IF you have offshore bank accounts, should you report the accounts to the US government? Yes, if the aggregate balances exceed $10,000 at any time during the year. What if you had the accounts before you left for the US? Yes, you should. There are reasons why our government wants to know: combat money laundering,…

1. CAPITAL assets include almost everything you own and use for personal purposes, pleasure or investment. 2. The following are capital assets: your home, household furnishings and stocks held in a personal account. 3. The following are not capital assets: • Inventory held mainly for sale to customers in a trade or business. • Accounts…

HERE are the top 10 things the Internal Revenue Service wants you to know about this valuable credit: 1. If you qualify, it could be worth up to $6,143 this year. EITC not only reduces the federal tax you owe, but could result in a refund. 2. The amount of your EITC is based on…

• AMOUNT of exclusion. When you have gain from the sale of your home, you may be able to exclude up to $250,000 of the gain from your income. The exclusion amount is $500,000 for taxpayers filing a joint return. • Ownership test. To claim the exclusion, you must have owned the home for at…

HERE 10 tips if you owe but cannot immediately pay the IRS: • Pay What You Can: Pay promptly to stop additional penalties and interest from accruing.  If you are unable to pay, consider getting a loan to pay the bill in full rather than make installment payments to the IRS. • Additional Time to…

IF you paid someone to care for your child, spouse, or dependent, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Here are 10 tips on claiming a credit for child and dependent care expenses. • The expense for child and dependent care must be provided…

MARRIED couples buying property are asked to decide how they should hold title: • Joint tenancy or • Community property. Basically, it is a choice between the ease of transfer to the survivor for joint tenancy and the tax benefits of holding property for community property. Unfortunately, it also a choice between the loss of …

WHEN buying real estate, there is always that inevitable question: how do you hold title? Remember that your choice can have dramatic impact on estate taxes, liability protection, heirs, family situations and other factors. Let’s explore choices to help you determine which title is best for your next property. Joint Tenancy: • Any number of…

MEDIA coverage on IRS abuses and subsequent tax laws put pressure on the Service to revamp the Offer in Compromise (OIC) program for taxpayers who could not pay their tax liabilities.  The IRS has just proposed regulations which, for the first time, provide relief if present collection activities create economic hardships. Previously, the IRS could…

AN offer in compromise (OIC) allows you to settle assessments for tax, penalties, and interests at less than the assessed amounts. You can apply for an OIC if there is doubt as to liability or as to collectibility. The bases of an OIC are discussed in our other newsletters. Let me give you 12 tips…

IF you fail to file on time or pay on time, penalties kick in. Here are 10 reasonable causes to abate (forgive) penalties for late filing or late paying: 1. Tax returns were mailed on time.  A return used to be considered filed on time if it is postmarked on or before the due date. …

IF you have not filed your income tax returns by the end of March, chances are you do not expect a refund, your tax records are a mess, or you simply do not want to break tradition. Just remember that filing extensions is not exactly a nice habit.  Besides prolonging your worries, it also extends…

THE Treasury Inspector General for Tax Administration (TIGTA, an agency that oversees the IRS) instructed the IRS to expand audits to prior and subsequent years. This means that if IRS audits your income tax return for 2013, they must expand the audit to your 2012 and 2014 as well. Ouch! The Treasury Department conducted its…

1. MAIL your payments to be received on time. The monthly due date is the date of receipt at the IRS Service Center, not the date of mailing. 2. Use certified mail with return receipt. 3. Do not skip one payment and double up on the next payment. One skipped payment causes the entire installment…

(Part 2 of 2) THE Internal Revenue Service (IRS) announced a major expansion of its “Fresh Start” initiative to help struggling taxpayers by providing: • Offer in Compromise (OIC) – more flexible guidelines for collection potential. • Payment plans – more taxpayers can apply without financial statements. We discussed OIC in a prior article. Let’s…

TOO good to be true? Perhaps, but read on. The IRS cannot deny your application if you satisfy all of the following requirements: 1. The tax is not more than $10,000. 2. You timely filed and paid all income tax returns for the past five years. 3. You did not enter into any installment agreement….

