* * *   Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.    * * *   He has 50 years of…

IF you lose an IRS audit, you have two choices: pay or appeal. Your decision depends on how you feel about the fairness of the auditor, amount of assessment, cost of defense, and extending or ending your misery with the IRS. • What is the role of Appeals? • Are Appeals Officers independent? • Do…

IRS loves to audit Schedule C. This form is filed by taxpayers who conduct their businesses as sole proprietors (popularly referred to as “DBA” or doing business as) instead of corporations or LLCs. This includes professionals and independent contractors who receive 1099s as subcontractors (instead of W2s as employees). Sole proprietorships face a risk that’s…

HOW did I get selected for an audit?  • Random selection and computer screening – how your return compares to norms. • Related party examinations - transactions with partners, investors, or audits of other entities. How will IRS notify me of audit? • IRS will notify you by mail. • They do not start any audit by…

1. THE new Tax Cuts and Jobs Act cuts corporate taxes from eight graduated rates of 15 percent to 35 percent to a flat rate of 21 percent. 2. The Act provides a 20 percent deduction for owners, partners and shareholders of pass-through entities such as S-corporations, LLCs and partnerships. However, the 20 percent deduction…

HERE’S a list of tax provisions of the Tax Cut and Jobs Act affecting individuals like you and me. 1. The new Tax Cut and Jobs Act keeps seven tax brackets with six of them at lower rates. Most of us will benefit from the new rates, even if the press says the opposite. 2….

THE Tax Cuts and Jobs Act saves the student loan interest deduction and keeps tuition waivers for graduate students tax-free. It also expands 529 savings accounts to include private K-12 education. Let’s discuss further. 1. American Opportunity and Lifetime Learning credits remain the same: Both American Opportunity Credit and the Lifetime Learning Credit remain the same….

Part 6: Homeowners 1. THE Tax Cut and Jobs Act reduces the maximum amount of mortgage debt to acquire a first or second residence for which you can claim itemized interest expense deductions from loans of $1 million ($500,000 for married filing separately) to $750,000 ($375,000 for married filing separately). 2. Current homeowners will not…

THE business tax provisions of the Tax Cut and Jobs Act include: • The new Tax Cuts and Jobs Act cuts corporate taxes from eight graduated rates of 15 percent to 35 percent to a flat rate of 21 percent. • Introduces a 20 percent deduction for pass-through entities. • Uses a new territorial system of…

1. MORTGAGE interest deduction has been lowered: Current homeowners can continue to deduct interest on loans of $1 million; however, new homeowners will be limited to interest on loans of $750,000. 2. State and local tax deduction is capped at $10,000: Yes, you can continue to deduct state and local taxes, but with a limit…

1. THE standard deduction is doubled: Republicans want to simplify our tax code so more people can claim standard deductions instead of more complicated itemized deductions. This becomes a reality after the new law doubled the standard deduction from $6,350 to $12,000 for single filers, from $9,350 to $18,000 for heads of households, and from…

REPUBLICANS hail the Tax Cuts and Jobs Act as their biggest legislative achievement under President Trump. It’s the first major tax overhaul since the days of fellow Republican Ronald Reagan. The new tax law causes wide implications. It affects your decision to buy or rent a home or your decision to send your kids to private…

OUR recommendations of tax moves before year-end is a little different because of President Trump’s major tax overhaul and the time – or lack of it – to implement tax savings ideas in just before 12/31/17. Tax rates are going down, standard deductions are going up, and property taxes and state taxes are capped; therefore,…

IF you owe more than $50,000 in delinquent taxes, penalties, and interest to the IRS, you are considered seriously delinquent. This puts your passport in jeopardy. Take action now before the State Department revokes or denies an application to renew your passport. Here are 10 tips to avoid passport problems: 1. Renew your passport now….

