The Statistics of Income (SOI)reported the following information - 08/25/2009: www.irs.gov
About 23.1 million individual income tax returns reported nonfarm sole proprietorship activity, a 4.7 percent increase since tax year 2006. Reported profits for these sole proprietorships were $280.6 billion in 2007.
Individual Noncash Contributions:For tax year 2006, 24.7 million individual income taxpayers itemized $52.6 billion in deductions for noncash charitable contributions.
Of these taxpayers, 6.2 million reported $46.8 billion in deductions for charitable contributions in excess of $500, as shown on Form 8283, Noncash Charitable Contributions.
Though filers of this form declined by 5.9 percent between tax years 2005 and 2006, the amount of charitable contributions increased 14.1 percent, from $41.1 billion in tax year 2005
S Corporations: The number of S corporations increased 5.1 percent to 3.9 million for tax year 2006, so that S corporations represent nearly two-thirds of all U.S. corporations. The number of shareholders in S corporations also increased 5.1 percent to 6.7 million. Total net income (less deficit) increased 7.0 percent to $386.2 billion.
Foreign-Controlled Domestic Corporations: The number of U.S.income tax returns filed by foreign-controlled domestic corporations (FCDCs) increased by 3.4 percent for tax year 2006, to about 63,950. FCDCs accounted for 1.1 percent of all corporation income returns filed. FCDC assets totaled $9.7 trillion, a 5.7 percent increase from the previous year, while assets for all corporations totaled $73.1 trillion, a 10.0 percent increase.
Corporate Foreign Tax Credit:For tax year 2005, about 5,840 U.S.corporations claimed more than $84 billion in foreign tax credits, reducing their U.S. tax on worldwide income by 30.3 percent, from $278.2 billion to $194 billion.
Sales of Capital Assets:Data from a five-year study of individual income tax returns (tax years 1999-2003) show that taxpayers realized the highest net capital gains in 2000.Net gains less losses peaked at $574.1 billion in that year, with capital gains of $929.8 billion and losses of $355.7 billion.The lowest amount of net capital gains reported for the 5 tax years examined was $131.9 billion, reported in 2002.
Monday, August 31, 2009
Thursday, August 27, 2009
5 Major Steps to Avoid your Chances of Being Audited
1. Make sure there are no mathematical errors in your tax return. Check your W2s and 1099s with the income you have placeed onto the 1040.
If there is an error in the tax return, the IRS (computer) will write you a letter explaining the changes. The chances of an IRS human getting involved is high. So check the math.
2. Report ALL income. If you receive a 1099, or not, report the income. Taxpayers who did not report the income, and the client later turned in a 1099 because of their own tax problems, is a story heard too often by the IRS.
Plus, it gets your file sent to the under reporting unit - and that could be the beginning of a very bad experience, depending on the circumstances and amount of the under reported income.
3. Don’t cheat, especially if you are self-employed. The IRS is aware of how taxpayers cheat and often times place the information onto the IRS web site.
There is a entire section on the IRS web site, about how offshore account holders cheat and how the IRS catches them.
4. Don’t get hobby losses confused with business losses. You only have 3 out of 5 years to claim a lost on a business. Your business actions, receipts and expenses usually will expose a taxpayer as operating a hobby, or, a for profit small business.
5. Do not take the word of an unknown tax professional when it comes to tax loopholes. Once you sign the return, regardless of who told you what, you are 100% responsible for what is on your tax return. Don’t believe me? Ask Wesley Snipes!
Note: Past due returns that reduce a taxpayers tax liability by large amounts, I am sure, are fair game for audits. That is one of the reasons, you may want to employ an experienced tax professional to complete your past due returns.
It is not hard to reduce the tax amount owed when re-doing a “Substitute Return” that the IRS prepared because a taxpayer failed to file. The IRS does NOT make any effort to deduct additional deductions that you might be entitled to.
If there is an error in the tax return, the IRS (computer) will write you a letter explaining the changes. The chances of an IRS human getting involved is high. So check the math.
2. Report ALL income. If you receive a 1099, or not, report the income. Taxpayers who did not report the income, and the client later turned in a 1099 because of their own tax problems, is a story heard too often by the IRS.
Plus, it gets your file sent to the under reporting unit - and that could be the beginning of a very bad experience, depending on the circumstances and amount of the under reported income.
3. Don’t cheat, especially if you are self-employed. The IRS is aware of how taxpayers cheat and often times place the information onto the IRS web site.
There is a entire section on the IRS web site, about how offshore account holders cheat and how the IRS catches them.
4. Don’t get hobby losses confused with business losses. You only have 3 out of 5 years to claim a lost on a business. Your business actions, receipts and expenses usually will expose a taxpayer as operating a hobby, or, a for profit small business.
