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IRS Warns Tax Professionals To Be Alert To These Scams

IRS Warns Tax Professionals Working Virtually To Be Alert To These Scams

Working Virtually: Avoid Phishing Scams

The Internal Revenue Service and the Security Summit partners warned tax professionals to be alert to new phishing scams that try to take advantage of COVID-19, Economic Impact Payments and increased teleworking by practitioners.

The IRS, state tax agencies and the nation’s tax industry urged tax firms to review and heighten their data protection plans this summer as cybercriminals step up efforts to steal client tax information. Crooks are targeting tax professionals as well as taxpayers.

Avoiding phishing emails is the fourth in a five-part Security Summit series called Working Virtually: Protecting Tax Data at Home and at Work. The Security Summit initiative by the IRS, state tax agencies and private-sector tax industry spotlights basic security steps for all practitioners, but especially those working remotely in response to COVID-19.

“The coronavirus has created new opportunities for cybercriminals to use email to try stealing sensitive information,” said IRS Commissioner Chuck Rettig. “The vast majority of data thefts start with a phishing email trick. Identity thieves pose as trusted sources – a client, your software provider or even the IRS – to lure you into clicking on a link or attachment. Remember, don’t take the bait. Learn to recognize and avoid phishing scams.”
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Taxability Of SaaS In Arizona, District Of Columbia, Iowa, Mississippi, Rhode Island And Tennessee

Taxability Of SaaS In Arizona, District Of Columbia, Iowa, Mississippi, Rhode Island And Tennessee

We recently posted an article about the challenges of SaaS taxability and discussed the reasons why SaaS is a particularly sticky subject, tax-wise.

While there are a number of reasons for it, the complexity largely boils down to irregularities in SaaS definitions between states, little uniformity when it comes to SaaS tax legislation and complication brought about by the very nature of the product (is it a “software” or a “service?”). Economic nexus adds an additional layer of difficulty.

Now, we’d like to give you an in depth look at SaaS taxability in 6 more states.

1. Taxability of SaaS in Arizona
Economic Nexus Provisions: Yes

As of 2020, remote companies that make $150,000 in gross sales of tangible personal property or services will trigger Arizona’s economic nexus. Sales made through a marketplace are not included. Starting January 1, 2021, the threshold will lower to $100,000.

SaaS and Cloud Computing Tax Rules: Taxable
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Independent Contractor (Self-Employed) Or Employee?

Independent Contractor (Self-Employed) Or Employee?

It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

Select the Scenario that Applies to You:

-I am an independent contractor or in business for myself

If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.

-I hire or contract with individuals to provide services to my business

If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are.
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250+ Motivational Quotes For Tax Professionals

250+ Motivational Quotes For Tax Professionals

Success is not final, failure is not fatal: it is the courage to continue that counts. ~ Winston Churchill

If you would like more Motivational Inspirations request our Motivational Inspirations ebook! Inspiration propels a person to possibility, and transforms the way one views their own capabilities. Highly successful people use a daily dose of inspiration to motivate themselves and their passion for their work.

We have compiled a complimentary eBook of more than 250 Motivational Quotes from famous people for you to read each day. Great thoughts create great results.

“Be kind whenever possible.It is always possible.” ~ Dalai Lama

“Victory belongs to the most persevering.” ~ Albert Einstein, Theoretical Physicist

“Believe you can and you are halfway there.” ~ Theodore Roosevelt, 26th U.S. President

“Strength does not come from physical capacity. It comes from indomitable will.” ~ Mahatma Gandhi

“An investment in knowledge pays the best interest.” ~ Benjamin Franklin, Inventor, Author, Politician

REQUEST 250 MOTIVATIONAL QUOTES AND INSPIRATIONS eBOOK

TaxConnections Give Tax Professionals A Valuable Lift

TaxConnections Give Tax Professionals A Valuable Lift

TaxConnections is reaching out to all tax professionals to huddle together to raise their online profile. With most tax professionals paying high fees to gain visibility, TaxConnections is the only solution online for raising your visibility at the lowest cost. What we have communicated to tax professionals all over the world is that their professional profiles are often hidden behind paywalls which prevent people from ever finding the tax professional they seek. Additionally, each month we reach out to executives all over the world to promote the tax experts on TaxConnections. Look at these metrics with proof people are paying attention to tax professionals on TaxConnections.
We are building new iterations of a Virtual office for tax professionals and we know it is valuable real estate. Now is the time to get in and establish your position on our platform. Secure your virtual real estate and establish yourself higher online.

