Unknowing Dupe or Audacious Liar?
Taxpayers can be found guilty of filing false tax returns as a principal or as an accomplice under an aiding and abetting theory. Jean Louis is a taxpayer found guilty of filing a false, fictitious and fraudulent income tax return (United States of America v. Jean Louis, U.S. Court of Appeals, 11th Circuit, Feb. 19,…
Good Record Keeping Key to Deducting Expenses
The requirement to keep adequate records when attempting to deduct various business-related expenses can’t be taken lightly. In the case of Peterson v. Commissioner, Matthew Peterson filed individual income tax returns for tax years 2011 and 2012. The returns contained various trade and business expenses on his Schedule C and various unreimbursed employee expenses on…
Investment Interest – a Less Well-known Itemized Deduction
Did you know that you can deduct your investment interest if you itemize? “Investment interest” is interest paid or accrued on indebtedness on property held for investment that is otherwise deductible. A good example of investment interest is the interest charged when buying stocks and bonds on margin. It does not include qualified residence interest,…
State and Local Sales Taxes Deductible When Itemizing
You have a choice between deducting state and local sales taxes or state and local income taxes. A prudent tax planner would obviously choose the larger of the two deductions. The option to deduct state and local sales taxes benefits the residents of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. These states don’t…
Citizen of a US State Can’t Avoid Federal Income Tax
The modern-day secession movement that has sprung up around the country in recent years is evidence that a number of states – as many as 20, stretching from New Jersey to Oregon to Texas – have citizens who would like to assert their independence from the federal government. John Trowbridge Jr. found out the hard…
Applying Repair Regulations Simplified for Small Businesses
Just in time for small business owners’ 2014 tax returns, a procedure for easier compliance with final tangible property repair regulations has been announced by the IRS. The simplified procedure is now available starting with the 2014 income tax return, which taxpayers or their tax professionals are currently preparing. In general, for the first taxable…
Using Standard Mileage Rate Has Limitations
You have a choice between using the business standard mileage rate or actual expenses when calculating the fixed and operating costs of an automobile. Once you select a method, you must use that method for the entire tax year. There are some limitations on the eligibility to use the business standard mileage rate. A taxpayer…
Forms 1099: File Tax Return Timely – But Not Too Early
Hold off on filing your income tax return until all Forms 1099 are received. Otherwise, you might be amending your return. Various types of Forms 1099 are used to report different types of activities. Three of the more popular types of 1099’s are: 1099-Div 1099-Int 1099-Misc 1099-Div Some people are familiar with the 1099-Div. Most…
Cross t’s and Dot i’s for Nontaxable Disability Benefits
Disability income is taxable for a military veteran – despite not being taxable in earlier years. The US Tax Court ruled that disability retirement pay received by Kevin M. Campbell was taxable income despite the fact that, in previous years, the Internal Revenue Service had treated it as nontaxable (Kevin M. Campbell and Pamela J….
Expensive Lesson: Children in Home aren’t Always Dependents
A taxpayer was disallowed dependency exemptions for his son, daughter and grandchild in a January 2015 US Tax Court case. The court also denied him head-of-household filing status. This decision (Gregory McBride v. Commissioner, US Tax Court, T.C. Memo. 2015-6, Jan. 8, 2015) cost the taxpayer $3,540 in additional federal income taxes and penalties of…