5. Do not take the word of an unknown tax professional when it comes to tax loopholes. Once you sign the return, regardless of who told you what, you are 100% responsible for what is on your tax return. Don’t believe me? Ask Wesley Snipes!
Note: Past due returns that reduce a taxpayers tax liability by large amounts, I am sure, are fair game for audits. That is one of the reasons, you may want to employ an experienced tax professional to complete your past due returns.
It is not hard to reduce the tax amount owed when re-doing a “Substitute Return” that the IRS prepared because a taxpayer failed to file. The IRS does NOT make any effort to deduct additional deductions that you might be entitled to.
What if I still owe taxes, after you complete my past due returns?
What if I owe taxes after you complete my past due returns?
Below are facts that can help you, should your past due returns include, an amount owed to the IRS.
If you owe, once your past due returns are completed, and some of you will, you will have several options.
1. You can request that we prepare a "Request for an Installment Agreement" and if accepted by the IRS, you can pay your tax bill, monthly, including penalties and interest over 60 months (5 years)
2. Or, you can hire a Tax Attorney or Enrolled Agent to file an Offer in Compromise. This is where you offer the IRS pennies on the dollar, of what you owe, and if accept, you pay the amount you agreed upon and your tax bill is wiped clean.
The OIC - Offer in Compromise is based upon a formula. If your financial situation fits into the formula, there is a good chance the IRS will accept your offer.
A Tax Attorney or an Enrolled Agent, usually will charge you between $2500 to $5000 to file an Offer in Compromise. Tax Accountants or Tax Preparers are not allowed to file OICs for taxpayers.
You may want to sit down and read the new, OIC Form 656 very carefully before you do anything. (If you can read and following instructions, you will have a better understanding of the OIC process)
3. The third most popular option is to file Bankruptcy.
Not all of the past due returns show an amount owed. Many of the returns have a refund. Refund checks are only mailed to taxpayers, IF, the file the past due returns within 3 years from the date the tax return was do.
Below are facts that can help you, should your past due returns include, an amount owed to the IRS.
If you owe, once your past due returns are completed, and some of you will, you will have several options.
1. You can request that we prepare a "Request for an Installment Agreement" and if accepted by the IRS, you can pay your tax bill, monthly, including penalties and interest over 60 months (5 years)
2. Or, you can hire a Tax Attorney or Enrolled Agent to file an Offer in Compromise. This is where you offer the IRS pennies on the dollar, of what you owe, and if accept, you pay the amount you agreed upon and your tax bill is wiped clean.
The OIC - Offer in Compromise is based upon a formula. If your financial situation fits into the formula, there is a good chance the IRS will accept your offer.
A Tax Attorney or an Enrolled Agent, usually will charge you between $2500 to $5000 to file an Offer in Compromise. Tax Accountants or Tax Preparers are not allowed to file OICs for taxpayers.
You may want to sit down and read the new, OIC Form 656 very carefully before you do anything. (If you can read and following instructions, you will have a better understanding of the OIC process)
3. The third most popular option is to file Bankruptcy.
Not all of the past due returns show an amount owed. Many of the returns have a refund. Refund checks are only mailed to taxpayers, IF, the file the past due returns within 3 years from the date the tax return was do.
Wednesday, August 26, 2009
Tax Client Received a CP 2000 Because of IRA Distributions Used to Purchase First Time Home
Issue: Tax client received $30,000 in IRA distributions to purchase first home.
$30,000 included as income on line 16b of 2007 tax return. Client was taxed on the $30K. However, there was no way to inform the IRS that the total distribution was being used to purchase first home.
Problem: The IRS sent a CP 2000 - requesting that the client pay the 10% penalty on the $30,000 IRA early distribution.
Taxpayer Responce: Money was used to pay down payment for first home.
IRS Response: Only the first $10,000 in 2007, can avoid penalty for first time home purchase, the balance has a 10% penalty.
You can use Form 5329 - Additional Taxes on Qualified Plans OMB (Including IRAs) and Other Tax-Favored Accounts to report the exception to the 10% penalty if you are not yet 59 1/2
$30,000 included as income on line 16b of 2007 tax return. Client was taxed on the $30K. However, there was no way to inform the IRS that the total distribution was being used to purchase first home.
Problem: The IRS sent a CP 2000 - requesting that the client pay the 10% penalty on the $30,000 IRA early distribution.
Taxpayer Responce: Money was used to pay down payment for first home.
IRS Response: Only the first $10,000 in 2007, can avoid penalty for first time home purchase, the balance has a 10% penalty.
You can use Form 5329 - Additional Taxes on Qualified Plans OMB (Including IRAs) and Other Tax-Favored Accounts to report the exception to the 10% penalty if you are not yet 59 1/2
Tuesday, August 25, 2009
Is It a Crime Not to File Back Taxes?
Yes. And can be punishable with a 5 figure fine and Federal prison time.
