YES, definitely. Mistakes can get you audited by the IRS. Let’s discuss common mistakes that can get you into trouble. 1. Filing On Paper Paper-filed error rate is 21% compared to only 1% for e-filed tax returns. 2. Procrastination: Some people have a habit of waiting and waiting until April 15 to file…an extension. Rushing…
ARE you struggling every month to pay your debts, especially your credit card bills? Are you always worried about not having enough left over for your mortgage, rent, food and other basic living expenses after you make your monthly debt payments? Do you want your credit card payments to be more affordable and manageable? One…
I REPRESENTED a foreign company with a $250,000-claim for a 40-foot container of manufactured goods that it delivered to the debtor, a California company, on December 30, 2014. The debtor had been in Chapter 11 for a year before the trustee was able to convert the case to Chapter 7 on April 4, 2015. The…
(Part 4) IN part 1: we defined 1) who are resident aliens, nonresident aliens or both, 2) who are exempt individuals, and 3) closer connection exception. In part 2: we defined 1) how resident aliens and nonresident aliens are taxed, 2) when is income considered U.S. sourced, 3) withholding requirement and employee issues. In part…
Equal rights in parental leave benefits Q: I HAVE been working 4 years for a large company in Los Angeles. My wife just gave birth to our first child. When I asked my boss about parental leave, I was told that I could take off for 2 weeks and no more. I thought I was…
THE first senior is 73. He has been separated from his wife for 30 years but not divorced. So, for all intents and purposes, he is single because even if his wife makes a ton of money, her income is irrelevant under the means test since the client does not benefit from that income. Even…
THE Internal Revenue Service currently audits less than 1% of tax returns annually, so your probability of attracting IRS audit is incredibly low. Taking deductions that are higher than average deductions nationwide increases your probability of getting audited. • Taking unrealistic itemized deductions raises red flags. • The IRS has a sense of what’s a fair…
Do you have old debts in the past that you haven’t paid and are wondering if the creditors can still come back now and collect from you after so many years? This is a common question that I am often asked. I actually see a lot of people in this situation. At some time in…
YOU have not filed your income tax returns for the current year and previous years because: 1) you decided you are not required to file? 2) You are a victim of identity theft and therefore excused? 3) You know you will owe taxes and you will have to pay when you file, decided not to…
IRS scores tax returns for audit. The higher the score, the more likelihood that you’ll be chosen for audit. 1. Scoring system: The IRS uses a Discriminant Function System (DIF) to determine returns that are most likely to generate additional revenue for the government. Scoring is secret and is known only to top brass at…
THE client is a foreign company that has been doing business with a California company since 2012. The client is one of the world’s largest manufacturers of a certain kind of equipment, which the CA company sells and distributes in the United States. Business was good reaching low million dollar figures until the CA company…
DOUGLASs Troester worked as a shift supervisor of coffee giant, Starbucks Corporation. As shift supervisor, he performed store closing tasks where he transmitted daily sales, profit and loss, and store inventory data to Starbucks’s corporate headquarters. He then activated the alarm, exited the store, and locked the front door. However, before performing these tasks, he…
WHEN people are going through financial difficulty and are unable to pay their bills, their first reaction is often to ignore their debts and avoid contact with creditors. They think that by doing this, somehow the creditors will simply give up and go away. Then one day they get a summons delivered to their home…
YOU may exclude from gross income gain from sale of principal residence under Internal Revenue Code Section 121. 1. You may be able to exclude gain of $250,000 or $500,000 if you are married filing a joint return. 2. To be eligible for the bigger $500,000 exclusion for joint filers, must meet the three requirement:…
“Are you facing foreclosure and want to save your home? Chapter 13 will stop the foreclosure on its tracks and allow you five years to pay off the default while protecting your house from foreclosure. If you owe credit cards and other unsecured debts like medical bills, Chapter 13 may even allow you to have…
