TaxConnections



Complimentary
Tax Blog Subscription




Want To Blog At
TaxConnections?
LEARN MORE

Special Needs Require Special Deductions

TaxConnections Picture - World with Children - 4-24-15 - square

Over the years I have worked with many families with special needs kids. I am amazed at their strength and the resilience of their spirit. The term “Special Needs” now encompasses more than what it used to and rightly so. It is truly phenomenal that studies show that the number of children diagnosed with autism, Asperger’s syndrome and many other neurological disorders continue to skyrocket. A recent report by the Centers for Disease Control estimated the rate to be as high as 1 in 50.

We know how disruptive the lives of families with special needs dependents are, which is only compounded by the fact that the costs of providing care to the dependents are very high. To further complicate things, parents or care-givers are not aware of possible tax deductions that can help alleviate some of these costs and they unknowingly forgo tax Read More

Revenue Magic (That Should Be Avoided)

Magician Hat with Magician Wand, vector icon isolated on white background

H.R. 1891 (114th Congress), the African Growth and Opportunity Act Extension and Enhancement Act of 2015, sponsored by Congressman Paul Ryan, extends the “African Growth and Opportunity Act, the Generalized System of Preferences, the preferential duty treatment program for Haiti, and for other purposes.” It is a revenue loser, but has a supposed revenue offset. That offset is really a fake in that it doesn’t raise any revenue, it just accelerates revenue into an earlier year that falls within the 5-year budget measurement period for the bill.

The shifting of tax revenues is accomplished by accelerating corporate estimated tax payments. H.R. 1891 proposes to modify IRC Section 6655 as follows: Read More

Is Your Refund Too High or Do You Owe Taxes? You Probably Need to Adjust Your W-4

TaxConnections Picture - W-4 - 4-24-15 - square

Article Highlights:

• Large Refund or Tax Due
• Employers Withhold Based on W-4
• IRS Online Withholding Calculator
• Self-employed Taxpayers

If your income is primarily from wages and you received a very large refund—or worse, if you owed money—then your employer is not withholding the correct amount of tax (but it probably isn’t your employer’s fault). Sure, you like a big refund, but you have to remember you are only getting your own money back that was over-withheld in the first place. Why not Read More

AICPA Recommends To The Service To Increase The Tangible Property Small Business Safe Harbor Rules

TaxConnections Picture - Capitol Building 4-23-15 - square

On Tuesday, April 21st The American Institute of CPAs (hereinafter the “AICPA”) has recommended to the Internal Revenue Service (hereinafter the “Service”) that the De Minimis Safe Harbor threshold amount under the Final Treasury Regulations governing Tangible Property be increased from $500 to $2,500 for small business entity taxpayers without an Applicable Financial Statement (hereinafter “AFS”).

Troy K. Lewis, the AICPA Tax Executive Committee Chair advised the Service that “the AICPA believes the requirement that a taxpayer have an AFS to use the $5,000 De Minimis Safe Harbor threshold unfairly discriminates against smaller taxpayers, and recommends an alternative test to allow such taxpayers to use the De Minimis rule.” Read More

Roll On One

W

James Moore received a temporary reprieve from a federal judge in Seattle, but, at least metaphorically speaking, he is still strapped onto the mercy seat in classic John Coffey style, waiting to see what the onlooking guards will do next. (See Video Clip Below)

No one really knows how Moore v. United States will turn out. What we do know is that, in a preliminary ruling, Judge Richard Jones declared that the IRS cannot spin the Wheel of Misfortune and arbitrarily determine the amount of a civil penalty in a Report of Foreign Banks and Financial Accounts (FBAR) failure to file case. The Service may well simply add to the record, and if that is the case, Judge Jones’ next order will be “roll on two.” However, there is a very good chance that this evidence does not exist, and in this alternative ending, an emotional Paul Edgcomb will quietly escort Mr. Moore out of the death house. Read More

Some Taxes You Pay Are Deductible

Taxes

Certain taxes you have paid can be allowable as itemized deductions. To be deductible, these taxes must have been imposed on you personally, and you must have paid them during the year.