There is a thin line between tax evasion and unfilled tax returns.
Fortunately, the IRS, usually won’t send a taxpayer to jail for unfilled tax returns, however, it would be a good idea to always remember, that “they” can and in some cases, they have. Can you say Ronald Isley or Wesley Snipes?
You can depend on the IRS to provide you with a much needed vacation (behind bars) to help you return to reality and realize, that there are some agencies within the Federal Government who “do” exactly what they promise.
And if you read the Department of Justice’s logs, you will see that the IRS sends more than famous people on extended vacation!
Not to frighten you, just file the past due returns, there are options if you can’t pay the taxes owed.
Personal Note: The IRS practices equal opportunity, they don’t care what color you are, who your mother was, what you do for a living, or how much education you have. They don’t care if your ancestors came to America on a slave ship of with the Pilgrims, their response to unfilled tax returns is the same.
There is a thin line between tax evasion and unfilled tax returns.
Fortunately, the IRS, usually won’t send a taxpayer to jail for unfilled tax returns, however, it would be a good idea to always remember, that “they” can and in some cases, they have. Can you say Ronald Isley or Wesley Snipes?
You can depend on the IRS to provide you with a much needed vacation (behind bars) to help you return to reality and realize, that there are some agencies within the Federal Government who “do” exactly what they promise.
And if you read the Department of Justice’s logs, you will see that the IRS sends more than famous people on extended vacation!
Not to frighten you, just file the past due returns, there are options if you can’t pay the taxes owed.
Personal Note: The IRS practices equal opportunity, they don’t care what color you are, who your mother was, what you do for a living, or how much education you have. They don’t care if your ancestors came to America on a slave ship of with the Pilgrims, their response to unfilled tax returns is the same.
Monday, August 24, 2009
More Form 1040X Returns Are Being File, Processing Time Will Take Longer
Form 1040X Processing Time Extended
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Because of higher than expected inventory levels of Form 1040X, Amended U.S. Individual Income Tax Return, the processing time frame is temporarily extended to 12-16 weeks instead of the normal 8-12 weeks. It is not necessary to contact the IRS regarding the status of a return; returns are being processed as quickly as possible.
More, Taxpayers who may have "remember" foreign bank accounts or filed their own taxes are filing 1040X - Amended Returns to make sure their tax returns are true and correct.
________________________________________________
Note: The new administration has unleashed the IRS to "find" unreported income. Intelligent taxpayers understand this and are filing 1040Xs in record numbers.
If you have income that you "forgot" to bring to the IRS's attention, now would be a good time to read the blog posting before this one. You know, the one about the IRS having a new agreement with the USB.
You know, the posting about how "the IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts"
If you can not pay the taxes, contact a Tax Attorney or Enroll Agent. It is way better to be as honest as you can with the IRS, and then work out a way to make the payments, than it is for the IRS to find out about the offshore bank accounts on their own.
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Because of higher than expected inventory levels of Form 1040X, Amended U.S. Individual Income Tax Return, the processing time frame is temporarily extended to 12-16 weeks instead of the normal 8-12 weeks. It is not necessary to contact the IRS regarding the status of a return; returns are being processed as quickly as possible.
More, Taxpayers who may have "remember" foreign bank accounts or filed their own taxes are filing 1040X - Amended Returns to make sure their tax returns are true and correct.
________________________________________________
Note: The new administration has unleashed the IRS to "find" unreported income. Intelligent taxpayers understand this and are filing 1040Xs in record numbers.
If you have income that you "forgot" to bring to the IRS's attention, now would be a good time to read the blog posting before this one. You know, the one about the IRS having a new agreement with the USB.
You know, the posting about how "the IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts"
If you can not pay the taxes, contact a Tax Attorney or Enroll Agent. It is way better to be as honest as you can with the IRS, and then work out a way to make the payments, than it is for the IRS to find out about the offshore bank accounts on their own.
IRS Will Now Get More Infomation on Taxpayers Who Have Swiss Bank Accounts
The IRS Press Announcement came out on August 19, 2009. The party is over, Swiss Bank Account Holders should be concerned, especially if they have not filed past due tax returns or "forgot" to include income in foreigh bank accounts.
IRS to Receive Unprecedented Amount of Information in UBS Agreement
IR-2009-75, Aug. 19, 2009
WASHINGTON — The Internal Revenue Service and the Department of Justice today announced the successful negotiation of an agreement that will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS.
As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying summons remains in effect.
Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program.
In addition, the Swiss Government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file an FBAR. This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the IRS and the Department of Justice have successfully prosecuted four United States customers of UBS whose information was provided to the IRS by UBS as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
IRS to Receive Unprecedented Amount of Information in UBS Agreement
IR-2009-75, Aug. 19, 2009
WASHINGTON — The Internal Revenue Service and the Department of Justice today announced the successful negotiation of an agreement that will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS.