Here is how it works for tax professionals:

Tax Professionals Looking For A New Opportunity: $30 Annual Tax Professional Membership

Tax Professionals Appear Higher On Searches: $300 Annual Tax Professional Membership

Tax Professionals Having Blogs Distributed: $300 Annual Tax Professional Membership

TaxConnections also offers a program for firms who want to advertise products and services. You can reach kat@taxconnections.com to discuss your specific marketing needs.

Complimentary Webinar Today – Thursday July 23 2020 – Receive Complimentary Tool Kit To Grow Your Tax Clients

Michael Gilburd

You are invited to a complimentary webinar TODAY Thursday, July 23 at 10:00AM PT/1:00PM ET. As business owners and financial advisors who want to thrive in this environment, you will gain a solid foundation and methodology for building a more valuable company.

Learn how to monetize your clients/practice.
Learn how to find and grow ideal clients.
Learn how to optimize value for your clients.

All attendees will receive a complimentary Tool Kit that you can use the day after the webinar to assist you in helping current and future clients.

REGISTER FOR THIS COMPLIMENTARY WEBINAR NOW!

The Contemporary Tax Journal, Volume 9 -Tax Treatment For Post-Retirement Payments

Professor Annette Nellen

When there is established precedent, can a taxpayer reach a different result? On February 18, 2020 the Tax Court held that Eileen Dunlap, an ex-national sales director of Mary Kay Cosmetics, Inc., was subject to self-employment (SE) tax on her post-retirement payments from Mary Kay.1

Background

Mary Kay Cosmetics, Inc. is a manufacturer and seller of cosmetics and related products. Ms. Eileen Dunlap was a Mary Kay beauty consultant and worked as a salesperson independent contractor. She purchased products at wholesale prices from Mary Kay and resold them at retail prices. She received commissions and bonuses from Mary Kay for the products she sold. With excellent sales skills, she became a sales director in 1981. As a sales director, she recruited and trained beauty consultants to sell Mary Kay products. She received commissions and bonuses based on the sales of the consultants in her tier. Mary Kay made monthly payments to its independent contractors, like Dunlap, and no taxes were withheld from the payments. If one of her consultants stop working for Mary Kay, Dunlap’s monthly payment was reduced. Dunlap and the consultants she recruited had agreements with Mary Kay that set forth their duties, rights, and commission structure.
Once Dunlap recruited a certain number of sales directors, she was promoted to national sales director in 1988. She had sales directors and consultants in her tier but had no direct authority over them. Mary Kay did not have an employer-employee relationship with their national sales directors, sales directors, and consultants. The flowchart below is Mary Kay’s operational structure.
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China Does Not Have And Is Not Moving Toward U.S. Style Citizenship-Based Taxation

China Does Not Have And Is Not Moving Toward U.S. Style Citizenship-Based Taxation

Readers Digest Version: The Bottom Line Is …

As reported by American Expat Finance, which discusses an interview with Dr. Bernard Schneider of Queen Mary …

You can listen to the podcast here.
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The Contemporary Tax Journal, Volume 9: Treatment Of Business Expenses

The Contemporary Tax Journal, Volume 9

The Contemporary Tax Journal, Volume 9

Tax Treatment Of Business Expenses: By Madhuri Lanka, CMA, MST Student, San Jose State University

Introduction

This article discusses a 2020 Tax Court case involving the issue of when an expense should be treated as a start-up expense, trade or business expense, or as an income producing activity expense. This classification is crucial because the tax treatment of deductions is different for each category and therefore, affects taxpayer’s calculation of taxable income and tax liability. It is important to observe whether the expenses incurred by a company were before the commencement of business or once it started carrying on business. The purpose of this paper is to discuss these types of expenses by analyzing a 2020 court case and Internal Revenue Code (IRC) sections 162 (trade or business expenses), section 195 (start-up expenditures) and section 212 (income producing activity expenses).

