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Archive for the ‘Journals, Publications & More Information’ Category.

Adoptive parents: Don’t forget about the Adoption Tax Credit

The IRS explains In Tax Tip 2024-26 to parents of adopted children in 2023 they may qualify for the adoption credit. That the credit can be applied to international, domestic, private and public foster care adoptions. Taxpayers who adopted or started the adoption process in 2023 may quali...

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What taxpayers need to know about digital asset reporting and tax requirements

The IRS reminds taxpayers in Tax Tip 2024-21 IR-2024-18 that they must check the box indicating whether they received digital asset as a reward, award or payment for property or services or disposed of any digital asset held as a capital asset through an exchange, sale or transfer. Taxpay...

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IRS reminds those aged 73 and older to make required withdrawals from IRAs and retirement plans by Dec. 31; notes changes in the law for 2023

The IRS announces with IR-2023-246 The IRS reminds taxpayers that are over 73 years of age that is born in 1951 must begin receiving payments from Individual Retirement Accounts (IRAs) and workplace retirement plans.  The payments are called required minimum distributions (RMDs), even if ...

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Selling Your Home for a Big Profit? Here are the Tax Rules

Protax revisits IRC Sec 121- Exclusion of Gain on Sale of Principal Residences-.rules re the 5 year window, the use and ownership tests, the 2 year rule and that the home must be your Main Home. Many homeowners across the country have seen their home values increase in recent years. Accor...

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Deposit Interest into Five Tax Buckets

Protax explains the deductibility of interest as related to Mortgage interest, Investment interest Business interest, Student loan interest and Personal interest. Interest rates rise and fall periodically, but the tax rules for deducting interest expenses remain the same — unless Congr...

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Can You Deduct Student Loan Interest on Your Tax Return?

Protax explains the income phaseout ranges based upon filing status now that the student loan pause is coming to an end! The federal student loan "pause" is coming to an end on August 31 after more than three years. If you have student loan debt, you may wonder whether you can deduct the ...

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High Earners 50 and Up Get Two-Year Reprieve From IRS on 401(k) Rule

Protax explains that on August 25, 2023 the IRS postponed a mandate that was due to kick in starting in 2023 to 2026 for higher income tax earners making more than $145,000 that would have required their catch up contributions on 401(k)/ 403(b) and Thrift plans to be placed in after tax RO...

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Retirement account catch-up contributions can add up

Protax explains that if you are 50 or over that you can top off your IRA and 401(k)/ 403(b) thrift plans accordingly and how it benefits Protax’s taxpayer clients down the road. If you're age 50 or older, you can probably make extra "catch-up" contributions to your tax-favored retiremen...

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Tips to help taxpayers make sure their donations go to legitimate charities

The IRS reminds taxpayers with Tax Tip 2023-110 how they can help determine if a charity is legitimate. When disaster strikes, Americans can always be counted on to help. That help comes in countless ways, but often the easiest way to help is by donating money to charities. Sadly, crimin...

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Tax basics for setting up a business

The IRS in Tax Tip 2023-18 explains to taxpayers wanting to set up a business the different business structure types, how to choose a tax year end, obtain an EIN and set up employees Starting a new business can seem overwhelming for new entrepreneurs or even seasoned professionals. The IR...

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IRS reminder: Make sure to understand recent changes when buying a clean vehicle

The IRS explains to taxpayers in IR-2023-160 how to claim a 2023 and prospective Qualified Plug In Electric Vehicle Credit on Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles), that starting in tax years 2023 taxpay...

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Tax considerations when selling a home

IRS explains in Tax Tip 2023-81 the application of IRC Sec 121- Exclusion of Gain on Sale of a Principal Residence, $250,000 per spouse--keep in mind that the home must be your Main Home and you must BOTH Own and Live in it or use it for at least 2 years, 34 months or 730 days in the 5 yea...

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The IRS alerts taxpayers of suspected identity theft by letter

The IRS reminds us under Tax Tip 2023-74 that after filing your 2022 US income tax return taxpayers can receive anyone of four (4) different types of IRS Theft ID letters, requiring them to follow a certain set of instructions prior to their tax returns being processed. Scammers sometimes...