As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying summons remains in effect.
Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program.
In addition, the Swiss Government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file an FBAR. This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the IRS and the Department of Justice have successfully prosecuted four United States customers of UBS whose information was provided to the IRS by UBS as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
Wednesday, August 19, 2009
The Making Work Pay Credit for 2009, 2010 is a Refundable Credit
The Making Work Pay Credit is a refundable credit in 2009 and 2010, that can be applied if self-employed.
Maximum credit is $400 ($800 if married filing jointly)
Credit limited to 6.2% of earned income. You can be an employee or self-employed to qualify.
The phased out over modified AGI range of $75,000-$95,000 ($150,000-$190,000 if married filing jointly)
For clarification of these new tax laws, visit: irs.gov -- keywords: making work pay credit
Maximum credit is $400 ($800 if married filing jointly)
Credit limited to 6.2% of earned income. You can be an employee or self-employed to qualify.
The phased out over modified AGI range of $75,000-$95,000 ($150,000-$190,000 if married filing jointly)
For clarification of these new tax laws, visit: irs.gov -- keywords: making work pay credit
Tuesday, August 18, 2009
2009 New Tax Law on Qualified Tuition Programs
During 2009 and 2010, qualified education expenses for qualified tuition programs (section 529) will include certain purchases of computer technology, equipment, or Internet access and related service.
Items purchased must be used by beneficiary and beneficiary's family during years beneficiary is enrolled at an eligible educational institution.
It excludes expenses for computer software designed for sports, games, or hobbies unless predominantly education in nature.
For details on this new tax law, visit; irs.gov -- keywords: new tax law tuition
Items purchased must be used by beneficiary and beneficiary's family during years beneficiary is enrolled at an eligible educational institution.
It excludes expenses for computer software designed for sports, games, or hobbies unless predominantly education in nature.
For details on this new tax law, visit; irs.gov -- keywords: new tax law tuition
Monday, August 17, 2009
The IRS Announced the Interest Rates Remain the Same for the 4th Quarter 2009
IR-2009-73, Aug. 14, 2009
WASHINGTON — The Internal Revenue Service today announced that interest rates for the calendar quarter beginning Oct. 1, 2009, will remain the same. The rates will be:
four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate during July 2009 to take effect Aug. 1, 2009, based on daily compounding.
For more information, visit: irs.gov - keywords: interest rates 2009
WASHINGTON — The Internal Revenue Service today announced that interest rates for the calendar quarter beginning Oct. 1, 2009, will remain the same. The rates will be:
four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate during July 2009 to take effect Aug. 1, 2009, based on daily compounding.
For more information, visit: irs.gov - keywords: interest rates 2009
Tuesday, August 11, 2009
I work for an escort service, they gave me a 1099, what do I tell IRS about my occupation and the $10K I paid for security?
You tell the IRS the truth.
In the occupation section of the 1040, you can put "Entertainment"
The cost of the security is tax deductible, as is all other business expenses.
Remember that Al Capone didn't get busted for his crimes on the street, it was his dealings with the IRS that got him. Being honest with the IRS is the correct thing to do. If you return was flagged for review, it would not be hard to tell what you do and why there might be a $10,000 deduction for security on your Schedule C. As long as you have documentation that you paid the security company, no problem.
Also, did you 1099 your security company?
What is important, is: The IRS receives copies of the 1099s and the IRS is aware of your annual earnings. Filing the past due returns ASAP would be in your best interest. Also, the IRS might be concerned with the amount of tips you earned for any given year.
For clarification of tax codes on 1099s and business expenses, visit irs.gov - keywords: instructions schedule c
In the occupation section of the 1040, you can put "Entertainment"
The cost of the security is tax deductible, as is all other business expenses.
Remember that Al Capone didn't get busted for his crimes on the street, it was his dealings with the IRS that got him. Being honest with the IRS is the correct thing to do. If you return was flagged for review, it would not be hard to tell what you do and why there might be a $10,000 deduction for security on your Schedule C. As long as you have documentation that you paid the security company, no problem.
Also, did you 1099 your security company?
What is important, is: The IRS receives copies of the 1099s and the IRS is aware of your annual earnings. Filing the past due returns ASAP would be in your best interest. Also, the IRS might be concerned with the amount of tips you earned for any given year.
For clarification of tax codes on 1099s and business expenses, visit irs.gov - keywords: instructions schedule c
Monday, August 10, 2009
Just Released; IRS Warns Taxypayers of New Identity Theft Scams
WASHINGTON — The Internal Revenue Service reminds consumers to avoid identity theft scams that use the IRS name, logo or Web site in an attempt to convince taxpayers that the scam is a genuine communication from the IRS. Scammers may use other federal agency names, such as the U.S. Department of the Treasury.
