Tag Archive for ask tax questions

IRS Increases Contribution Amounts for Retirement Plans

The IRS announced in IR 2014-99 increases to retirement plan contributions.

Highlights include the following:

• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.

• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $5,500 to $6,000. Read More

Written by | Posted in IRS • Retirement

Chicago Lawyer with Portfolio of Celebrity Clients Indicted On Charges of Tax Fraud

Gary Stern is the latest professional to become ensnared in the coils of the criminal justice system. The once prominent lawyer who represented NFL players, doctors, lawyers, and other professionals has been charged with tax fraud. Federal prosecutors allege that Stern organized, operated, and promoted elaborate and bogus tax schemes, primarily to help his wealthy clients evade federal income taxes. For as complicated a strategy as these tax schemes might have been, they can be reduced to something so simple that even a caveman could do it: claiming millions of dollars in tax credits.

Specifically, the charges relate to preparing fraudulent tax returns and impeding the operation of the IRS. A federal indictment filed Tuesday in U.S. District Court in Chicago alleges that from 2006 to 2010, Gary J. Stern, “corruptly obstructed and impeded” the IRS Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

Odujinrin v. IRS Commissioner – Reinforces The Significance of Engaging A Reputable Enrolled Agent

In Wole Odujinrin v. IRS Commissioner the petitioner, a hematology oncologist who represented himself, did not have adequate substantiation to support his petition and was not entitled to claim a net operating loss. He was also liable for an accuracy-related penalty under IRC 6662 – the expensive kick in the shorts.

This petitioner moronically showed up with little documentation in support of his claimed deductions and had inadequate evidence to show that he correctly assessed his 2009 tax liability. He testified that he relied on the advice of a tax practitioner but that person was not present to testify at trial nor provide an affidavit.

The Tax Court ultimately ruled in this case that the petitioner failed to establish a defense Read More

Written by | Posted in IRS

Ex-Seyfarth Shaw Attorney Case: The Latest in a Series of Department of Justice Prosecutions For Tax Shelter Fraud

Recently, tax shelters have become the target of much prosecution by the Department of Justice. In the largest criminal tax case ever filed, professional services company KMPG LLP admitted to engaging in fraud and generating at least $11 billion dollars in false tax losses. The multi-billion dollar criminal tax fraud conspiracy involved the elaborate design, marketing, and implementation of fraudulent tax shelters.

Since the 2005 KPMG indictment and subsequent guilty plea, the Department of Justice has continued in its quest to uncover instances of tax shelter fraud. The case of Chicago tax lawyer and former Seyfarth Shaw LLP partner, John E. Rogers, is among the latest in a series of tax shelter fraud criminal prosecutions. Starting in 2010, the U.S. Department of Justice targeted John E. Rogers, ex-Seyfarth Shaw LLP partner, with a civil suit alleging he Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

Amazon Fulfillment – Customer Convenience or Sales Tax Disaster

Now more than ever Amazon has been a one stop shop for many consumers. Not only can you buy just about anything you can think of on the Amazon website, but you can also receive lightning fast delivery of whatever you buy. Over the past few years, Amazon has taken their company to the next level. Now, in addition to selling items, Amazon provides a fulfillment service to online retailers.

As Amazon puts it, their fulfillment business “helps you grow your online business by giving you access to Amazon’s world-class fulfillment resources and expertise.” Simply put, the online retailer sends their products to Amazon. Amazon stores the item at one of its distribution centers. Once the item is purchased, Amazon packs and ships your product to the customer. In addition, Amazon provides customer support. While it certainly Read More

Written by | Posted in State And Local Tax (SALT)

5 “Tricks” To Make Halloween Candy Tax Deductible

You can in fact deduct Halloween candy if you figure out a way to make it business related. The IRS doesn’t say a lot about this topic because they don’t want to give you “permission” to deduct these items, but they also have not specifically stated that you cannot deduct Halloween candy.