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IRS offers tips on preparedness and how to protect personal information during natural disasters

The IRS reminds us in IR—23-100 what we can do in the event of a natural disaster to reconstruct our records, some tips to keep in mind when we may apply for federal assistance or insurance reimbursements! In recognition of National Hurricane Preparedness Week and National Wildfire Awar...

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Hobby or business: here’s what to know about that side hustle

The IRS reminds us through Tax Tip 2023-61 of Hobby Loss deductibility restrictions, please keep these in mind when preparing your US income taxes!! Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies a...

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Supreme Court holds FBAR penalty is imposed per report, not per account

Huge news- The US Supreme Court on February 28, 2023 holds in a decision on Bittner, No. 21-1195 (U.S. 2/28/23)) vs. (Boyd, 991 F.3d 1077 (9th Cir. 2021)) that the $10,000 non willful FBAR Form 114 penalty is per report, not per account! The U.S. Supreme Court held Tuesday in a 5-4 decisi...

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New IRS features allows taxpayers electronically filing amended returns to choose direct deposit to speed refunds

The IRS announced in IR-2023-22 on February 9, 2023 as a follow up from its June 23, 2022 announcement that we are now able to efile Amended Form 1040NR- U.S. Nonresident Alien Income Tax Return, that we can now also choose to direct deposit the refunds to speed them up! In the latest imp...

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The adoption tax credit helps families with adoption-related expenses

The IRS explains In Tax Tip 2023-06 to parents of adopted children that taxpayers who adopted or started the adoption process during 2022 should review the rules around the adoption credit and the amount of the credit increases for qualified taxpayers. The adoption tax credit lets familie...

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Tax basics: Understanding the difference between standard and itemized deductions

In IRS Tax Tip 2023-03 the IRS discusses the differences between the Itemized Deduction and the Standard Deduction. One of the first decisions taxpayers must make when completing a tax return is whether to take the standard deduction or itemize their deductions. There are several factors ...

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IRS reminds those over age 72 to start withdrawals from IRAs and retirement plans to avoid penalties

The IRS announces with IR-2022-217 The IRS reminds taxpayers that are over 72 years of age that is born in 1950 must begin receiving payments from Individual Retirement Accounts (IRAs) and workplace retirement plans. The payments are called required minimum distributions (RMDs), even if th...

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Important info for people considering making early withdraws from retirement funds

The IRS provides a timely and excellent reminder in Tax Tip 2022-162 about important info for people to consider before they dip into their hard-earned retirement savings for hardship distributions, early withdrawals or loans. In addition to a reminder n Required Minimum Distributions. No...

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Is A Backdoor Roth IRA Right for You? Consider These Pros and Cons

Just a little reminder the Backdoor ROTH is not a certainty going forward, it lives to fight another tax year! If your income exceeds the limits to contribute directly to a Roth IRA, you may have heard about the so-called 'Backdoor Roth IRA,' which allows traditional IRA conversions to ...

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October FBAR Extension Deadline Nears For Foreign Bank And Financial Account Holders

IRS reminds taxpayers in IR-2022-174 of the Form 114 FBAR, that the extended October 17, 2022 deadline is approaching! Filers affect by a natural disaster in Puerto Rico, Florida, North Carolina and South Carolina may have their FBAR due date further extended. WASHINGTON – The Inte...

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ABLE Accounts Can Help People With Disabilities Pay For Disability-Related Expenses

The IRS reminds us that we can contribute for 2023 up to $16,000 to a ABLE (Achieving a Better Life Experience) account, including rollovers from the same beneficiaries 529 College Savings plan tax free, where qualified disability expenses (QDE) may be withdrawn tax free!  QDE generally...

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COVID Tax Relief: IRS Provides Broad-Based Penalty Relief For Certain 2019 And 2020 Returns Due To The Pandemic; $1.2 Billion In Penalties Being Refunded To 1.6 Million Taxpayers

“Read all about it”---The IRS in IR-2022-155 re Notice 2022-36 takes the absolutely unprecedented step in providing automatic late filing penalty relief (5% penalty)  to individuals and businesses for tax years 2019 and 2020 on a blanketed basis for all taxpayers affected by Covid-1...