In an identity theft scam, a fraudster, often posing as a trusted government, financial or business institution or official, tries to trick a victim into revealing personal and financial information, such as credit card numbers and passwords, bank account numbers and passwords, Social Security numbers and more. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.
The scams may take place through e-mail, fax or phone. When they take place via e-mail, they are called “phishing” scams.
The IRS does not discuss tax account matters with taxpayers by e-mail.
The IRS urges consumers to avoid falling for the following recent schemes:
visit: http://www.irs.gov/newsroom/article/0,,id=211669,00.html
In an identity theft scam, a fraudster, often posing as a trusted government, financial or business institution or official, tries to trick a victim into revealing personal and financial information, such as credit card numbers and passwords, bank account numbers and passwords, Social Security numbers and more. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.
The scams may take place through e-mail, fax or phone. When they take place via e-mail, they are called “phishing” scams.
The IRS does not discuss tax account matters with taxpayers by e-mail.
The IRS urges consumers to avoid falling for the following recent schemes:
visit: http://www.irs.gov/newsroom/article/0,,id=211669,00.html
Sunday, August 9, 2009
New 2009 Child Tax Credit Law - More People Will Qualify
The earned income level needed to qualify for "additional child tax credit" decreases from $8,500 to $3000. Now more people will be able to qualify.
The lower income lever applies in 2009 and 2010.
For more details and clarification, visit: irs.gov -- keyword: child tax credit
The lower income lever applies in 2009 and 2010.
For more details and clarification, visit: irs.gov -- keyword: child tax credit
Saturday, August 8, 2009
Important Changes to the Alternative Minimum Tax - AMT for 2009
Exemption amount increases for 2009 to $46,700 if single or head of household, $70,950 if married filing jointly or surviving spouse and $35,475 if married filing separately.
Tax-exempt interest on private activity tax-exempt bonds issued in 2009 and 2010 in not included in ATM taxable income.
The Alternative Minimum Tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. It was designed to tax individuals who have a high income, yet were able to write-off most of the income with certain deductions.
Now the tax is targeting more and more middle income Americans.
To find out if you may have to pay AMT for 2009, visit, irs.gov -- keywords: amt, assistant (use the IRS calculator to determine if you may be exposed to the Alternative Minimum Tax
This is not a tax you want to be caught off guard with. Once it set in, deductions, regardless of how much, usually won't change your tax liability.
Tax-exempt interest on private activity tax-exempt bonds issued in 2009 and 2010 in not included in ATM taxable income.
The Alternative Minimum Tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. It was designed to tax individuals who have a high income, yet were able to write-off most of the income with certain deductions.
Now the tax is targeting more and more middle income Americans.
To find out if you may have to pay AMT for 2009, visit, irs.gov -- keywords: amt, assistant (use the IRS calculator to determine if you may be exposed to the Alternative Minimum Tax
This is not a tax you want to be caught off guard with. Once it set in, deductions, regardless of how much, usually won't change your tax liability.
Friday, August 7, 2009
My ex-husband is just now filing his tax returns for back years and wants to claim the child support as alimony. He ask for my social security number
Can you say attorney?
If not, understand that child support is NOT alimony.
I am not an attorney and can not provide legal advise. Contact an attorney or visit the irs.gov web site; keyword: alimony,child support
If not, understand that child support is NOT alimony.
I am not an attorney and can not provide legal advise. Contact an attorney or visit the irs.gov web site; keyword: alimony,child support
Thursday, August 6, 2009
I am a web site owner. My tax preparer filed my 1099 on a Schedule C-EZ, why not a regular Schedule C?
You are correct to ask questions about the selection of forms your preparer used. The Schedule C-EZ is a short version of Schedule C and has in Part II, Line 2 a place for "Total Expenses"
Being a web site owner you surely had enough expenses to justify a Schedule C.
For instance you could automatically have the following deductions:
ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or to upgraded your site.
Monthly fees for email communications
Cost of graphics, banners, etc
Monthly Online services
Mileage to and from the store for office supplies, additional business miles
All office supplies used for business
High speed Internet connection
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line
Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?
What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliates? (Travel)
Plus, there could be any number of additional expenses as a web site owner.
If you need help with your bookkeeping and or tax preparation, let us know, we can help you.
Being a web site owner you surely had enough expenses to justify a Schedule C.
For instance you could automatically have the following deductions:
ISP - Internet Provider Service
Online Advertising for your web site
Marketing of your web site
Independent contractors who may have built your web site or to upgraded your site.
Monthly fees for email communications
Cost of graphics, banners, etc
Monthly Online services
Mileage to and from the store for office supplies, additional business miles
All office supplies used for business
High speed Internet connection
Business cards
Postage
Delivery cost, if any,
Cell phone
Separate Fax Line
Did you work from your home? (Do you rent or own your own home?)
