One of the primary ways small business owners end up in trouble is to avoid the expense and complexities of payroll taxes by classifying workers as independent contractors. Generally speaking, you are responsible for withholding income taxes, withholding and paying Social Security and Medicare taxes and paying unemployment taxes on all wages paid to your […]
While the IRS maintains that audits are largely random, in truth there are “triggers” which raise a red flag to the IRS and one of those triggers lie in the classification of “self-employed.” The IRS claims that the majority of tax cheaters happen to be self-employed, therefore this group gets special attention and are almost […]
As the “fiscal cliff” deadline looms, many taxpayers are becoming increasingly nervous about how the tax changes will affect them in the upcoming year. Those who have done a bit of year-end planning may find themselves ahead of the game when April 15th rolls around. While there may be more changes to come, here are […]
Most of us think of a tax loophole as a gift from the IRS. A tax loophole is actually an exploitation of a current tax law which allows the taxpayer to reduce or even eliminate taxes owed. A prime example of a tax loophole is the substantial tax break which was offered several years ago […]
A married taxpayer filing “married filing separate” took the mortgage interest deduction on a house purchased with a family member. The court recognized that that Congress did not intend for “married filing separate” taxpayers to be able to take the full amount of the interest deductions allowable under Section 163. The taxpayers deductions for mortgage […]
The taxpayers, attempting to settle taxes with the IRS, signed standard Offer in Compromise (“OIC”) forms, including IRS Form 656, the required form for OIC filers. The OIC was accepted by the IRS in 2007. For the 2007 year and on the taxpayer’s 2007 return, filed in 2008, the taxpayer’s claimed an earned income tax […]
The IRS has clarified that contributions to a single member LLC, owned by a charity, are made to the Charity. The IRS formally recognizes the disregarded status of single member LLCs in the charitable organization context, consistent with the treatment of these single member LLC disregarded entities. IRS Notice 2012-52.
The IRS made permanent the fast track settlement program with regard to tax exempt and governmental entities. Eligible cases under this fast track program will receive the expedited settlement process. However, a number of exclusions exist with the program. See IRS Announcement 2012-34
The court, interpreting Section 152, and Reg. Section 1.152-2, held that the couple residing in Israel with non-citizen children were not entitled to the dependency exemptions. Carlbach and Fried v. Commissioner, 139 TC 1, July 19, 2012.
Applying the common law employee test, the tax court held that masonry workers were employees, and not independent contractors for purposes of federal income tax, FICA and FUTA withholding. The tax court noted the degree of control was sufficient to indicate an employer / employee relationship. The workers were paid an hourly wage, were employed […]