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Some Tax Considerations For People Who Are Separating Or Divorcing

The IRS in Tax Tip 2022-92 explains some tax considerations for people who are separating or divorcing--  The tax treatment of alimony and separate maintenance payments and who can claim a Dependent Child in cases of Separation, Divorce or parents Living Apart, including the optional fi...

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Social Security Concerns For Remote Workers And International Assignees

Terrific explanation on how workers and self employed persons can avoid a double Social Security obligation when either a US person lives and works outside the US and where a foreign national lives and works inside the US- Explanation of FICA taxes, Detached Employee Rules- Five Years or M...

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Supreme Court To Resolve FBAR Penalty Dispute

Finally we will obtain clarity on the FBAR penalty found on FinCEN Form 114, under Code of Federal Regulations (CFR)- Internal Revenue Service to CFR Title 31- Money and Finance: Treasury and managed by FinCEN- the Federal Crimes Enforcement Network. The U.S. Supreme Court on Tuesday, June...

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IRS Extends E-Filing To More 1040-Series Amended Returns

The IRS announced Thursday, June 23, 2022 that we are now able to efile Amended Form 1040NR- U.S. Nonresident Alien Income Tax Return, however it will be some time before the software manufacturers catch up and implement these changes. Taxpayers are now able to file amended returns electr...

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Claiming A Child As A Dependent When Parents Are Divorced, Separated Or Live Apart

The IRS in Tax Tip 2022-18 explains who can claim a Dependent Child in cases of Separation, Divorce or parents Living Apart, Including the use of Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Parents who are divorced, separated, never marrie...

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Companies Who Promise To Eliminate Tax Debt Sometimes Leave Taxpayers High And Dry

In IRS Tax Tip 2022-103 don’t believe all those TV and Radio commercials from scam non licensed businesses promising to “…settle your tax debt for pennies on the dollar.”  The IRS does not negotiate tax debt.  Why CNN continues to sell them airtime is a mystery… As the old...

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School Is Out For The Summer, But Tax Planning Is Year-Round

The IRS explains in Tax Tip 2022-76 how getting married can affect your US income tax filings, from changing your name, addresses, changing your withholdings and adjusting your filing status, in addition to how kids summer camp can affect the Child and Dependent Care Credit and working Par...

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IRS Reminds Holders Of Foreign Bank And Financial Accounts Of April FBAR Deadline

IRS reminds taxpayers in IR-2022-73 of the Form 114 FBAR, not to worry as these are generally extended beyond April or June 2022 all the way to October 17, 2022 without any extension required. The Internal Revenue Service today reminded U.S. citizens, resident aliens and any domestic ...

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For The First Time, Maximum Educator Expense Deduction Rises To $300 In 2022; Limit $250 For Those Filing 2021 Tax Returns

The IRS reminds us in IR-2022-70 that the Maximum Educator expense Deduction is $250 for tax year 201 and rises to $300 for tax year 2022, rising $50 per annum with inflation thereafter.  This pertains to teachers from Kindergarten to 12th grade regarding their unreimbursed expenses- Bo...

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Time Is Running Out To File For Tax Year 2018 and Still Get Unclaimed Refunds

IRS reminds us in Tax Tip 2022-51 that the Tax year 2018 is about to fall off the table on April 18, 2022, 1.5 billion in unclaimed refunds are waiting…. The last date to file a claim for refund is the later of 3 years from the extended due date of the tax year filing or 2 years after ...

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IRS Highlights Importance of Child and Dependent Care Credit; Can Help Families, Others

The IRS reminds us that the Child and Dependent Care Credit was expanded for the 2021 US tax year, for taxpayers with an Adjusted Gross Income of under $438,000, it is 8,000 per qualifying person up to 2 qualifying persons or $16,000, where a qualifying dependent is a dependent 12 years ...