Did you pay office rent? Insurance?
Did you do any advertising offline?
Did you have an eBay store? Monthly cost for e-store
Was there a cost for e-Commerce services?
Did you pay fees to PayPal or another Online Banking Institution?
What about Entertainment?
Did you attend any number of the workshops and seminars for web site owners? And affiliates? (Travel)
Plus, there could be any number of additional expenses as a web site owner.
If you need help with your bookkeeping and or tax preparation, let us know, we can help you.
The IRS sent me a CP-2000, which said I didn’t file 1099 income for $1300. I never got a 1099 from the client. How did the IRS come up with this amo
Taxpayers must always remember that employers, banks, brokers, clients, etc, file informational returns to the IRS in order to substantiate their own tax deductions.
The IRS matches amounts reported on tax returns with the information returns.
This computer matching begins after the original return due date.
Call the IRS, if you don’t know already, which of your clients turned in the 1099 income. If you received the income, check with your tax professional before signing and returning to the IRS.
If you did not complete work for the client and never received the $1300 – contact the client and ask for clarification and that the information be corrected with the IRS
For further clarification visit the irs.gov website: keyword: cp 2000
The IRS matches amounts reported on tax returns with the information returns.
This computer matching begins after the original return due date.
Call the IRS, if you don’t know already, which of your clients turned in the 1099 income. If you received the income, check with your tax professional before signing and returning to the IRS.
If you did not complete work for the client and never received the $1300 – contact the client and ask for clarification and that the information be corrected with the IRS
For further clarification visit the irs.gov website: keyword: cp 2000
Tuesday, August 4, 2009
Americans Have Until Sept 23, 2009 to Come Clean with Offshore Bank Accounts, to Avoid Possible Criminal Prosecution
“Americans who have concealed assets offshore have until September 23 to voluntarily come clean with the IRS and take advantage of the reduced penalties connected with the current offshore initiative,” said John DiCicco, Acting Assistant Attorney General for the Tax Division. “Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution.”
For clarification of the rules, contacting a Tax Attorney or Enrolled Agent would be in you best interest. You can also research the IRS web site at irs.gov - keyword: offshore accounts
The IRS has gone so far as to list out the different ways, taxpayers get caught when hiding offshore accounts.
If you have not filed past due returns which includes monies in a foreign account, you can contact a CPA or a Tax Accountant that is registered with the IRS.
For clarification of the rules, contacting a Tax Attorney or Enrolled Agent would be in you best interest. You can also research the IRS web site at irs.gov - keyword: offshore accounts
The IRS has gone so far as to list out the different ways, taxpayers get caught when hiding offshore accounts.
If you have not filed past due returns which includes monies in a foreign account, you can contact a CPA or a Tax Accountant that is registered with the IRS.
Monday, August 3, 2009
Man Hid $8 Million in a Swiss Bank Account, the IRS and the Department of Justice Were Not Impressed
FOR IMMEDIATE RELEASETUESDAY, JULY 28, 2009WWW.USDOJ.GOV
TAX(202) 514-2007TDD (202) 514-1888
UBS CLIENT PLEADS GUILTY TO FILING FALSE TAX RETURN, HID $8 MILLION IN SECRET SWISS BANK ACCOUNTS
New York Toy Manufacturer Representative Used Nominee Entities, Offshore Credit Cards, Sham Loans
WASHINGTON – Jeffrey P. Chernick, of Stanfordville, N.Y., pleaded guilty today to charges of filing a false tax return, the Justice Department and Internal Revenue Service (IRS) announced. Chernick, who owns a corporation which represents toy manufacturers in China and Hong Kong, appeared today before Judge James I. Cohn in Ft. Lauderdale, Fla., and accepted responsibility for concealing more than $8 million in Swiss bank accounts.
According to court documents and statements made in court, on or about Oct. 14, 2008, Chernick electronically filed a U.S. Individual Income Tax Return Form 1040 for tax year 2007, which failed to report that he had an interest in or a signature authority over a financial account at UBS AG, one of Switzerland’s largest bank. He also failed to report income earned on the UBS account. The UBS account was opened in the name of Simba International Ltd., a nominee Hong Kong corporation
According to court documents, beginning in the mid-1970’s, the defendant set up a Hong Kong corporation and opened offshore bank accounts in order to conceal from the IRS commissions paid to the defendant for toy sales. In total, Chernick was the beneficial owner of approximately $8 million in offshore assets which were maintained in accounts in the name of nominee entities, including Simba, at UBS and other Swiss banks.
According to court documents, in 2000, UBS entered into an agreement to begin providing the IRS with certain information relating to accounts in which the beneficial owner was a U.S. citizen. Around the same time, one of Chernick’s Swiss bankers left UBS for a smaller, less known Swiss bank. This banker told Chernick he had left UBS, in part, because the smaller bank would not be subject to Washington’s scrutiny and could not be pressured by the U.S. government to disclose certain information to American authorities. Following this banker’s advice, Chernick agreed to invest some of his assets with the smaller Swiss bank.
