Archive for Tax Provision/Tax Reporting

What Has Jeeves Got To Do With Taxes?

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If you know Jeeves, he is the fictional character in the series of humorous (read rib-tickling funny) short stories by P.G. Wodehouse. Jeeves is a very, very capable valet who gets his employer, Wooster out of many a sticky situation.

My father introduced me to P.G.Wodehouse’s books and there was no turning me back after that. The brilliant comic genius’ writing has kept me enthralled through long train rides, boring summer afternoons, quick breaks in the midst of grueling exams, you get the drift!

Now we may not all be able to afford a Jeeves in our lives, but a very common trend these days is to hire a nanny or an “au pair” if one has small gifts. Considering the sky-rocketing Read more

June 2015 Business Due Dates

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June 15 – Employer’s Monthly Deposit Due

If you are an employer and the monthly deposit rules apply, June 15 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for May 2015. This is also the due date for the non-payroll withholding deposit for May 2015 if the monthly deposit rule applies.

June 15 – Corporations

Deposit the second installment of estimated income tax for 2015 for calendar year corporations.

June 30 – Taxpayers with Foreign Financial Interests

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Using The Home Sale Gain Exclusion For More Than Just Your Home

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With careful planning, and provided the rules are followed, the tax code allows the home sale gain exclusion every two years.

Let’s assume you own a home, perhaps a second (vacation) home, or maybe are even thinking about buying a fixer-upper and flipping it. With careful planning, it is possible to apply the full home sale exclusion to all three of the properties.

Here is how it works. The tax code allows you to exclude up to $250,000 ($500,000 for married couples) of gain from the sale of your primary residence if you have lived in it and owned it for two of the five years immediately preceding Read more

How To Account For Social Security And Medicare Tax On Unreported Tip Income

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If you work in an industry where it is customary to receive a portion of your income from customer tips, you are required to pay Social Security and Medicare taxes on those earnings. However, it is only possible to pay these taxes during the year if you report your tip income to your employer. If you receive cash and charge tips of $20 or more per month from any one job, you are required to report these to your employer. If you did not report all of these tips to your employer, you are required to report and pay the additional Social Security and Medicare taxes that should have been paid on these unreported tips. This you do as follows:

• You must complete Form 4137, Social Security and Medicare Tax on Unreported Tip Income. This form is used to calculate the tax in these unreported tips. Read more

What To Do If You Haven’t Filed A Tax Return

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Filing a past due return may not be as difficult as you think.

Taxpayers should file all tax returns that are due, regardless of whether full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. It is important, however, to know that full payment of taxes upfront saves you money.

Here’s What to Do When Your Return Is Late

Gather Past Due Return Information

Gather return information and contact me via TaxConnections. You should bring any and all information related to income and deductions for the tax years for which a return is Read more

How Long Are You On The Hook For A Tax Assessment?

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A frequent question from taxpayers is:

How long does the IRS have to question and assess additional tax on my tax returns?

For most taxpayers who reported all their income, the IRS has three years from the date of filing the returns to examine them. This period is termed the statute of limitations. But wait – as in all things taxes, it is not that clean cut. Here are some complications:

You file before the April due date – If you file before the April due date, the three-year statute of limitations still begins on the April due date. So filing early does not start an earlier running of the statute of limitations. For example, whether you filed your 2014 return on February 15, 2015 or April 15, 2015, the statute did not start running until April 15, 2015. Read more

Making Citizenship-Based Taxation Reform Easy

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Making Citizenship-Based Tax Reform “Easy”

Heitor David Pinto wants to “make it easy” for Congress to move from citizenship-based taxation (CBT) to residence-based taxation (RBT).

Pinto thinks CBT is “absurd.” And he aims to help Congress change it.

Because of CBT’s complexity and because it’s a low priority for Congress, Pinto was concerned Congress might take a long time or might not do tax reform at all for Americans abroad.  But, Pinto hopes “if it’s mostly done already, they might do it faster.”

When the naturalized American citizen immigrated to the United States from Brazil a Read more

National Football League Is Giving Up Its Tax-Exempt Status

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With all the distractions of deflated footballs, player misconduct and the safety of the game, the NFL is volunteering to give up its tax-exempt status.

The NFL As A Non-profit Entity

The National Football League (“NFL”) which you figure makes millions in revenue every year is recognized by the IRS as a tax-exempt entity and does not pay income taxes as any for-profit-company would.

Section 501(c)(6) of the Internal Revenue Code provides for the exemption from  tax entities which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual. Read more

Deducting Medical and Dental Expenses

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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

Innocent Spouse Relief


Many married taxpayers choose to file a joint tax return because of the benefits to be derived from this filing status. On a joint return, both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the return, even if they later divorce. This is true even if a divorce decree should state that your former spouse will be solely responsible for any amounts due on previously filed joint returns.

The situation can exist, then, where one spouse could be held responsible for all the tax due, even if all the income was earned by the other spouse. In cases like this, the IRS, in the interest of equity may allow a spouse in such a situation to be relieved of tax, interest, and penalties that are due on the joint tax return. Read more

New Developments (As of December 23, 2014)

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Recently, there have been several important IRS and court opinions affecting various areas of taxation.

A. Distribution of benefits to estate beneficiaries.

An executor was aware that the estate would owe significant taxes but instead of distributing the assets to the beneficiaries, he had the estate distribute money to himself and other heirs. As a result, the estate did not have enough funds to pay the taxes. The IRS put a lien against other property owned by the executor. The executor appealed the IRS decision to a Pennsylvania District court. The court upheld the IRS decision stating that the executor is personally liable for depleting the assets of the estate [Stiles, D.C., PA]. Read more

Two Weeks To Benefit from the Recently Passed Tax Extenders Bill!


This past Friday, December 19, 2014, President Obama signed into law the Tax Increase Prevention Act of 2014 (HR 5771) which passed the the Senate on December 16th, 2014, that retroactively extended certain tax incentives which had expired on December 31, 2013 for one year.

Individual Tax Extenders:

– Research and experimentation credit;
– 50% first-year bonus depreciation;
– Increased expensing limits ($500,000/$2 million) for section 179 property;
– 15-year depreciation life for qualified leasehold improvements, qualified restaurant Read more