Applying for Tax-Exempt Status May Soon Be Simpler
The IRS has released a draft of a shorter, less burdensome version of the regular Form 1023 – Form 1023-EZ – for organizations that plan to apply for tax-exempt status. It is not currently available for use. When finalized, the two-page Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal…
Late Filing: Interest and Penalties May Apply
With April 15 behind us, most taxpayers have filed their income tax returns. If for some reason, people have yet to file their 2013 return, they may owe interest and penalties when the return is ultimately filed. It is important to note that interest and penalties are charged only if taxes are owed. If the…
Unionized College Athletes: Taxes? What Taxes?
The sports world has been abuzz with the news that the National Labor Relations Board ruled in favor of football players at Northwestern University, giving the players the right to form a union. Most of the chatter is about the effects such a move could have on college sports. The tax world is also talking…
Final Answer? Severance Payments can be Taxed
The US Supreme Court has issued the final word on the taxation of severance payments. In a unanimous decision, the Supreme Court – reversing the 6th Circuit Court of Appeals – has held that severance payments made to involuntarily terminated employees and not tied to the receipt of state unemployment insurance are subject to tax…
Can a Trust be a ‘Real Estate Professional’?
The Tax Court has determined that a trust that owned real estate properties and engaged in other real estate activities qualified for the exception to the passive activity loss rules for real estate professionals. A passive activity is any activity conducted by a trade or business in which a person does not materially participate. In…
Virtual Currency Can Mean Real Taxes
The IRS has provided guidance in the form of frequently asked questions on the tax treatment of virtual currency, such as Bitcoin. Virtual currency may be used to pay for goods or services or held for investment. It is a digital representation of value that functions as a medium of exchange, a unit of account…
IRS Looks at Rollovers Differently Now
How the IRS interprets the “one rollover per year” rule when referring to IRA tax-free rollovers changes beginning on Jan. 1, 2015 – even though the original rule that only one tax-free rollover is permitted per year has not changed. The one-year waiting period begins on the date you receive the IRA distribution, not on…
Warning: Even a ‘Dumb’ Criminal Could Steal Your Tax Refund
The crime of identity theft has become so rampant that the IRS has labeled it one of the “Dirty Dozen” tax scams. If nefarious individuals can gain access to your name and Social Security number, one scam is to file a fraudulent tax return on your behalf claiming a fake refund, which is deposited into…
File Correct Tax Form if Expecting Fair Treatment for Good Behavior
Failing to file the right form sometimes takes precedence over doing the right thing – at least when viewed through U.S. tax law. The Court of Appeals for the Eighth Circuit has affirmed a decision of the Tax Court that again denies a dependency deduction to a noncustodial parent when the custodial parent fails to…
Filing Separately May Not Be a Wise Tax Choice
A recent decision by the U.S. Tax Court highlights yet another reason that married couples can be penalized if they choose to file separate tax returns. Julie Oderio was married and lived with her husband. During 2008, she was a full-time employee and also owned rental property. Oderio filed her 2008 return as a married…