Here are five ways to deduct those over-priced bags of snack size chocolates:

1. Make a promotion out of it. Attach your business card or a promotional flyer to packets of M&M’s and voila! Deductible.

2. There are many companies who will print candy wrappers with your logo on it. An even better and more advanced way to promote your business and still have something for Read More

Written by | Posted in IRS • Tax Deductions

Weil Case: What Was The Swiss Role?

If you poke about under rocks for long enough, you’d better be prepared to find something unpleasant. That’s what the US government is realizing as the Raoul Weil case finally goes to court. Weil, 54, is accused of helping US citizens avoid taxes while working as head of Global Wealth Management at Switzerland’s UBS – and some of the stories emerging are as bizarre as the numbers are huge.

Raoul Weil, left, arrives with his wife, Susan Lerch Weil, for the start of his trial at federal court on Tuesday in Fort Lauderdale.

US Clients

It’s thought that UBS’s clients included around 20,000 US citizens, among them, almost Read More

Written by | Posted in IRS • Tax Fraud/Evasion/Crimes

Premium Tax Credit Problems

Two of three recent federal court rulings held that the premium tax credit (PTC) is only available to individuals obtaining coverage through their state exchange, not the federal exchange. This is a big deal because the PTC serves to help make health insurance affordable to individuals with income between 100% and 400% of the federal poverty line. Also, the majority of states did not create their own exchange, forcing individuals in need of insurance to go to the federal exchange (if they are eligible for a PTC).

Resolution of this big issue likely won’t happen until next year. Meanwhile, the upcoming filing season will involve millions of individuals having to reconcile the PTC they may have received in advance, with their true amount. There is also a lot of complexity for practitioners too. Another key piece of the Affordable Care Act that comes into play in 2014 Read More

Written by | Posted in Individual • Specialty Tax Incentives

The Unknown Tax Comic – Part 11

♦ An investor went to a tax expert and said: “If I give you $1,000, will you answer two questions?” The expert replied: “Certainly. And what is the other question?”

♦ Q: How do you humble a person that flaunts their wealth?
A: Have them fill out a tax return.

♦ America is the land of opportunity. Everybody can become a taxpayer.

♦ IRS MOTTO: “We’re not happy until you’re not happy!”

♦ Did you hear about the cannibal tax accountant? She charges an arm and a leg.

♦ A window sign in Chicago: “Tax Returns Prepared – Honest Mistakes Are Our Specialty.” Read More

Written by | Posted in Tax Humor • TaxConnections

FBAR Account Reporting – Imperative

FBAR Foreign bank account reporting is imperative, Please pardon my writing you again about this but I am deeply concerned.

If you have a bank account anyplace outside of the USA, it doe not matter why even if it is an account with money to obtain your spouse or retirement visa, you need to report it. The law says, “total aggregate of all accounts exceeding $10,000” but I am not sure I trust the IRS to abide by those regulations, I recommend to file for any significant amount. And do so for the last SIX (6) years, 2013 and back 5 more years, as required by law.

PLEASE understand the penalties for non-compliance are draconian that start at $500 and go up from there and can even include criminal prosecution if your failure to file was Read More

Written by | Posted in FATCA • FBAR • Federal

Top Tax Write-Offs That Could Get You In Trouble With The IRS – Part 2 of 2

From travel expenses to paying wages to family members, there’s no limit to what people will try to write off at tax time for the sake of their business. But where do you draw the line? Which write-offs you’re trying to write off go too far?

Tax Write-Off: Personal Expenses

This is a category business owners can easily get into trouble with if they’re not careful.

• Key Issue: You simply can’t deduct services of a purely personal nature that aren’t related to your business.

• How to Do It Right: Getting an opinion from a tax professional as to whether an expense is deductible for your business makes most sense. The cost of high-speed internet Read More

Written by | Posted in IRS • Tax Deductions • Tax Tips
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