The IRS announced that taxpayers will have until April 17, 2012 to file their 2011 individual tax returns. The IRS will also begin accepting 2011 electronically filed tax returns beginning on January 17, 2012. These updates were listed on IRS News Release IR-2012-1 which can be found on the IRS website at www.irs.gov.
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Employee or Independent Contractor?
Is the person working for you an employee or independent contractor? This question comes up often. Typically start-up businesses will want to treat as many workers as possible as independent contractors, so they don’t have to deal with payroll taxes, and other fringe benefits. However, is this approach correct? The IRS would rather has every worker treated as an employee as they would receive more payroll taxes which include social security and medicare. Also the employer is required to withhold federal and state income taxes and remit them to the government. Well this topic has been discussed often. For a starting point, review the IRS website at http://www.irs.gov/businesses/small/article/0,,id=99921,00.html. This will provide you with a brief understanding of the issue and links to other related areas. Continue reading
Registered Tax Preparers
As a CPA, it always shocked me when I reviewed a tax return that wasn’t prepared in accordance with the applicable tax law. I’m not talking about a mistake on the application of laws. I’m saying that I saw fraudulent tax returns. Let me given you an example. A client referred a taxpayer to us to assist in an IRS issue. I met with the taxpayer and found out that the IRS wanted the refund back that it gave her. In order to determine if the IRS notice was correct, we reviewed the tax return. The IRS was stating that the taxpayer shouldn’t have taken a deduction for mortgage interest and for a large amount of charitable deduction. Continue reading
Are those emails from the IRS real?
Many of our clients and I’m sure a lot of other taxpayers have received emails from the IRS. Well, I’m here to tell you ignore them. They are not real. The IRS does not make initial contact with any taxpayer or tax advisor through email. The IRS has been communicating this statements since 2006. Read the link to the IRS website below. The IRS does have email, but they barely even use it with tax professionals due to these sorts of issues and for security purposes. Continue reading
Tax & Business Update – Fall 2011
Take advantage of business and tax laws that may expire for good on December 31, 2011. Mos of these tax laws benefit businesses. If Congress doesn’t extends certain business tax write-offs, make sure you consider the following items before December 31, 2011. Continue reading
IRS hires more agents
So, I have been telling everyone that IRS audits are up, especially in the metropolitan areas. It makes sense, doesn’t it? If the government is broke and needs more money, then they will hire more agents to audit more people. According to a Treasury Inspector General for Tax Administration Report (Number 2011-30-071), the number of IRS employees increased from 103,811 in in 2006 to 107,622 in 2010. in 2009, the IRS hired more than 2,000 revenue agents and tax compliance officers and during 2010, they added another 1,300 revenue agents. These new hires are on top of the existing agents. Continue reading
Are Damages or Punitive Damages Taxable?
The quick answer is damages or awards received for physical injuries or sickness are generally not taxable. However, punitive damages or awards are generally taxable if they are paid to compensate a taxpayer for non-personal injuries. Internal Revenue Code (IRC) Section 104 is the area of law that defines the taxable treatment of compensation for injuries or sickness. Continue reading
IRS Audits Increase
Over the past year, we have seen a large increase of IRS audits. We expect the audit increase is due to the fiscal problems / budget problems with the United States of America. So, on one hand Congress is saying we are here to help and on the other hand, they are telling the IRS to find more money. So be prepared. We are seeing IRS audits for the following items: Continue reading
