Many people are wondering what effect a Donald Trump administration may have on their taxes. It is important to note that every plan that a president proposes has to go through congress, and that process alone can often greatly affect any legislation. However, if this plan is approved by congress in it's entirety, then many people would be able to save a lot of money on taxes. In fact, experts are stating that this proposed tax cut will be the largest one since Ronald Reagan, the sustainability of such large tax cuts however remains a matter of debate.
People who make between $48,000 and $83,000 per year will save about $1,000 on their taxes per year. Those who are making over $3.7 million, which are considered to be in the top 0.1 percent, will save $1 million per year. Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, is a man who has studied Trump's proposed plan in detail. Gleckman stated that the proposed tax plan will affect many people who may have been against Trump during the election.
Howard Wagner, managing director at Crowe National Tax Services, stated... read article
The tax code is clear - there is a cap on how much you can deduct per business gift. Right now the maximum allowance for any single business gift is $25 per recipient.
Obviously, many business gifts or multiple gifts to any single client or business partner might exceed that amount, but right now the IRS only permits a maximum of $25 tax deduction for any given recipient. Furthermore, the IRS regulations stress that this $25 cap is per individual, not the gift themselves. Therefore if you reward a faithful customer with three business gifts over the course of a year for a total of $75, you are only permitted a single $25 deduction because all of the gifts went to the same individual.
That being said, if you bought those same three gifts but bestowed them on three different people, you could write off the entire amount as a tax deduction. And, since completing deduction paperwork for your tax forms requires a lot of due diligence, it is critical to be as accurate as possible, which is why incidental costs are so relevant.
What Are Incidental Costs?
The IRS regulations stipulate that the $25 cap on gifts for a single individual does NOT... read article
There was speculation after Congress passed a tax-extender bill in late December 2014 near the end of its session that in combination with budgetary cutbacks the legislation might delay taxpayer filings and Internal Revenue Service (IRS) processing. In a December 18 press conference, IRS Commissioner John Koskinen warned that congressional budget cuts might delay taxpayer refunds because fewer than the normal number of IRS agents would be available to audit returns and to assist taxpayers calling in with questions.
On December 29, 2014, the IRS said that it anticipated opening of the 2015 tax filing season as normally scheduled on January 20, 2015, when the agency would begin processing electronic and paper tax returns as usual. Commissioner Koskinen said that the tax extender legislation enacted ten days earlier on December 19 had had no effect so far on the continued updating and testing of IRS systems.
But by early January, two weeks before the start of the tax filing season, taxpayers were apprehensive. They braced for a season of misery. Commissioner Koskinen had advised agency employees that the budget revisions would reduce the scope of taxpayer services and that "realistically [IRS agents] would have no choice but to do less... read article
The rumor mill was abuzz, but alas, it was all just rumor. The Internal Revenue Service will not be issuing an emergency tax deadline extension in 2015, although there was talk of a possibility earlier in the year. The IRS announced in December 2014 that it would begin accepting tax returns on January 20, 2015 and anticipated no delays in tax returns this year. While the budget cuts to the Internal Revenue Service operating budget were fueling the possibility of delayed returns, the federal government said that everything was on running on time to begin processing tax filings.
The result of this adaptability by the revenue agency means that there will be no tax deadline extension this year. However, those who have not prepared their taxes as of now are eligible for an extension as long as they request it by midnight April 15. 2015. which is a hard deadline in most tax filing seasons. It will be the same this year, regardless of the deadline extension anticipation. While the interest on the extended taxes owed will only be 5%, that is not the case with the penalty for a late filing. The penalty can be upwards to 25% and is... read article
With the controversial law now under way after a shaky start, the internal revenue service is requiring that information recorded at the Obamacare online exchanges be provided to the IRS.
The IRS claims that they need this information to determine who is really eligible to receive the healthcare subsidies. The new rule will allow the IRS to collect personal information including names, addresses, taxpayer ids, premium amounts, insurance carriers, and policy numbers.
The new rule comes at a time when cases of IRS-related identity theft are at an all-time high and has law makers concerned with privacy and the potential for errors by the IRS.
Several bills filed by Republicans sought to amend the new rule to reduce the amount of data collection available to the IRS however, the new bills were never taken up by the Senate and the current rule stands. The IRS states as a reason that the income verification used by the healthcare exchanges is the most recent two years of filed tax returns.
However given that the initial start of the healthcare exchanges was in many cases over a defective website, it could be anyone's guess what information the IRS will actually be getting and if it is... read article
For those who are facing large amounts of tax debts and view the shutdown of the federal government as a temporary relief – think again.