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Two Tax Credits That Can Help Cover the Cost of Higher Education

In IRS Tax Tip 2022-38 the IRS does an excellent job at explaining and advising on the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Higher education is important to many people and it’s often expensive. Whether it’s specialized job training or an ...

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Tax Time Guide: Saving for Retirement? IRA Contributions for 2021 Can Be Made Until April 18

IRS reminds us that we have until April 18, 2022 of this 2021 tax year to make a $6,000 (with catchup for age 50 to $7,000) IRA contributions- Traditional or ROTH IRA for the 2020 tax year, don’t be late! The Internal Revenue Service reminds taxpayers they may be able to claim a ded...

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Understanding The Child and Dependent Care Credit

The Child and Dependent Care Credit may come into play for tax year 2021, the maximum eligible expense for this credit is $8,000 for one child and $16,000 for two or more for qualifying persons! Taxpayers who are paying someone to take care of their children or another member of house...

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IRS Reminds Taxpayers Their Social Security Benefits May Be Taxable

The IRS reminds us using Tax Tip 2022-22 that taxpayers receiving Social Security benefits may have to pay federal income tax on a portion of those benefits. Social Security benefits include monthly retirement, survivor and disability benefits. They don't include supplemental security in...

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How A Taxpayer’s Filing Status Affects Their Tax Return

The IRS reminds us using Tax Tip 2022-13 that our filing status is determinate on December 31 of each tax year, and a description of each filing status! A taxpayer’s filing status tells the IRS about them and their tax situation. This is just one reason taxpayers should familiarize them...

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Remember To Use Up Your Flexible Spending Account Money

What happens when you do not use up all your FSA? Do you have a tax-saving flexible spending account (FSA) with your employer to help pay for health or dependent care expenses? As the end of 2021 nears, there are some rules and reminders to keep in mind.   An account for health e...

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New Digital Asset Reporting Requirements Will Be Imposed In Coming Years

Hip, hip hooray for regulation in the Cryptocurrency market, the guessing work and reliance on 3rd party software is finally gone. The Infrastructure Investment and Jobs Act (IIJA) was signed into law on November 15, 2021. It includes new information reporting requirements that will gen...

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How Are Court Awards And Out-Of-Court Settlements Taxed?

Have you ever wondered how damage awards and out of court settlements may be taxed by the IRS?! Awards and settlements are routinely provided for a variety of reasons. For example, a person could receive compensatory and punitive damage payments for personal injury, discrimination or ha...

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Factor In Taxes If You’re Relocating To Another State In Retirement

Tax consequences to consider between the state you currently live in and the state you want to move to! Are you considering a move to another state when you retire? Perhaps you want to relocate to an area where your loved ones live or where the weather is more pleasant. But while you’...

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ABLE Accounts: A Valuable Financial Solution For People With Disabilities

The IRS reminds us that we can contribute for 2022 up to $15,000 to a ABLE (Achieving a Better Life Experience) account, including rollovers from the same beneficiaries 529 College Savings plan tax free, where qualified disability expenses (QDE) may be withdrawn tax free!   QDE generally ...

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FinCEN Provides FBAR Relief to Victims of Recent Natural Disasters

Notice- October 5, 2021- The Financial Crimes Enforcement Network (FinCEN) announced that victims of Ida and the CA wildfires and Tropical storm Fred have until December 31, 2021 to file their FBAR Form 114.   FinCEN is offering this expanded relief to any area designated by the Federal E...

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Retirement And Taxes: Understanding IRAs

The IRS provides an excellent breakdown on the different types of IRA’s, their uses and differences, the contributions and withdrawal features of each. Individual Retirement Arrangements, or IRAs, provide tax incentives for people to make investments that can provide financial security ...

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Understanding The Tax Responsibilities That Come With Starting A Business

The IRS explains with tax tip 2021-134 that when you start a business you have options as to the business structure, Sole proprietorship, Partnership, Corporation, S corporation and LLC.  Also you can choose your year end, it does not have to be December 31. Small business owners have a ...