James Gordon Primus v. Commissioner, TC Summary Opinion 2020-2

James G. Primus, a New York accountant, bought a property consisting of 200 acres of maple trees in Quebec, Canada in September 2011. A significant number of the trees were mature and ready to produce maple syrup. Before collecting sap and producing syrup, James G. Primus thinned the maple bush and subsequently installed a pipeline to produce syrup from sap. The production and sale of maple syrup began in 2017.
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Treasury Department And IRS Issue Guidance For Consolidated Groups Regarding Net Operating Losses

Treasury Department And IRS Issue Guidance For Consolidated Groups Regarding Net Operating Losses

The Department of the Treasury and the Internal Revenue Service issued proposed regulations and temporary regulations that provide guidance for consolidated groups regarding net operating losses (NOLs).

The Tax Cuts and Jobs Act (TCJA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended the rules for NOLs. After amendment, the NOL deduction is the sum of:

The total of the NOLs arising before January 1, 2018 (pre-2018 NOLs) that are carried to that year; plus
The lesser of:
The total of the NOLs arising after December 31, 2017; or
80% of taxable income less pre-2018 NOLs (the 80% limitation).
The TCJA generally eliminated NOL carrybacks and permitted NOLs to be carried forward indefinitely. The TCJA also provides special rules for nonlife insurance companies and farming losses. Nonlife insurance companies are permitted to carry back NOLs two years and forward 20 years, and the 80% limitation does not apply. Farming losses are permitted to be carried back two years and carried forward indefinitely, subject to the 80% limitation.
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Gig Economy Tips Taxpayers Should Remember

IRS On Gig Economy

The gig economy, also called sharing or access economy, is activity where taxpayers earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website. While there are many types of sharing economy businesses, ride-sharing and home rentals are two of the most popular.
Here are some things taxpayers should remember:

• Income from these sources is taxable, regardless of whether an individual receives information returns. This is true even if the work is full-time, part-time or if an individual is
paid in cash.
• Taxpayers may also be required to make quarterly estimated income tax payments and pay their share of Social Security, Medicare or Medicaid taxes.
While providing gig economy services, it is important that the taxpayer is correctly classified.
• This means the business or the taxpayer must determine whether the individual providing the services is an employee or independent contractor.
• Taxpayers can use the worker classification page on IRS.gov to see how they are classified.
• Independent contractors may be able to deduct business expenses, depending on tax limits and rules. It is important for taxpayers to keep records of their business expenses.
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Learn The Tax Rules For Non-Resident Aliens

Learn The Tax Rules For Non-Resident Aliens

This guide is dedicated to helping you comply with US tax laws if you are a foreign national (resident or nonresident alien) working or investing in the US.  We take you through the substantial presence test and show you how to determine your US tax resident status. Whether you are an H1b, L1, O1, or other non-immigrant visa holder, you will learn about the US resident tests for tax purposes, which are different than for immigration purposes.

If you are a nonresident alien, investing in US real estate or other US business activities from your home country, we give you an overview of deductions and credits available on Form 1040NR, with plenty of additional resources provided. We explain your tax filing options on a dual status or resident tax return if you have obtained permanent resident (green card) status.

You will also learn the more complex tax rules that apply if you are an F1 or J1 visa holder. Then we give you an overview of tax treaty benefits, which are particularly useful for F1 and J1 visa holders. Finally, you will learn about ITIN requirements, state tax requirements and social security and Medicare tax withholding rules. For most Americans, completing their tax return is a confusing and frustrating exercise. We can only imagine how ominous the task must seem for you, a foreign visitor. Hopefully the information you find here will make the job easier.
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