IRS Services Are Available During the Government Shutdown: What You Need to Know

As the longest government shutdown in US history continues, many Americans are wondering how IRS services are being affected. An IRS-wide furlough began on December 22, 2018. What makes the shutdown even more challenging for the IRS is that most provisions of the new tax laws went into effect January 1, 2018, and they were in the midst of training for them. However, the IRS is scheduled to begin accepting tax returns for individuals on schedule on January 28. (The IRS began accepting business … [Read more...]

The Hazards of Selling to a Related Party

  You may have a client who comes to you with a “great idea” to sell their property to a family member at a loss in order to get a juicy tax deduction. Your client may ask the family member to resell it to them later, or maybe your client plans to just continue to use the land and keep it in the family. Unfortunately for your client, this is strictly forbidden by 26 U.S. Code § 267. This section of the code relates to sales within a family, some corporate sales, and some transfers … [Read more...]

Why and How to Revoke an S Corporation: What You Need to Know

Many small businesses operate as S corporations to avoid the complexities of C corporations and to avoid double taxation. C corporations are taxed before money is distributed to their shareholders who are taxed yet again. On the other hand, the income of S corporations flows directly to shareholders who pay for taxes on their personal returns.  There sometimes a day, however, when an organization outgrows its S corp status, and the company would like to revoke it in favor of operating as a C … [Read more...]

How to Decrease Your Payroll Taxes with a Common Paymaster

Today’s large businesses are often comprised of many different companies such as subsidiaries in various locations. If some employees work for more than one of those related companies, and if the companies have their own payrolls, both the business and the affected employees may be overpaying FICA (social security) and FUTA (federal unemployment) taxes. Fortunately, the federal government provides a solution. Multi-entity corporations may avoid overpaying payroll taxes and duplicating payroll … [Read more...]

Breaking Down the New Mortgage Deduction Rules

Homebuying and homebuilding are good for the economy. That fact, and not lawmakers’ desire to give working families a break, is what makes the mortgage interest deduction a sacred cow. The government sees the deduction as something of a reverse stimulus. By encouraging people to buy houses, and therefore encourage builders to construct houses, the economy prospers. Not all nations see it that way. Some industrialized countries, most recently Japan, have either tinkered with the MID or done … [Read more...]

Dealing With The New Alimony Deduction Rules

For about a generation, spousal support payments have been tax-deductible for obligors and alimony receipts have been tax-reportable for obliges. Effective January 2019, the times they are a-changin’. Payments will no longer be tax deductible and receipts will no longer be tax-reportable. According to some, the change is just a ripple in the ocean. According to others, it’s the biggest change to family law since California began the no-fault divorce revolution in 1969. From an income tax … [Read more...]

Should We Tax The Robots?

In 1900, at the dawn of the Industrial Revolution, life for everyday Americans was not much different than it was in 1700. Then, gasoline-powered automobiles replaced horse-drawn carriages, and everything changed. Fast forward a little over a century. In 2030, when driverless cars arrive, the revolution may be even bigger. The same technology that replaces automobile drivers may also replace truck drivers, waitresses, fast food cooks, and a host of other workers, at least according to … [Read more...]

Reassessing Some SALT Deduction Workarounds

state and local tax

In the runup to the 2017 tax reform package, the State And Local Tax deduction “loophole” fell into the crosshairs. Lawmakers predicted that lowering the SALT limit to $10,000 a year would raise hundreds of billions of dollars. Besides, they asserted, this change will not affect 90 percent of taxpayers. That’s very small comfort to a client who happens to the in the other 10 percent. Furthermore, if your tax client is among the 5 percent of Americans who pay significant state and local taxes, … [Read more...]

Why Are Tax Industry Experts Leary of Proposed Tax Cuts?

We don’t always agree and regardless the issue, there are always arguments on both sides, and discussions are often heated. Expect nothing less toward proposed tax cuts by the Treasury Department. They are bringing forth both anticipation and trepidation by a growing number of industry experts and economists. The plan is called unaffordable and unfair. A common concern is that capital gains and dividends are taxed at a lower rate than income earned through actual work. It’s also being … [Read more...]

Are Your Clients Taking Advantage of Sellable Tax Credits?

State governments realize the economic benefit of spending billions of dollars on tax credits. Are your clients taking advantage of this? Many are not due to low tax liability. Nonprofit organizations or start up businesses that generate very little income are among them. Some states have found a solution. They have created a secondary market by enticing these types of businesses with transferable or sellable tax credits. The secondary market incentives are sophisticated and growing at a … [Read more...]