1. CAN you get a passport if you owe taxes? Of course, you can. But if your taxes, penalties and interest total more than $50,000, you fall under a new category called “seriously delinquent” that subjects you to passport restrictions. 2. What exactly are passport restrictions? The State Department will deny your passport application or…

1. CONGRESS created a new code section called “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” The idea of this new law is to use travel to enforce tax collections. It was proposed and rejected in 2012. It was re-introduced in 2015, passed by Congress, and signed by President Obama. It’s taking foothold…

1. DON’T volunteer information. A typical agent is a low-key, friendly agent. They get your guard down by playing a nice guy role. Don’t be deceived by it. Remember that he (includes her) is not on your side. He may appear to be, but he is not. 2. Don’t be a blabbermouth. Taxpayers are scared…

IF you are not satisfied with the results of your IRS audit, go to Appeals. You have a choice of either ending your misery by paying up or by continuing to fight at the Appeals Office. The appeals process is an administrative means to resolve your problems without resorting to legal action. It’s a good…

HOW long do you have to keep tax records? How long can the IRS audit your tax returns? Let’s discuss tips on statute of limitations so you can clean your garage this weekend. 1. The general statute to audit you is three years after the return is filed. 2. The statute is extended to six…

YOU may choose to run your business as a partnership. A Partnership is an association of two or more persons as co-owners who intend to carry on a business for profit. Each person must contribute money, property, labor, or skill. Mere co-ownership of property that is leased or rented is not a partnership. Spouses carrying…

YOU have seen businesses with “LLC” after their names. That LLC refers to Limited Liability Company which is a hybrid that combines the pass-through attributes of a partnership with the limited liability of a corporation. Fortunately, it combines the best of worlds of partnerships and corporations. The owners are called “members” who hold “interests” and…

YOU may choose to do business as a corporation. A corporation is a legal fiction.  It exists only in contemplation of law.  It has a separate legal identity.  That entity, not you, operates the business. It owns the business assets, owes business debts, collects business revenues, and pays business expenses. It possesses characteristics such as…

Upon deciding to form your own business, the next question is – what type of entity should you operate – as a sole proprietorship, partnership, corporation, LLC, or LLP?  Which entity is most beneficial for you? Choosing the wrong form could cause unnecessary taxes, increased liability, and unnecessary exposure to lawsuits. What you should not…

THE IRS developed a guide for its agents in auditing consultants to focus on: 1. Travel and meals, 2. Bartering, 3. Independent ontractor 1099 versus employee W2, 4. Shifting or assignment of income by a taxpayer to a related entity, 5. ersonal ervice orporation, and 6. Internal controls, books and records, electronic software, and use of the Internet. Travel: The…

IRS agents are equipped with audit techniques unique to attorneys. Here’s insider info on how IRS instructs its agents to probe into: 1. Unreported income, deferral of income. 2. Advanced client costs. 3. Bartering. 4. Constructive receipts. 5. Personal service corporations. 6. Worker Reclassification – were employees misclassified as independent contractors? 7. Were Form 1099s…

10 States with the Lowest Combined Income and Sales Tax Rates: • New Hampshire • Alaska • South Dakota • Wyoming • Florida • Texas • Washington • Delaware • Montana • Colorado 10 States with the Highest Combined Income and Sales Tax Rates: • New York • New Jersey • Connecticut • California •…

INDIVIDUALS and businesses in all 50 states pay federal income tax. Residents in 41 states also pay state income tax while nine states have no state income taxes. Here are list of states with lowest and highest state income tax, sales tax, combination of both, as well as county, city, and school district taxes. States…

BACKGROUND: When is your tax return free from IRS audit? From your point of view, statute of limitations prevents the IRS from collecting a deficiency in tax or beginning a civil or criminal case. Statute of limitations provides a date of finality after which the IRS or the taxpayer can take no further actions. We…

HOW long do you have to keep tax records? How long can the IRS audit your tax returns? Let’s discuss tips on statute of limitations so you can clean your garage this weekend. 1. The general statute to audit you is three years after the return is filed. 2. The statute is extended to six…