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IRS Reminds Business Owners To Correctly Identify Workers As Employees Or Independent Contractors

The IRS reminds us on the differences between employed individuals and self employed individuals, remember please consult the IRS’s Revenue Ruling 87-41 for the IRS’s 20 point analysis! This is a hotly audited IRS focused area! During National Small Business Week, the Internal Revenue...

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Foreign Financial Asset Filing Requirements: Coming Into Compliance

An excellent expose on a US persons obligation to report their foreign asset holdings/ foreign accounts on FBAR Form 114, FATCA Form 8938, the variety of penalties imposed for failure to do so and the remedies available to fix these delinquent reporting requirements. EXECUTIVE SUMMARY ...

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Here’s How Saying “I Do” Can Affect A Couples Tax Situation

The IRS explains in Tax Tip 2021-82 how getting married can affect your US income tax filings, from changing your name, addresses, changing your withholdings and adjusting your filing status. The arrival of summer is also the start of wedding season. Marriage changes many things and taxes...

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IRS Has Refunds Totaling $1.3 Billion For People Who Have Not Filed A 2017 Federal Income Tax Return

IRS reminds us that the Tax year 2017 is about to fall off the table on May 17, 2021, 1.3 billion in unclaimed refunds are waiting…. The last date to file a claim for refund is the later of 3 years from the extended due date of the tax year filing or 2 years after the tax was paid. Uncl...

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Federal Tax Day – Current,J.1,IRS Can Impose One Non-willful Penalty for Late FBAR Covering Multiple Foreign Accounts (Boyd, CA-9),(Mar. 26, 2021)

In a similar finding to the district court in the matter of Bittner (DC TX 6/29/2020), the Court of Appeals for the Ninth Circuit on March 26, 2021 ruled that the IRS can impose only one non-willful penalty under 31 USC 5321(a)(5)(A) when an untimely, but accurate, Report of Foreign Bank a...

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‘Willful’ FBAR Penalties Upheld

The Fourth Circuit affirmed penalties for a taxpayers failure to file Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR) were ‘willful’ despite there claim to be unaware of the requirement! The Court found them to be ‘objectiv...

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Tax Time Guide: Get Credit For IRA Contributions Made By April 15 On 2020 Tax Returns

IRS reminds us that we have until April 15, 2021 of this 2020 tax year to make a $6,000 (with catchup for age 50 to $7,000) IRA contributions- Traditional or ROTH IRA for the 2019 tax year, don’t be late! The Internal Revenue Service notes that taxpayers of all ages may be able to claim...

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Report of Foreign Bank and Financial Accounts (FBAR) Filing Requirement for Virtual Currency FinCEN Notice 2020-2

FinCEN (Financial Crimes Enforcement Network) on December 31, 2020 advised filers that although accounts holding virtual currency are not currently considered a reportable account, it to pros=pose shortly changes that will require virtual currency accounts reportable under 31 CFR 1010.350(...

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DC Holds That Non-Willful FBAR Violation Calculations Is Per Year Not Per Account

The district court in the matter of Bittner (DC TX 6/29/2020), concluded that the penalty for a non-willful FBAR violation relates to each FBAR Form 114 not timely or properly filed rather than to each foreign financial account maintained but not timely or properly reported. Only time wil...

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Taxpayers Should Renew Expiring ITINs Early To Avoid A Refund Delay Next Year

As we have warned in the past ITIN’s not used at least once every 3 years and 5 years after issuance now expire, the following applies to the 2020 tax year for returns filed in 2021. The later requirement will affect ITINs with middle digits of 88, 90, 91, 92, 94, 95, 96, 97, 98 or 99, i...

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IRS Finalizes Safe Harbor To Allow Rental Real Estate To Qualify As A Business For Qualified Business Income Deduction

On September 24, 2019 the IRS released IR-2019-158 containing Revenue Procedure 2019-38 that contained a safe harbor which would allow a rental activity to be treated as Qualified Business Income for the purposes of IRC Sec 199A. This Safe Harbor contains a 250 hour requirement, however If...