The following taxes you paid during the year are deductible on Schedule A:

• State and local income taxes (from your W-2).
• Real estate taxes (deductible in the year you paid them).
• Personal property taxes charged on the value of personal property.
• Foreign income taxes paid.

Note carefully, however, that the following taxes are not deductible: Read More

Practitioner Fears Over LB&I Document Requests Not Substantiated In Practice?

TaxConnections Picture - IRS Man At Desk 4-23-15 - square
What Has Been Your Experience?

According to Bloomberg/BNA (subscription required) there hasn’t been a surge in the number of summonses from the Internal Revenue Service as its Large Business & International Division has shifted attention to new processes for information document requests, an IRS official said, alleviating some concern from practitioners about the effects of the processes.

“Since it’s been rolled out, there has not been a noticeable uptick in summons at all,” said David Bergman, an attorney in the IRS Office of Chief Counsel (Procedure & Administration), at an event April 15 hosted by the DC Bar Association Tax Audits & Read More

OVDP And Double Counting: Oh The Agony! – Part II

TaxConnections Picture - Dollar Sign In Sand 4-22-15 - square

This is a continuation of Part I. This hypothetical pertains to a taxpayer who has applied to OVDP and who has transferred assets from one foreign account, which was recently closed, to another during the disclosure period.

This is a simple example, yet it illustrates some of the common mistakes that are associated with double counting.

Joe has applied to the OVDP. He had two foreign accounts in 2010: one at Bank A and another at Bank B.

The opening balances in each account were as follows: Read More

International Grant Making – Watch Your Step

Charity sign

It is not uncommon for a United Stated-based organization to have activities in other countries.  Indeed, for many organizations international activity is their primary reason for existence and the thrust of their mission. Sometimes, these international activities may take the form of grant from the U S-based organization to an organization in another country. These grants may present some issues for the U S organization if they are not handled properly.

Federal law is not clear in regard to documentation requirements for grants made by a 501(c)(3) public charity to foreign organizations.  Specific laws do apply to 501(c)(3) private foundations.  The IRS has taken the position, however, that public charities should follow the expenditure responsibility rules that apply to private foundations in regard to foreign Read More

Deducting Medical and Dental Expenses

TaxConnections Picture - Reports 4-21-15 - square

It is very important that you keep adequate records of all your medical and dental expenses incurred, because if you incurred substantial expenses, you may be entitled to claim a deduction on your tax return. You can deduct medical expenses for yourself, your spouse, and all your dependents on your tax return. It is very important to note, however, that you can deduct these expenses only to the extent that they exceed 10% of your adjusted gross income. (For taxpayers 65 and older, up to tax year 2016, they can deduct expenses that exceed 7.5% of their income).

Deductible medical expenses include the following:

• Doctors, dentists, and other medical practitioners’ fees. Read More

Everything You Wanted To Know About FATCA IDES, But Did Not Ask!

N
Updated! IDES Web Pages

The following web pages or documents have been updated on the FATCA International Data Exchange Service (IDES) site:

IDES Alert Codes
• IDES Resources
• Global IT Forum

Updated! IDES User Guide (04-2015)

The IDES User Guide has been updated for April 2015 and includes enhancements Read More

Hillary Clinton Proposes Tax Increases

TaxConnections Picture - Tax Chart 4-21-15 - square

Here we go again! It is campaign season and some candidates just cannot wait to say how they are going to penalize business. Hillary Clinton is proposing a new scheme where businesses that manufactured things will be tax differently than businesses that are “trading” items. I am not exactly sure what this means but it sounds to me like a tax increase on service businesses and for people who invest in business.

Let us face it, manufacturing has been on a continual decline in this country for the past 60 years. The US is known for producing intellectual property and services that are the envy of the world. Hillary Clinton, as well as some of her tax and spenders just do not get it! If you increase taxes on something you will get less of it. Increase tax on business and you will have less business in the US. Read More

TaxConnections