Archive for Charles Woodson

Tax Reform Enables Deferral Of Taxable Gains Into Investments In Opportunity Zones

Charles Woodson- Tax Reform Enables Deferral Of Tax

Those who have a large taxable gain from the sale of a stock, asset, or business and who would like to defer that gain with the possibility of excluding some of it from taxation should investigate a new investment called a qualified opportunity fund (QOF), which was created as part of the recent tax reform.

To help communities that have not recovered from the past decade’s economic downturn, lawmakers included in the Tax Cuts and Jobs Act the new code Sections 1400Z-1 and 1400Z-2, which are intended to promote investments in certain economically distressed communities through QOFs. Investments in QOFs provide unique tax incentives that lawmakers designed to encourage taxpayers to participate in these funds:

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Having Two IRA Rollovers In One Year

Charles Woodson - Having Two IRA Rollovers In One Year

Two IRA Rollovers In One Year Tax law permits you to take a distribution from your IRA account, and as long as you return the distribution to your IRA within 60 days, there are no tax ramifications. However, many taxpayers overlook that you are only allowed to do that once in a 12-month period, and violating this rule can have some nasty and unexpected tax ramifications.

The one-year period is measured based on the date a distribution is received. If the second distribution is received before the same date one year later, it is a disqualified rollover.
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Business And Personal Records: Are You Prepared For A Disaster?

Charles Woodson - Business And Personal Tax Records- Are You Prepared For A Disaster

This year’s wildfires, record rains, flooding, tornadoes, hurricanes and potential for earthquakes should all act as reminders that you should be prepared for a disaster. Sure, it will take some effort on your part and you may never be affected by a disaster, but if you are, you will sure wish you had been prepared. It can become a nightmare, whether it impacts you personally or your business.

Business Owners – If you are a business owner, unexpected events can have a devastating effect on your business. You need to be protected from any number of natural and unnatural events, such as fire, computer failure and illness or the loss of key staff, all of which can make it difficult or even impossible to continue day-to-day operations.

Good planning can help you take steps to minimize the impact of a disaster and protect your business. The following recommendations can help your business cope with an unforeseen calamity.

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Disabled Taxpayer Tax Credits And Benefits

Charles Woodson- Disabled Taxpayers Tax Credits And Benefits

Taxpayers with disabilities may qualify for a number of tax credits and other tax benefits. Parents of children with disabilities may also qualify. Listed below are several tax credits and other benefits that are available if you or someone else listed on your federal tax return is disabled.

Increased Standard Deduction – Tax reform substantially increased the standard deduction for 2018 to $12,000 for single filers, $18,000 for those filing as head of household and $24,000 for married filing joint returns. Tax reform also retained the standard deduction add-on for taxpayers who are legally blind. Thus, if a taxpayer is filing jointly with a blind spouse, they are able to add an additional $1,300 to their standard deduction; if both spouses are blind, the add-on doubles to $2,600. For other filing statuses, the additional amount is $1,600. While being age 65 or older isn’t a disability, it should be noted that the “elderly” add-on of $1,300 or $1,600, depending on filing status, has also been retained. These add-ons apply only to the taxpayer and spouse, and not to any dependents.

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5 Reasons To Amend A Previously Filed Tax Return

Charles Woodson - 5 Reasons To Amend A Previously Filed Tax Return

The most recent data from the IRS on individual tax returns (from the 2014 tax year) indicates that of 131 million returns filed, about 5 million were expected to be amended. This comes to less than 4 percent, but that projection still affects a significant number of taxpayers. Filing an amended tax return can be a hassle that you definitely want to avoid if possible. But there are some situations where you’ll have to do so, and it’s prudent to seek out the help of a tax advisor who can guide you through the process. Here’s why you may need to file an amended tax return.

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What Are The Penalties For Not Filing Your Tax Return?

Charles Woodson, IRS Penalties For Not Filing

Everybody knows the old saying about death and taxes, yet a surprising number of people fail to file an income tax return. If you’re one of those people and you think you’ll be able to slide by, you need to reconsider your position. Even if you’re unable to pay your taxes, you need to file a return. Not doing so will eventually lead to a domino effect of negative consequences.