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Tax Credits Can Help Offset The Cost Of Higher Education

The IRS does an excellent job at explaining and advising on the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Whether it’s online, in-person, part-time or full-time, higher education can be expensive. The good news is there are tax credits that can help ...

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Now Available: IRS Form 1040-X Electronic Filing

Major IRS milestone helps taxpayers correct tax returns with fewer errors, speeds processing The IRS announces in IR-2020-182 as we reported on May 27, 2020 that the ability to for Amended efiling starting with the 2019 tax year only, is now a reality and is effective and in place effecti...

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IRS unclaimed refunds of $1.5 billion waiting for tax year 2016; taxpayers face July 15 deadline

IRS reminds us that the Tax year 2016 is about to fall off the table on July 15, 2020, 1.5 billion in unclaimed refunds are waiting…. The last date to file a claim for refund is the later of 3 years from the extended due date of the tax year filing or 2 years after the tax was paid. Unc...

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IRA contributions made by July 15 count as 2019 tax deduction

IRS reminds us that we have until July 15 of this 2020 tax year to make a $6,000 (with catchup for age 50 to $7,000) IRA contributions- Traditional or ROTH IRA for the 2019 tax year, don't be late! The Internal Revenue Service today reminded people that contributions to traditional Indivi...

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IRS announces Form 1040-X electronic filing options coming this summer; major milestone reached for electronic returns

Finally…the IRS announces in IR-2020-107 that starting this summer of 2020 they will begin to allow for Amended efiling starting with the 2019 tax year only, a long awaited and overdue change that should dramatically speed up the processing times of filing amended tax returns hat have st...

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Streamlined Disclosure in U.S. v. Brian Nelson Booker

The case of the U.S. vs Brian Nelson Booker a Florida based CPA the first person criminally charged by the Department of Justice (DOJ) with allegedly making false statements in connection with the IRS’s Streamlined Domestic Offshore Program (SDOP), reminds us that filing a Streamlined su...

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CERTAIN TAX-FAVORED FOREIGN TRUSTS NOW EXEMPT FROM INFORMATION REPORTING!

The IRS has issued Rev Proc 2020-17, 2020-12 IRB, that exempts from information reporting requirements certain tax-favored foreign trusts that are established and operated exclusively or almost exclusively to provide pension or retirement benefits, or to provide medical, disability, or e...

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Parents who adopt can benefit from this valuable tax credit

The IRS explains to parents of adopted children that taxpayers who adopted or started the adoption process during 2019 should review the rules around the adoption credit and the amount of the credit increases for qualified taxpayers, the rules remain the same. Taxpayers who adopted or sta...

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Child tax credit by the numbers

The IRS explains the Child Tax Credit (CTC) with phase out ranges STARTING at $400,00 for married filing joint filers.  The IRS reminds us of what the parameters for claiming the CTC starting in January 1 of 2019. Taxpayers may be able to claim the child tax credit if they have a qualify...

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Global tax chiefs undertake unprecedented multi-country day of action to tackle international tax evasion

The IRS wants you to know that they have combined forces with the United Kingdom (UK), United States (US), Canada, Australia and the Netherlands to catch offshore tax evasion as a result of an international financial institution located in Central America, whose products and services are b...

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Gig economy work can affect a taxpayer’s bottom line

The IRS explains how the Gig economy- (also called sharing economy or access economy—is activity where people earn income providing on-demand work, services or goods. Often, it’s through a digital platform like an app or website..) is taxed, so timely and relevant in today's changing w...

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Get ready for taxes: Important things to know about refunds

The IRS explains how the receipt of your tax season refund can be affected by many factors, including whether you efile or paper file, theft ID and whether you claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) do not expect your refund before mid-February. As...

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What teachers should know about deducting out-of-pocket classroom expenses

What the IRS wants teachers from Kindergarten to 12th grade to know about unreimbursed expenses that they incur for the classroom. Now that fall is here and school has started, many teachers are dipping into their own pockets to buy classroom supplies. Doing this throughout the year can a...

