Month: March 2021

Life Insurance Policy Loan: A Tax Nightmare

Bruce Brown fell into the life insurance policy loan trap. Brown, a commercial litigation attorney, purchased a life insurance policy from Northwestern Mutual Life Insurance Company. For the first six and a half years, he paid the insurance premiums by check. For the next 15 1/2 years, he paid the premiums by borrowing at 8 …

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Payroll Tax Deferral for Federal Employees Prompts Criticism

A government notice indicating that President Trump’s temporary payroll tax deferral will go into effect for federal employees sparked alarm from observers, who say the move may be illegal. The Agriculture Department’s National Finance Center, which provides administrative services to federal agencies, stated in an August 21 notice that beginning with the first pay period …

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Practitioners Cheer IRS Guidance on Minimum Distribution Waiver

The IRS served up a list of answers — and some perks — for taxpayers in its latest guidance on the coronavirus relief package provision waiving required minimum distributions (RMDs) for 2020. Notice 2020–51, 2020-29 IRB 1, released June 23, provides that a taxpayer who received an RMD at the start of this year can …

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4 Ways to Reduce Taxes on Foreign Earned Income

If you have a client who is an expat working in a foreign country, or if your client is a foreign national living in the U.S. but with income from a foreign country, they are required to file U.S. tax returns. On the upside, there is a good chance they are entitled to substantial tax …

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The Pass-Through Entity Workaround to Beat the SALT Limitation

In the past year, several states have created a pass-through entity tax (PET) to circumvent the $10,000 cap for the state and local tax (SALT) deduction. Louisiana and New Jersey are the most recent states to adopt such a tax. Effective December 2017, the Tax Cuts and Jobs Act (TCJA) brought sweeping reform to the …

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Tax Advantages of IRS Form 3115 – Request to Change…

What is Form 3115?  According to the IRS, the form is filed “to request a change in either an overall method of accounting or the accounting treatment of any item.” What would necessitate this change? You could have a client, for example, who uncovers an earlier error or is required to make a change following …

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Qualified Disaster Payments and Code Section 139

What is a Qualified Disaster Payment? During these challenging times, laws have been passed to create relief for businesses and their employees. For example, under Code Section 139, employers can provide tax-free “qualified disaster payments” to reimburse employees for expenses specifically due to COVID-19. Because most business owners are also employees, they can make these …

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Three Reasons Why Your Tax Plans Aren’t Selling (& What to Do!)

Here are three common problems and their solutions to help you develop a successful and strategic tax planning sales pitch. Reason #1: “I have trouble demonstrating the value to clients.” The value of your tax plan has to be obvious to your clients, but it can be difficult to quantify. By comparison, if you spend …

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