IRS audits have been dominated by examination of Schedule C for taxpayers who conduct their businesses as sole proprietors (instead of corporation or LLC). This includes professionals, technicians, and independent contractors who receive 1099s as subcontractors (instead of W2s as employees). Here are some issues that generate the most dollar assessments & therefore the most…

How long do you have to keep tax records? How long can the IRS audit your tax returns? Let’s discuss 10 tips on statute of limitations so you can clean your garage this weekend. Statute of limitations provides final dates after which neither you nor the IRS can be disturbed by the other. • From…

The IRS issued new guidance requiring individuals with an interest in a “specified foreign financial asset” to attach a disclosure statement to your income tax return for any year in which the aggregate value of all such assets exceeds $50,000. Use new form Form 8938 (Statement of Specified Foreign Financial Assets) starting in 2011. Q….

New Foreign bank account rules were designed to combat money laundering, terrorism, and tax evasion. Unfortunately, folks like you and me get snared in the process. We get penalized if we don’t follow the new rules. I have written a series of simplified articles on this subject to help you understand the new rules and…

IF you have offshore bank accounts, should you report the accounts to the U.S. government? Yes, if the aggregate balances exceed $10,000 at any time during the year. What if you had the accounts before you left for the U.S.? Yes, you should. There are reasons why our government wants to know: combat money laundering,…

THERE are three basic types of IRS audits: correspondence, office, and field examinations. Today’s topics are correspondence audits, the simplest of the three. Here are 10 tips for you: 1. Respond promptly. You have 30 days to call or write back. 2. If you cannot, request for an extension of time in writing before the…

Choosing the proper entity for your business (Part 4 of 5) LIMITED LIABILITY COMPANY (LLC) is a hybrid that combines the pass-through attributes of a partnership with the limited liability of a corporation. An LLC with more than one member is taxed as a partnership (or as a corporation if not organized properly). The owners…

Choosing the proper entity for your business (Part 3 of 5) S CORPORATION is a corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code. This type of entity enjoys both the limited liability of corporations and absence of double taxation of sole proprietorships and partnerships.  The corporation elects to be…

Choosing the proper entity for your business (Part 1 of 5) YOU have decided to go into business for yourself. Should you operate as a sole proprietorship, partnership, corporation, LLC, or LLP?  How do you select which entity is most beneficial for you? Choosing the wrong form could cause unnecessary taxes, increased liability, and unnecessary exposure…

YOU have just received an invitation to the offices of the Internal Revenue Service. They want to examine your return. Don’t panic. All these years, you have stashed funds for a rainy day. This is a rainy day. Compose yourself. Then go to battle. Don’t be over confident though. I am just boosting your morale….

SHOULD you attend an IRS audit? Yes, I mean, you – your own  audit. Well, you don’t have to. This is always a strategic question that should be discussed at the planning stage of an audit. Of course, you do not want to go. Of course, I do not want you to go either. So…

YOU have just lost an audit and have decided to bring your case before the appeals office of the IRS. You have learned the basics of the appeals process and how to prepare for the conference from previous articles. Let me now give you 10 strategies as you face the Appeals Officer: 1. Respect the…

THERE are three basic types of audits: correspondence, office, and field examinations. Correspondence audits are the simplest ones – W2s, 1099s and other items that can be easily resolved by mail. Office audits are more complicated and involve small businesses and individuals with difficult issues. The exams are conducted at the IRS offices (not your…

IF you run your own business, consider employing your children this summer vacation. Employing your children gives you a triple benefit: 1. It teaches your children the virtue of work and the value of money. 2. It could save you taxes by shifting income down from your rate of about 33 percent to 39 percent …