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Virtual currency: IRS issues additional guidance on tax treatment and reminds taxpayers of reporting obligations

The IRS is aware that some taxpayers with virtual currency transactions may have failed to report income and pay the resulting tax or did not report their transactions properly.  Therefore for the first time since 2014 the IRS has released two new pieces of guidance for taxpayers who enga...

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Taxpayers who donate to charity should check out these resources

Some excellent recourses available by the IRS when it comes to charitable giving!  Is the charitable organization a legit US registered charity, how to fair value items, rules on deductibility, and non-cash donations. Taxpayers who donate to a charity may be able to claim a deduction on ...

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The child tax credit benefits eligible parents

With the signing of the TCJA 2017 legislation on December 22, 2017 to become effective as at January 1, 2018 the Child Tax Credit (CTC) took on a whole new life.  With new phase out ranges STARTING at $400,00 for married filing joint filers, it was not uncommon this past 2018 tax season t...

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Here’s how the credit for other dependents can benefit taxpayers

The Child and Dependent Care Credit may come into play when the Child Tax Credit does not, learn who qualifies, the maximum credit available, the type of care that qualifies, and the provider information required to claim the credit. Taxpayers with dependents may qualify to claim a few di...

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Taxpayers can compare eligibility and benefits of two education credits

The IRS does an excellent job at comparing and contrasting the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). There are two education credits that can help taxpayers with higher education costs: the American opportunity tax credit and the lifetime learnin...

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Two education credits help taxpayers with college costs

If you pay for college in 2018, you may receive tax credits for education on your federal tax return.  Even if you’re studying outside of the U.S. the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) may reduce the amount of tax you owe, but only the AOTC is...

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Divorce or separation may have an effect on taxes

With the passage of the 2017 TCJA legislation signed into law on December 22, 20917 we are reminded of the tax law changes related to alimony and separation payments as applicable to 2019 US tax filings.  Beginning Jan. 1, 2019 alimony or separate maintenance payments are not deductible f...

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Taxpayers with expiring ITINs should renew them now

As we warned you on July 25, 2019 at the end of 2019 (to file for 2019 tax returns in 2020) ITINs expire after not being used at least once in the last 3 tax years, as well as ITINs with middle digits of 83, 84, 85, 86 or 87 expire. Taxpayers with expiring individual taxpayer identificat...

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Tips for taxpayers who may need to amend their tax return

What the IRS wants taxpayers to know about filing mistakes on their tax returns.  Taxpayers can fix mistakes or omissions on their tax return by filing an amended tax return. If you need to amend, the following tips should prove helpful to you. Although the IRS often finds and corrects e...

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IRS Statement On Foreign Tax Credit

In 2019, the United States and the French Republic memorialized through diplomatic communications an understanding that the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociate (CRDS) taxes are not social taxes covered by the Agreement on Soci...

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Individuals with significant tax debt should act promptly to avoid revocation of passports

As previously blogged back on March 22, 2019, Protax warned that under The Fixing America’s Surface Transportation Act (FAST Act), P.L. 114-94, adding Sec. 7345, which authorizes the IRS to certify to the secretary of State that when a taxpayer is seriously delinquent with his or her tax...

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These tax tips can help new business owners find success

The IRS explains with tax tip 2019-116 that when you start a business you have options as to the business structure, Sole proprietorship, Partnership, Corporation, S corporation and LLC.  Also you can choose your year end, it does not have to be December 31. Starting a business can be ve...

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Tax reform brought significant changes to itemized deductions

How the TCJA 2017 act severely limited Itemized Deductions starting on January 1, 2018, while eliminating the phaseout entirely.  Gone are unreimbursed employee expenses, investment expenses and personal casualty & theft losses unless the casualty is declared a federal disaster area b...

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Data Breach!? Contact The IRS!

What happens when your CPA gets hacked, and your data is compromised, what the IRS Mandates we must do as professional CPA’s to protect the general public and your data.  Contact the IRS and law enforcement, contact the states in which you prepare returns, contact experts and contact cl...

