THE loss of our homes to foreclosure, short sale, or deed in lieu of foreclosure is akin to adding insult to injury – after losing our homes, we also have to worry about lender repercussion, credit history, and tax consequences. Let’s define and discuss tax consequences of foreclosure, short sale, and deed in lieu of…

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? Your choice can have dramatic impact on estate taxes and income taxes. Let’s explore choices to help you determine which title is best for your next property. Whichever you chose, get legal advice from your attorney. Joint Tenancy: • Any…

YOU have just received an invitation to visit an office of the Internal Revenue Service to examine (meaning audit)  your tax returns.  Don’t panic. You have stashed funds for a rainy day, and this is it – a gathering storm.  Take a minute to compose yourself, then read these tactics to shelter you from the…

GUARANTEED? Too good to be true? 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. 4….

IF you are unable pay all your taxes owed to the IRS, you may make an offer to pay a smaller sum to fully pay all taxes, penalties, and interests. This is called Offer in Compromise (OIC for short). Let’s discuss the pros and cons of OIC. Advantages: If the offer is accepted, you will…

HERE 10 tips if you cannot immediately pay your liabilities to 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…

ARE you a U.S. citizen or resident working in a foreign country? Have you declared your foreign income? Have you even filed a tax return? Or are you hiding from the long and lovely arms of the IRS? Can the U.S. government reach you on the other side of the globe? Unfortunately, yes. But is…

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…

1. THE failure-to-file penalty is generally more than the failure-to-pay penalty. If you cannot pay all the taxes you owe, file to prevent that more costly failure-to-file penalty. 2. The failure-to-file penalty is 5% per month of the unpaid taxes. This penalty will not exceed 25% of the taxpayer’s unpaid taxes. 3. The failure-to-pay penalty…

• FILE Electronically – Consider filing electronically instead of using paper tax forms. If you file electronically and choose direct deposit, you will receive your refund faster. 2. Check social security numbers – Make sure that SS numbers are correct for you, your spouse, and children. If you e-file, names used for your returns must…

MANY financially distressed borrowers lost their homes and had their loans cancelled during and after the recession. It was a relief to have their debts reduced or forgiven, but the same debt relief also triggered tax consequences that they were not aware of. In my CPA practice as a tax consultant, homeowners express shock and…

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 IRS offices (not your office)….

LIMITED Liability Company (LLC) is a hybrid that combines the pass-through attributes of a partnership with the limited liability of a corporation. The owners are called “members” who hold “interests” and are governed by an “operating agreement.” An LLC with more than one member is taxed as a partnership. This is a relatively new form…

S CORPORATION is a corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code. But why elect S status? Well, 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 pay zero corporate federal tax!…

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 do is listen to your neighbor or friend because each one has a different set of circumstances…

THERE are two different approaches to prepare for an audit: organized and shoebox. Organized means systematically arranging your records. Shoebox means simply being you—naturally disorganized. Let’s discuss each method so you can determine which one is best for your next audit. Why You Should be Organized: 1. This methodical approach of presenting data in a…

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….

Q. AM I required to report bank accounts in a foreign country? A. Yes, if you have more than $10,000 at any time outside the U.S. Q. Am I exempted from reporting if my accounts are in Euros, Chinese Yuan, Philippines pesos, or Mexican pesos? A. No, you are not exempt from reporting foreign accounts…

If you own a foreign bank account, brokerage account, mutual fund, or other financial account, you may be required to report the account annually to the government. Let’s get an understanding of what FBAR is, who must file new forms, and who do not have to file. I also included a few tips on filing…

If you are a U.S. citizen (or dual citizen) residing outside the U.S. but do not report your foreign accounts, you may be subject to harsh penalties—penalties that are more severe than you expect, penalties that can even exceed balances in your accounts. It is therefore critical that you learn the new rules for FBAR…

YOUR case was closed unagreed 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 my prior articles. Let me now give you 10 strategies as you meet face-to-face with the Appeals Officer: 1….

YOU are still upset from losing an IRS audit. You can either pay or fight. If you choose peace and quiet—pay. If you choose to fight—go to appeals. Let me give you 10 tips on how to prepare for the appeals conference: 1. Be organized in gathering and grouping records. An organized approach to gathering,…

After losing an audit to the IRS, you have the option of paying or appealing. Pay if you are happy with the results or don’t want to extend the agony of dealing with the IRS. Appeal if you are not happy or feel that you have not been treated fairly. Let’s explore the advantages &…

AFTER an audit of your tax returns by the IRS, 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 way to resolve disputes. It…

NEITHER one, actually. You see, IRS conducts field audits where the books and records of a business are maintained. This, of course, is your home, office, warehouse, factory, or store. But I don’t like any of these locations. What I like is my own accounting office. After representing taxpayers in IRS disputes for decades, I…

• YOU may claim exemptions for yourself, your spouse and your dependents. • Dependents must have a Social Security number (TIN is not good enough). • Exemption amount is $4,000 for 2015 for each exemption. • Exemptions reduce your taxable income and your income tax. • It could also produce credits such as child care…

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% to 39%  for federal…

HERE are 10 tips for students with summer jobs: 1. Fill out Form W-4 (Employee’s Withholding Allowance Certificate). This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs, make sure all your employers withhold adequate amount of taxes to cover…

SHOULD you attend your 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 early planning stage of an audit. Of course, you do not want to go. As your power of attorney, I do not want you to go…