills you have in 2011, you can minimize your taxes for this year
Still more medical expenses allowed
December 3, 2011 By
The IRS has conceded that the cost of gender reassignment surgery is a medical expense. In a 2010 Tax Court case, a man diagnosed with gender identity disorder was allowed to deduct the cost of surgery and hormone therapy to become a woman. The IRS has decided to follow this ruling and not disallow such deductions taken by taxpayers.
More medical expenses allowed
October 9, 2011 By
A special diet prescribed by a doctor can qualify as a medical expense as long as it costs more than your normal diet. A private letter ruling says you can deduct the difference. Fees paid to alternative medicine practitioners such as chiropractors, acupuncturists and Christian Science practitioners are deductible.
Outside payroll firms can be penalized for not paying
October 9, 2011 By
If your payroll firm didn’t forward your payroll taxes to the IRS, you were out of luck. But a new IRS memo to field agents says they will assess the trust fund recovery penalty of 100% on payroll firms and employee leasing companies. This is good news for employers as long as the payroll firm hasn’t absconded with the funds.
New reporting for credit card sales
October 9, 2011 By
Starting this year, credit and debit card companies (and Paypal) will issue the new form 1099-K showing payments made to merchants. These amounts will be reported separately on business’ tax returns, whether they are Schedule C, corporations, or partnerships. The IRS expects this to reduce underreporting of income.
IRS Sends Out 20,000 Letters This Month But Don’t Panic
August 16, 2011 By
If you are one of the randomly selected recipients, don’t panic. The IRS is sending out surveys to revise its estimates of how much time is spent on recordkeeping and tax preparation. They are also sending 24,000 surveys to business filers.