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Millions more ITINs set to expire in 2019; IRS says renew early to prevent refund delays

Please remember at the end of 2019 (to file for 2019 tax returns in 2020) ITINs expire after not being used at least once in the last 3 tax years, as well as ITINs with middle digits of 83, 84, 85, 86 or 87 expire! Nearly 2 million Individual Taxpayer Identification Numbers (ITINs) are se...

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Virtual currency not FBAR reportable (at least for now)

FinCEN makes it clear that regulations (31 C.F.R. §1010.350(c)) do not define virtual currency held in an offshore account as a type of reportable FBAR Form 114 account. Tax practitioners and taxpayers alike have long grappled with whether virtual currency, aka cryptocurrency, is report...

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When delaying your Social Security benefits pays off

When you start collecting Social Security can have a significant impact on the monthly benefit you receive, the moral of the story is although you can start collecting at age 62 the longer you wait until Full Retirement Age (FRA) (anywhere from age 65-67) up to age 70 due to the Delayed Re...

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Home office deduction benefits eligible small business owners

The IRS reminds taxpayers who is eligible for a home office deduction, the types of expenses they may claim and the methods available to claim home office deductions. Small business owners may qualify for a home office deduction that will help them save money on their taxes, and benefit ...

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Some taxpayers may need to amend their tax return

What the IRS wants taxpayers to know about filing mistakes on their tax returns.  Taxpayers can fix mistakes or omissions on their tax return by filing an amended tax return. If you need to amend, the following tips should prove helpful to you. Taxpayers who discover an error after filin...

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Here’s what people should know about reporting cash payments

The IRS re-introduces us to IRS Form 8300 required to be filed for all cash transactions in excess of $10,000 that occur in a trade or business. Federal law requires a person to report cash transactions of more than $10,000 to the IRS. Here are some facts about reporting these payments. ...

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IRS reminds those with foreign assets of annual April 15 FBAR deadline, generally extendable to June or October 15, 2019

IRS reminds taxpayers of the Form 114 FBAR, Form 8938 Statement of Specified Foreign Financial Asset filing deadlines, not to worry as these are generally extended beyond April or June 2019 all the way to October 15, 2019.  Also of mention is the now defunct OVDP program and Streamlined. ...

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Here’s what people should know about taking early withdrawals from retirement plans

The IRS reminds taxpayers what happens in the event they decide to  raid their retirement plans---early withdrawals may be taxable or non taxable and subject to penalty. Taxpayers may need to take money out of their individual retirement account or retirement plan early. However, this ca...

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Things taxpayers should know about claiming dependents

The IRS reminds us that since taxpayers can no longer claim personal exemptions for dependents on their tax returns, other reasons why we may want to claim dependents. As they are preparing their 2018 tax returns, taxpayers should remember that personal exemptions are suspended for 2018. ...

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Plug-In Electric Vehicle Manufacturer Crosses 200,000 Sold Threshold; Tax Credit for Eligible Consumers Begins Phase Down on Apr. 1

On February 12, 2019 we reported that the IRS announced that Tesla, Inc. had sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the third quarter of 2018.This triggered a phase out of the tax credit available for purchasers of new Tesla plug...

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Court upholds IRS PTIN fees

Federal Appeals overturns a 2017 Federal District court decision (launched by 700,000 in a class action suit, mainly non licensed nonprofessional tax outfits) that the IRS had no authority to charge a fee to tax preparers to obtain a PTIN.  The case centered around that "… the assessmen...

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Tax Time Guide: Seniors who turned 70½ last year must start receiving retirement plan payments by April 1

The IRS reminds taxpayers that, in most cases, Monday, April 1, 2019, is the date by which persons who turned age 70½ during 2018 must begin receiving payments from Individual Retirement Accounts (IRAs) and workplace retirement plans.  The payments are called required minimum distributio...

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IRS: Be vigilant against phone scams – Annual ‘Dirty Dozen’ list continues

The IRS warns taxpayers to be alert to tax time phone scams where aggressive criminals pose as IRS agents in hopes of stealing money or personal information. Phone scams or “vishing” (voice phishing) continue to pose a major threat. IRS YouTube Videos: Tax Scams – English | Spanis...

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