income tax

IRS To Use Private Debts Collectors

In the spring of 2017, the IRS will begin outsourcing the collection of not all, but some, overdue federal tax debts to private contractors. In early December of 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or “FAST Act.” The FAST Act provides funding for transportation project over the next ten years. Of course, any bill related to highways is likely to include provisions requiring the IRS to use private debt collection companies, which this bill, in fact, includes.

Yes, Olympic Medals and Prize Money Are Taxable

The Summer Olympics in Rio de Janeiro recently concluded and many Americans took home gold, silver, and bronze medals. To be precise, 46 gold, 37 silver, and 38 bronze medals were won by American athletes. But not only were U.S. athletes like Michael Phelps and Kevin Durant raking in the gold in Brazil, so was the U.S. Treasury Department and the Internal Revenue Service. Yes, big surprise, the U.S. government has a stake in the Olympics as it taxes Olympic winnings as income.

The Most Overlooked Tax Deductions, Part 3

Many taxpayers overlook the long list of deductions that they may take when completing and filing their tax returns. The IRS has estimated that millions of taxpayers overpay their taxes each year mainly because they fail to avail themselves of all of the possible deductions. The tax professionals at the Thorgood Law Firm can help ensure that all taxpayers take advantage of any and all deductions that may apply to them. Here is the third part of our multi-part blog on the most overlooked tax deductions:

PAYMENT OF TAXES AS DEDUCTIONS

Estate tax on income in respect of a decedent

Part 1 – What If: Job Related Life Events And Struggling Taxpayers

If you have any type of financial difficulty, keep in mind that there’s a tax impact to events such as job loss or foreclosure. Such consequences may not necessarily be predominantly negative. For example, if your income decreased, you may be newly eligible for the Earned Income Tax Credit or other tax credits, which is a good thing.

Of the utmost importance when facing some financial obstacle is to contact the IRS immediately if you believe that you may have trouble paying your tax bill. Please see our blog You Can’t Pay Your Tax Bill in Full  You Have Options…An experienced and knowledgeable tax attorney may help ease any financial burden. Remember that to avoid additional penalties, you also should always file a tax return even if you are unable to pay.

What A Mess: The Donald And His Tax Returns

In March, Donald Trump’s campaign published a letter written by his tax attorneys explaining the status of his tax returns, an apparent sore subject for the Donald whenever he is questioned about it by the media. Although the letter is dated March 7, 2016, it wasn’t released by his campaign until twenty-three days later. Regardless, he continues to thumb his nose at the time-honored tradition of presidential nominees disclosing their tax returns at some sufficent time prior to the election.

Makric Enterprises, Inc. v. Commissioner: When Tax Mistakes Are Costly

Not knowing the details of a business transaction sounds preposterous on its face, especially when the ignorant taxpayer is the party which formulated the transaction. In the case of Makric Enterprises, Inc. v. Commissioner, TC Memo 2016-44, a failure to make sure that the right corporation was sold as part of the agreement literally proved costly to the taxpayers involved, to the tune of $2,839,780.

This tax matter involved two corporations. One of which was a holding company (Makric Enterprises, Inc.) which owned only one asset, the stock of a wholly owned subsidiary (Alpha Circuits, Inc.). A third party expressed interest in purchasing the business conducted by Alpha.

Who Is Liable For Failure To Pay Over Employment Taxes?

Employers are required to withhold federal income and payroll taxes from their employees’ wages for payment of payroll taxes such as federal income taxes and FICA (Federal Insurance Contributions Act) taxes, which are held in trust until the employer makes a federal deposit of these amounts. The IRS applies a term, “Trust Fund Recovery Penalty” or TFRP, well-known by employers, to describe the fine for employer’s willful failure to pay over these taxes. Persons responsible for making such payments may be subject to criminal charges for any willful failure to do so. Most TFRP cases involve corporate officers.

Some Things To Know About New York State Tax

It’s not news that most people complain about having to pay taxes. New Yorkers seem to especially complain about their state and local tax burden. The Tax Foundation, with a database that currently covers the years 1977-2012, interprets the tax burden of individual taxpayers by measuring what they actually spend in local and state taxes. Its. According to its rankings of states with the highest state and local tax burdens, Americans paid an average rate of 9.9 percent in state and local taxes in 2012. Further, the state with the highest state-local tax burden was New York at 12.7 %. In fact, the top three states – New York, New Jersey and Connecticut – have been ranked as the top three in this category since 2005. Not surprisingly, New York’s tax laws are relatively complex compared to other U.S. states. Here are some things to know about taxes in the Empire State.

Fail to Turn Over Payroll Taxes To The IRS? You Could Be Looking At Jail Time

An employer is required to withhold federal income and payroll taxes from its employees’ wages for payment to the IRS. Payroll taxes such as federal income taxes and FICA (Federal Insurance Contributions Act) taxes, both withheld by an employer, are held in trust until the employer makes a federal deposit of these amounts. The IRS applies a term, “Trust Fund Recovery Penalty” or TFRP, well-known by employers, to describe the fine for employer’s willful failure to remit payroll taxes.

The Alternative Minimum Tax, Explained

The Alternative Minimum Tax, ExplainedUnder the Internal Revenue Code and the vast body of rules and regulations related thereto, certain tax benefits can significantly reduce the amount of taxes that a taxpayer may owe. The alternative minimum tax (AMT) applies to those taxpayers with high levels of income by limiting these benefits and ensuring that these taxpayers pay at least a minimum amount of tax. If the AMT applies to you, you may lose many credits or deductions you would normally receive if you didn’t have to pay the AMT.

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