If anything, the shutdown will have the effect of making it far more difficult to resolve any IRS problems because virtually all debt negotiations are off until things go back to normal. However, portions of the IRS are still hard at work, processing returns or taking note of the lack there of.
It's worse if you, or your tax attorney, are in the midst of negotiating with the IRS because during the shutdown there will be no one to negotiate with. The IRS office closing however will not get you off the hook for making scheduled payments and the clock is still ticking on any other time-sensitive.
For anyone with questions or seeking help will also be out of luck, as customer service over the phone or in person will not be available congress gets it's act together.
Needless to say the shutdown will be a major in convenience for law firms who help resolve tax problems, as any progress on the IRS's end will be delayed for an unknowable amount of time.
The new healthcare law which was just affirmed by the Supreme Court, officially titled the Patient Protection and Affordable Care Act (“the Act”), has a number of consequences beyond just medical reform. Specifically, the law is full of new taxes and tax increases that will affect individuals and businesses alike. However, many of these taxes will take years to take effect.
First, starting in 2012, the value of health care benefits that employers provide to employees must be reported on W-2s. The amount reported is not considered income.
Second, in 2011, the penalty for nonqualified distributions from health savings accounts was doubled to 20%.
Third, employees are now limited in the amount that they can contribute to health care flexible spending accounts. This was previously a discretionary amount; now it is capped at $2500.
Fourth, beginning in 2013 the itemized deduction limit for medical expenses will increase from 7.5% to 10%.
Finally, individuals who do not procure their own health insurance by 2014 will be taxed. This tax will be phased in over three years starting at the greater of $95 or 1% of income and rising to the greater of $695 or 2.5% of income in 2016.
It is expected that the IRS will be more thorough in reviewing tax returns this year. It’s been rumored that tax increases will be necessary to reduce the budget deficit, but now Washington leaders are coming out and saying it.
Rep. Steny Hoyer(D-MD) said at the first of this month that increasing taxes to reduce the budget may be, “the only solution.” Hoyer also said a balanced approach is needed that “raises some revenue.”
As a result, American taxpayers will be expected to fork out more of what they earn, both during the years of the current recession and when it comes to filing their annual returns for years to come.
The Internal Revenue Service (IRS) will be even more aggressive in checking to make sure the United States Government gets every penny owed to it. The increased diligence that the IRS will employ in reviewing returns means that taxpayers will have to assure they are knowledgeable about the money that may be owed to the government.
That’s why consulting with a IRS tax attorney is important when preparing returns and in the event... read article
No More Refund Anticipation Loans IRS Wipes Out the “Quickie Tax Loan” Business with New Ruling
IRS Spokesman David Stell declared that the agency shall no longer release “debt indicators” of taxpayers to tax preparation services.
Debt indicators released by the IRS are those that indicate whether the taxpayer will receive any tax refund, and if that refund would be offset by payment of delinquent taxes, student loans or child support. Tax preparers and payday loans companies use this information to process Refund Anticipation Loan (RAL) or RAC (Refund Anticipation Checks).
The usual target market for the loans are taxpayers in the lower-income bracket. Tax preparers take advantage of these individual’s need to get hold of cash quickly to process such loans. Both refund anticipation loans and refund anticipation checks are being used by taxpayers so that instead of having out-of-pocket payments, the tax preparation fees and products are paid for. The target of such loans and checks are those who have no cash-at-hand to pay for services done under tax preparation.
I hear varieties of this question frequently in my office. In this week’s blog, I have taken two examples from newspaper articles of examples of individuals who violated different sections of the tax code and unfortunately ended up in prison.
Former Wisconsin Restaurant Owner Receives Prison
Term for Evading Income Taxes
On February 27, 2008, in Madison, Wis., Sabi Atteyih was sentenced to 12 months plus one day in prison, to be followed by a three year term of supervised release for income tax evasion. On January 2, 2008, Atteyih pleaded guilty to evading his income taxes for 2002. While owning the Casbah Restaurant in Madison, Atteyih underreported his taxable income from the restaurant from 2002 through 2005 by $349,673 and he evaded income taxes totaling $128,938.
Minnesota Woman Sentenced for Failing to Pay Employment Taxes
On April 20, 2009, in St. Paul, Minn., Kara Kristine Sommer, of Burnsville, Minn., was sentenced to 18 months in prison and three years of supervised release for failing to pay the Internal Revenue Service (IRS) payroll taxes... read article