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Archive for Income Tax

Did You Pay Too Much In Prior Tax Years?

Charles Woodson, Tax Overpayment

Have you been preparing your own returns? If not, did you have someone prepare it who didn’t take the time to query you about possible tax deductions, credits or filing status options? If you answered either question yes, you could have missed out on a number of tax benefits that could have saved you big bucks in taxes.

If something was overlooked, there is still time to get a refund for 2015, 2016 or 2017 (or even 2014, for some state returns). So if you know you missed something, or even if you just want a professional to look over your past returns to see if something was overlooked, give this office a call.

Here is a list of some (but not all) frequently overlooked tax benefits that may apply to you. Some of these were extended to 2017 in a special bill passed by Congress in the middle of February 2018, so if you filed your 2017 return before that date or used a preparer who does not keep up with changes, there’s a chance one or more items may apply to you. Please note that the items listed below apply to years 2015 through 2017.

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Foreign Investment Into The U.S. Part II: Who Is A U.S. Person?

The U.S. income tax and estate tax both function under a system with only two possibilities, a taxpayer is either a U.S. person/domiciliary or not a U.S. person, referred to as a non-resident alien (“NRA”). There is no middle ground, it is an all or nothing system. Since U.S. tax law is based on this distinction, the first step in any analysis is determining the correct category.

The U.S. laws do not define who is an NRA, rather, they define who is a U.S. person, or for estate taxes a U.S. domiciliary. Therefore, NRAs will be anyone who does not meet the definition of a U.S. person or domiciliary. Due to these rules, before we can decide how a foreigner will be taxed in the U.S., we must first make sure they are in fact a foreigner under the laws.

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Tax Consequences Of Crowdfunding

Crowdfunding websites such as Kickstarter, GoFundMe, Indiegogo, and Lending Club have become increasingly popular for both individual fundraising and small business owners looking for start-up capital or funding for creative ventures. The upside is that it’s often possible to raise the cash you need but the downside is that the IRS considers that money taxable income. Here’s what you need to know.

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Foreign Investment Into The U.S. Part I: Overview Of Taxes

With the strength and stability of the U.S. economy, strong rule of law, and new favorable tax laws, foreign investment into the U.S. is continuing to grow. Although the tax law changes have been favorable for inbound investment, U.S. tax law remains aggressive and sometimes harsh. The good news is that with very detailed laws the outcomes are predictable making tax planning possible.

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Can Tax Really Be Avoided?

What do they mean when they say avoid tax? Can it really be avoided or is tax just a zero sum game like accounting?

The Income Tax Act has options for calculating and paying income tax. Tax is not a zero sum game. There are options to what rates are used. There are options to what number is used to calculate the tax. These options can reduce your taxes paid.

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Understanding Marginal Income Tax Brackets

By any measure, the tax code is huge. According to Commerce Clearing House’s Standard Federal Tax Reporter it’s up to 74,608 pages in length.¹

And each Monday, the Internal Revenue Service publishes a 20- to 50- page bulletin about various aspects of the tax code.²

Fortunately, it’s not necessary to wade through these massive libraries to understand how income taxes work. Understanding a few key concepts may provide a solid foundation. Read more

The 2017 Tax Act And U.S. Real Estate: The Foreign Investor And Unusually Low Tax Rates

The boom in U.S. real estate caused by foreign investors is about to get bigger as a result of greatly reduced U.S. income taxes for nonresident aliens and foreign corporations.

Because of the new 2017 Tax Act, foreign investors could receive a 40% reduction in the U.S. income tax of their gains and income from their real estate investments. For those foreign investors who already were invested in U.S. real estate, their after-tax returns could now be 40% more valuable without their raising a finger. Read more

IRS Reminds Taxpayers To Report Virtual Currency Transactions

WASHINGTON — The Internal Revenue Service today reminded taxpayers that income from virtual currency transactions is reportable on their income tax returns.

Virtual currency transactions are taxable by law just like transactions in any other property. The IRS has issued guidance in IRS Notice 2014-21 for use by taxpayers and their return preparers that addresses transactions in virtual currency, also known as digital currency. Read more

Formula For Success: Tax = Money X Politics

The Income Tax Act (ITA) is a lot like those word problems we all remember from grade school math. The word problem is a story told in numbers. Tax is a story told in numbers but the characters in the story are real life politicians and voters.

Let us take a humorous approach and give a real life example. Imagine you are a politician looking to get re-elected. You have the power to change the ITA because you currently hold office. You decide to change the ITA to encourage voters to vote for you. Let’s say you want to get young families to vote for you. You introduce a new tax credit that only young families can use. The tax credit gives a tax refund to families with children in registered sports activities. The formula in your head is: Read more

Changes To Enterprise Investment Scheme (EIS) And Seed Enterprise Investment Scheme (SEIS) Relief

Enterprise Investment Scheme and Seed Enterprise Investment Scheme relief are being considered by a large number of companies at the moment as a way of raising funds but at the same time enabling investors to obtain attractive income tax and capital gains tax reliefs.

A number of cases have been heard before the First tier and Upper Tribunals that demonstrate how easy it is to fall foul of the complex provisions granting these reliefs. Moreover, there have been a number of changes to the legislation in recent years, and more changes have been announced that will have a significant impact on the operation of the relief.

Risk To Capital Condition Read more

Tax Compliance: What You Need To Know Before You Travel

Thinking of moving to Mexico or Belize to live comfortably? Are you making an income in Mexico or the US you have not reported to the US government? Mexico has changed their tax laws and tax penalties and you need to be aware of them. Mexico now wants to know how much money you have in your US ban accounts.

You must be compliant and Maurice Glazer shares his experience working with taxpayers who decided to move to Belize or Mexico to live. Avoid getting arrested and having your US passport confiscated by being compliant. Read more

Do You Really Like Loaning The Government Money?

This is a reprint of a blog I wrote over three years ago, but it still makes sense today.This is a reprint of a blog I wrote over three years ago, but it still makes sense today.

So, you have filed your income tax return with the IRS and your state, and are now waiting for the refund the government(s) owe you. You are thinking of all the things you can do with that money when you get it. Here are some things to think about as you wait:

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