According to court documents, from 2002 through 2008, Chernick discussed his offshore accounts with this former UBS banker and other Swiss financial service providers. These meetings took place in the United States at various locations, including hotels in New York City.
During these meetings, Chernick, the Swiss bankers and Swiss financial service providers would discuss Chernick’s investments held in his offshore accounts, as well as the payment of fees for banking services rendered by Hong Kong and Swiss financial service providers.
In July 2008, despite Chernick’s concerns about the ongoing investigation into the activities of UBS, a Swiss financial service provider convinced Chernick not to disclose his offshore accounts, not to file amended returns, and not to pay to the IRS any additional taxes that were due and owing.
According to court documents, in order to have access to the millions of dollars Chernick concealed offshore, he utilized credit cards linked to his offshore Swiss bank accounts which he used to make large purchases while traveling abroad. Additionally, with the assistance of Swiss bankers and other financial service providers, Chernick set up a sham $700,000 loan between Simba and a second Hong Kong entity in order to repatriate funds into the United States to purchase property adjacent to his home in New York.
“Americans who have concealed assets offshore have until September 23 to voluntarily come clean with the IRS and take advantage of the reduced penalties connected with the current offshore initiative,” said John DiCicco, Acting Assistant Attorney General for the Tax Division. “Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution.”
Judge Cohn scheduled sentencing for Oct. 30, 2009. Chernick faces a maximum sentence of three years in prison.
“As the investigation into offshore tax evasion continues, the United States will continue to vigorously pursue new leads and evidence as they are uncovered,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. “Those who enable and commit tax evasion risk substantial monetary penalties and incarceration.”
In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted helping U.S. taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.
“This is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who shirk their tax responsibilities. Today’s action is also part of a much larger and coordinated effort by the Administration to aggressively find and crack down on tax evaders hiding their wealth overseas. For those still hiding in this shadowy world, it is time to come in and get right with your government or face stiff criminal and financial penalties,” said IRS Commissioner Doug Shulman.
In June 2009, UBS client Steven Michael Rubinstein, a Boca Raton accountant, pleaded guilty to filing a false tax return. In April 2009, another UBS client, Robert Moran, a Ft. Lauderdale yacht broker, pleaded guilty to filing a false tax return.
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, United States citizens much file a Report of Foreign Bank and Financial Accounts, or F-Bar, with the United States Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
TAX(202) 514-2007TDD (202) 514-1888
UBS CLIENT PLEADS GUILTY TO FILING FALSE TAX RETURN, HID $8 MILLION IN SECRET SWISS BANK ACCOUNTS
New York Toy Manufacturer Representative Used Nominee Entities, Offshore Credit Cards, Sham Loans
WASHINGTON – Jeffrey P. Chernick, of Stanfordville, N.Y., pleaded guilty today to charges of filing a false tax return, the Justice Department and Internal Revenue Service (IRS) announced. Chernick, who owns a corporation which represents toy manufacturers in China and Hong Kong, appeared today before Judge James I. Cohn in Ft. Lauderdale, Fla., and accepted responsibility for concealing more than $8 million in Swiss bank accounts.
According to court documents and statements made in court, on or about Oct. 14, 2008, Chernick electronically filed a U.S. Individual Income Tax Return Form 1040 for tax year 2007, which failed to report that he had an interest in or a signature authority over a financial account at UBS AG, one of Switzerland’s largest bank. He also failed to report income earned on the UBS account. The UBS account was opened in the name of Simba International Ltd., a nominee Hong Kong corporation
According to court documents, beginning in the mid-1970’s, the defendant set up a Hong Kong corporation and opened offshore bank accounts in order to conceal from the IRS commissions paid to the defendant for toy sales. In total, Chernick was the beneficial owner of approximately $8 million in offshore assets which were maintained in accounts in the name of nominee entities, including Simba, at UBS and other Swiss banks.
According to court documents, in 2000, UBS entered into an agreement to begin providing the IRS with certain information relating to accounts in which the beneficial owner was a U.S. citizen. Around the same time, one of Chernick’s Swiss bankers left UBS for a smaller, less known Swiss bank. This banker told Chernick he had left UBS, in part, because the smaller bank would not be subject to Washington’s scrutiny and could not be pressured by the U.S. government to disclose certain information to American authorities. Following this banker’s advice, Chernick agreed to invest some of his assets with the smaller Swiss bank.
According to court documents, from 2002 through 2008, Chernick discussed his offshore accounts with this former UBS banker and other Swiss financial service providers. These meetings took place in the United States at various locations, including hotels in New York City.