“AVisa workers come to work in the U.S. hoping to better their lives and their families’. They work hard, and are less likely to complain about substandard working conditions. There are employers who exploit this situation for profit.” Q: I AM a Filipino worker petitioned by my U.S. employer to work as part of its…
E-Filed Returns: • Electronic data are transmitted to a centralized Submission Processing Center. • Tax preparation software assigns a unique 14-digit Declaration Control Number to each return. • A unique Filing Location Code shown as the first two digits distinguishes returns as e-filed. • An Electronic Management System provides format data verification, data translation, and…
I WAS counseling someone the other day in my office. He looked shocked and confused as we sorted through all the credit card statements on my desk and added up how much he owed. $65,000! That’s how much the statements said he owed! How could this be? He said he remembered paying a lot of…
(Part 2) IN part 1: We defined 1) who are resident aliens, nonresident aliens or both, 2) who are exempt individuals, and 3) closer connection exception. In part 2: We defined 1) how resident alien and nonresident alien are taxed, 2) when is income considered U.S. sourced, 3) withholding requirement and employee issues. Taxation and…
THE client is 55 and single. He appears to have no problems to worry about. He is self-employed and makes about $5,000 monthly teaching people a special skill. He has no dependents. He owns a house that has no equity. The house is worth $400,000 but he owes $420,000 for it. He has not paid the…
Q: AS a newly hired employee, I have seen discriminatory practices against women and older persons in the company. I reported these to upper management and I was told something would be done. After following up on my report, I was told I was fired for “not being a team player.” What are my rights?…
THE classic “hobby loss” situation involves a professional or businessperson who starts Zumba classes, dog-breeding business or a farm. If the IRS determines that the Zumba, dog-breeding, or farm project is more for enjoyment rather than making money, it could be classified as a hobby. Losses from hobbies are not deductible. A sole proprietor who…
BANKRUPTCY sure sounds like a scary word. And most people see it as an admission of financial failure. By declaring bankruptcy, they figure they are hitting rock bottom. But is that really true? If you take a look around at all the people who have experienced bankruptcy, you will discover something rather remarkable: Bankruptcy is…
There is never the perfect time to think about who you would like to inherit from your estate in case you pass away or at least who among your closest friends (BFFs) and family members are even deserving of inheriting from your estate. In doing so, you should also think about which vehicle you plan…
TECHNOLOGY has dramatically changed the way that people work and earn a living in the 21st century. Instead of the traditional employer-employee model, companies who need services obtain them from the general public, leading to the formation of what is called the “on-demand economy” or “gig economy.” This has allowed the rise of alternative work…
THE client is 57 and is recently divorced with two children, one in high school the other in college. She makes $40,000 yearly in middle management for a large corporation. She has $50,000 in credit card debt accumulated while she was still married. The ex-husband had good income. So, when she was still married, her…
THE word “bankruptcy” is packed with all sorts of negative emotional triggers. It sounds bad — even dirty. It’s embarrassing. (What if people find out?!) People paint ugly pictures of what their lives will look like post-bankruptcy. But it’s not true. Bankruptcy is an opportunity to close one chapter of your life and open a…
YES, it does. Losses from hobbies attract IRS audits. It’s cool to run a business that you enjoy, such as photography, dance studio, martial arts, dog-breeding, farming, and other leisurely activities. If you convert that stress-reducing pastime into a regular business, try to make some money; otherwise, you may attract an IRS audit, especially if…
A Senior Care Home is also known as board and care, residential care facility for the elderly (RCFE) and assisted living facility. It is a place where non-medical care is provided to residents 60 years old and over, assisting them with their activities of daily living (ADL). As a consultant, the most frequent question asked…
(Part 2) IN the previous issue we defined: 1) who are resident aliens, nonresident aliens or both, 2) who are exempt individuals, and 3) closer connection exception. Do not forget to remember that U.S. tax laws controlling principles are whether you are a resident alien or nonresident alien. On the other hand, immigration laws refer…
