In 2016, the Georgia legislature adopted a state income tax credit effective January 1, 2017 designed to enourage Georgian’s to contribute to qualified rural hospital organizations.
IRS Fact Sheet 2017-9 provides a good reminder to employers that they must be careful in identifying workers as employees and independent contractors. If employees are misclassified as independent contractors, the employer may be responsible for payroll taxes. The FSA provides a list of factors used to discern whether a worker is an employee versus an independent contractor.
Even if the employer incorrectly classifies workers, documentation that supports the employer’s filing position is important.
IRS Field Service Advice (FSA) 20172801F provides a reminder that gift tax returns must be filed by taxpayers in order to start the statute of limitations. Generally, a gift that is adequately disclosed on a gift tax return or a schedule thereto will start a 3 year statute of limitations which the IRS has to contest the value of the gift. If the gift is not adequately disclosed, or if no gift tax return is filed, there is no statute of limitations and the gift may be subject to IRS audit indefinitely. If you have questions or need help in the preparation of a gift tax return, we can help. Contact us at 404-255-7400 or firstname.lastname@example.org.
IRS Information Letter 2017-0015 below provides a requesting taxpayer guidance on the proper amount of income includible in the taxapyer’s income from a life insurance split dollar arrangement entered into with his/her employer. This is a good reminder to review your split dollar arrangements periodically to make sure they are functioning and taxed as intended by the parties to the contract. If you need help with a split dollar arrangement, we can help. Contact us at 404-255-7400 or email@example.com.
Although “file and suspend” is no longer available as a Social Security planning tool (expired on April 30, 2016), there is one spousal strategy that still exists. A restricted application called “file as a spouse first” can be filed when you reach full retirement age (FRA) if you turned 62 by January 1, 2016 (born in 1953 or earlier).
In Castigliola v. Commissioner, a law firm claimed that the member managers of their professional limited liability company were “limited partners” under IRC Section 1403 and so not subject to self employment taxes on distributable shares of income over and above guaranteed payments paid to the attorneys as their compensation.
The following Tax Court Memorandum decision underscores the importance of substantiating auto and travel expenses. The court noted that in Rogers v. Commissioner, T.C. Memo. 2014-141, 108 T.C.M. (CCH) 39, 43. “Section 274(d) imposes relatively strict substantiation requirements for deductions claimed for (among other things) “listed property.” Under section 280F(d)(4) listed property includes any “passenger automobile.” No deduction is allowed under section 274(d) unless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating her own statements, the amount, time and place, and business purpose for each expenditure. Sec. 1.274-5T(a), Sec. 1.274-5T(b), and Sec. 1.274-5T(c).”
In the case of Carolyn F. Whitsett v. Commissioner, Tax Court Memo 2017-100, the United States Tax Court found that the taxpayer, Carolyn F. Whitsett, relied in good faith on her accountant and was not liable for negligence related penalties when her CPA reported capital gain due to a stock redemption in the wrong tax year and failed to file a return. (see memorandum below) If the IRS has assessed a penalty against you and you would like help finding out if it may be abated, please give us a call at 404-255-7400 or email us at firstname.lastname@example.org.
WASHINGTON — Beginning June 15, taxpayers requesting letter rulings, closing agreements and certain other rulings from the Internal Revenue Service will need to make user fee payments electronically using the federal government’s Pay.gov system.
Most married couples file their tax returns as Married Filing Jointly (MFJ) which is generally tax advantageous when compared to the other alternative which is Married Filing Separately (MFS). It needs to be noted though, that filing jointly is an annual election by both spouses and cannot be used if one spouse does not agree to sign (a frequent issue during divorce proceedings).