No matter how many people have told you that it’s no big deal, or that the IRS has “bigger fish to fry” than you, the employees of the Internal Revenue Service have a job to do and a process that they follow. Even if no legal action is taken against you, failure to file a return will end up working against you. Let’s take a look at the rules regarding filing your taxes and the various outcomes that you risk:

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Tax Reform Eases The Alternative Minimum Tax – But It’s Still There

Charles Woodson, Alternative Minimum Tax

Although Congress has been promising to repeal the alternative minimum tax (AMT), they failed to do that when they passed tax reform in 2017. Instead, they lessened the effects of the AMT by increasing AMT exemptions (an amount of income exempt from AMT taxation) and raising the income thresholds for when the exemptions are phased out. These two steps and some other changes covered below lessen your chances of being hit by the AMT, but it is still there, so it is wise to be aware of how the AMT is determined and the things that might trigger it.

There are two ways to determine your tax: the regular way, which most everyone is familiar with, and the alternative method. Your tax will be the higher of the two.

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A Breakdown Of The Proposed IRS 1040

Charles Woodson, Proposed IRS 1040 Form

Remember the IRS’s promise about being able to file your income tax return using a postcard?

The reality of the new 1040 form is a far cry from a postcard. Although the administration insists that it has simplified the process of preparing your tax return, a few minutes of comparing the old 1040 to the new draft version shows that the redesign did little more than change it from the previous two-page form to two half-size pages – with six schedules provided separately. All but four of the 79 lines from the old version remain on the new one; they’re just divided up differently. Unless all of your income comes from wages, interest, dividends, pensions and Social Security, you will now have more schedules to fill out than you did before, and you still have a lot of work ahead of you.

How much new work does the revised version represent? Here’s a quick rundown of the six new schedules:

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Offer In Compromise FAQs

Chuck Woodson, Offer In Compromise

We’re all responsible for paying our fair share of taxes each year. But what happens when the amount that you owe is simply out of reach? What happens if you failed to make payments in a timely manner and your financial circumstances have shifted to the point where your cumulative debt is beyond your ability to pay? In the face of this untenable position, your best option for paying the IRS may be what is known as an Offer in Compromise.

The Goal of the Offer in Compromise

The Offer in Compromise, or OIC, was created to accomplish two goals: it allows American taxpayers who are unable to pay the full amount of their tax debt a way to negotiate a payment that is in keeping with their ability to pay, while at the same time providing the IRS with the ability to collect at least a portion of the amount that is owed to them. The process is neither simple nor fast: it generally takes at least one to two years for both sides to come to an agreement on an amount to be paid.

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10 Mistakes Most Small Business Owners Miss When Starting Out

Chuck Woodson, Mistakes Small Business Owners Make

The process of starting a small business can be an arduous one; there are numerous steps that need to be taken — and often in a precise order — to legally establish a business. As a result, the process can be overwhelming. Unfortunately, it’s also easy to overlook some important details and steps along the way. By being aware of a few of the most common legal and compliance mistakes made by small business owners when starting out, you can be better prepared for future success.

1. Misclassifying Employees as Independent Contractors

Regulators are coming down hard on misclassifications. The IRS estimates that this problem includes millions of workers. It is best to talk this through with an expert, but you can get some background on the guidelines at the United States Department of Labor website.

2. Choosing the Wrong Business Structure

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Thinking About Renting Out Your Home For A Short Period Of Time? You Better Know These Tax Rules!

Rented For Fewer Than 15 Days During The Year – When you rent out your home for fewer than 15 days total during the tax year, the rental income is not reportable, and the expenses associated with that rental are not deductible. However, interest and property taxes need not be prorated, and the full amounts of the qualified mortgage interest and property taxes you pay are reported as itemized deductions (as usual) on your Schedule A, if you itemize your deductions.

The 7-Day And 30-Day Rules – Rentals are generally passive activities, meaning that they are not treated as a trade or business and are not subject to self-employment taxes. However, an activity is not treated as a rental if either of these statements applies:

A. The average customer use of the property is for 7 days or fewer—or for 30 days or fewer if the owner (or someone on the owner’s behalf) provides significant personal services, or

B. The owner (or someone on the owner’s behalf) provides extraordinary personal services without regard to the property’s average period of customer use.

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