During these meetings, Chernick, the Swiss bankers and Swiss financial service providers would discuss Chernick’s investments held in his offshore accounts, as well as the payment of fees for banking services rendered by Hong Kong and Swiss financial service providers.
In July 2008, despite Chernick’s concerns about the ongoing investigation into the activities of UBS, a Swiss financial service provider convinced Chernick not to disclose his offshore accounts, not to file amended returns, and not to pay to the IRS any additional taxes that were due and owing.
According to court documents, in order to have access to the millions of dollars Chernick concealed offshore, he utilized credit cards linked to his offshore Swiss bank accounts which he used to make large purchases while traveling abroad. Additionally, with the assistance of Swiss bankers and other financial service providers, Chernick set up a sham $700,000 loan between Simba and a second Hong Kong entity in order to repatriate funds into the United States to purchase property adjacent to his home in New York.
“Americans who have concealed assets offshore have until September 23 to voluntarily come clean with the IRS and take advantage of the reduced penalties connected with the current offshore initiative,” said John DiCicco, Acting Assistant Attorney General for the Tax Division. “Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution.”
Judge Cohn scheduled sentencing for Oct. 30, 2009. Chernick faces a maximum sentence of three years in prison.
“As the investigation into offshore tax evasion continues, the United States will continue to vigorously pursue new leads and evidence as they are uncovered,” said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. “Those who enable and commit tax evasion risk substantial monetary penalties and incarceration.”
In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted helping U.S. taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.
“This is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who shirk their tax responsibilities. Today’s action is also part of a much larger and coordinated effort by the Administration to aggressively find and crack down on tax evaders hiding their wealth overseas. For those still hiding in this shadowy world, it is time to come in and get right with your government or face stiff criminal and financial penalties,” said IRS Commissioner Doug Shulman.
In June 2009, UBS client Steven Michael Rubinstein, a Boca Raton accountant, pleaded guilty to filing a false tax return. In April 2009, another UBS client, Robert Moran, a Ft. Lauderdale yacht broker, pleaded guilty to filing a false tax return.
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, United States citizens much file a Report of Foreign Bank and Financial Accounts, or F-Bar, with the United States Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
Sunday, August 2, 2009
I just go married and my husband owes back taxes, should I file separetely?
Usually couples pay more taxes when they file separate returns, however, in your case, it may be worth it.
There are restrictions when a couple files separately, such as you can't take the earned income credit, you may have a lower Child Tax Credit, then if you filed jointly and your capital loss limit is cut in half. There are additional restrictions involving higher education expenses and adoption expenses.
Visit www.irs.gov for a complete list of restrictions and clarification of the tax code -
keyword: married filing separate
There are restrictions when a couple files separately, such as you can't take the earned income credit, you may have a lower Child Tax Credit, then if you filed jointly and your capital loss limit is cut in half. There are additional restrictions involving higher education expenses and adoption expenses.
Visit www.irs.gov for a complete list of restrictions and clarification of the tax code -
keyword: married filing separate
What is Depreciation?
Depreciation is a mathematical calculated, annual deduction that the IRS allows for the wear and tear of business property - which includes income producing property and equipment used for business, that has a useful life of more than one year.
Depreciation is based on cost, use and category and is used to decrease a taxpayer's tax liability.
It would take 3 or 4 blog pages to fully describe depreciation. You can view the tax codes on depreciation at www.irs.gov - keyword: depreciation
Depreciation is based on cost, use and category and is used to decrease a taxpayer's tax liability.
It would take 3 or 4 blog pages to fully describe depreciation. You can view the tax codes on depreciation at www.irs.gov - keyword: depreciation
Saturday, August 1, 2009
I received a CP 2000 from the IRS, What should I do?
The IRS sends a CP 2000 to taxpayers when they are proposing a “change” to their filed tax return, usually because information on the return, does not match the information that was reported to the IRS by employers, banks, mortgage interest, 1099s, 1099-G (Gambling Winnings) etc
The CP 2000 can look intimidating, around 10 pages, however, if you take a deep breath and read each page, slowly, you will see that the notice is reporting each item that you reported and the differences, in what was reported.
It is best, to contact your tax professional. If you prepared your own taxes, it may be a good idea to speak with a tax professional before signing and returning a CP 2000.
Recommended: Visit www.irs.gov and use keywords: CP 2000 - The IRS instructions will explain each page and line of the CP 2000
The CP 2000 can look intimidating, around 10 pages, however, if you take a deep breath and read each page, slowly, you will see that the notice is reporting each item that you reported and the differences, in what was reported.
It is best, to contact your tax professional. If you prepared your own taxes, it may be a good idea to speak with a tax professional before signing and returning a CP 2000.
Recommended: Visit www.irs.gov and use keywords: CP 2000 - The IRS instructions will explain each page and line of the CP 2000
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