The IRS on Monday released withholding tables that reflect a new tax credit, dubbed the making work pay credit, created by the stimulus package. The making work pay credit was created by the American Recovery and Reinvestment Act, PL 111-5, which President Obama signed on Feb. 17. The credit equals
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Tax
Reminder: Support Your Auto Expenses
Auto expenses are a very common deduction for business owners and employees who must travel. Often the taxpayer does not know the exact amounts necessary to calculate the proper deduction and the tax preparer must estimate the mileage, business percentage, and ultimate auto deduction with the client’s help. Tax preparers
Requesting 9100 Relief
A taxpayer who fails to make a tax election by the due date for the election may not be out of luck. Certain extension and administrative relief options exist if the taxpayer can obtain “9100 relief” under Treas. Reg. §§ 301.9100-1 through -3. The drawback is that unless he or
Tax Aspects of Contributing a House to a Fire Department
Local fire departments often deliberately burn existing structures as a training exercise. New firefighters can practice their skills and techniques, knowing in advance that the structure is uninhabited. Often individuals will donate an old property, possibly even a former residence, to the local fire department. Obviously, where possible, taxpayers would
Small Business Tax Breaks in the Stimulus Package
The American Recovery and Reinvestment Act of 2009 contains numerous tax provisions aimed at small businesses. Bonus depreciation: IRC section 168(k) is amended to extend the 50% first-year bonus depreciation through 2009 (through 2010 for certain transportation property and aircraft). The election to accelerate AMT and research credits in lieu
Individual Tax Breaks in the Stimulus Package
With its new and expanded tax benefits for individuals, the American Recovery and Reinvestment Act of 2009 seeks to get more money into the pockets of American consumers. College students and their families, homebuyers, and buyers of new cars are among the potential beneficiaries, but so too are low-income Americans,
What to Do If a Client Is Missing a W-2
Employers had until Feb. 2 to issue Forms W-2 to their employees, showing wages and earnings for 2008. If a client hasn’t received a W-2 by now, here are the steps the IRS says to take: 1. Contact the employer. The client should contact his or her employer to find
Tax Court Can Look Outside Administrative Record in Determining Innocent Spouse Relief
The Eleventh Circuit has held that the Tax Court could consider evidence outside the administrative record when deciding on a taxpayer’s claim for innocent spouse relief (Neal, No. 06-14357 (11th Cir. 2/10/09)). The taxpayer had petitioned the IRS for equitable relief under IRC section 6015(f) because, unbeknownst to her, her
Taxes in Troubled Times
The IRS has acknowledged there’s plenty of pain to go around in the current economic downturn. Financially strapped taxpayers can take advantage of several relief initiatives and provisions that could lessen their tax bite. Those with investments posting a loss may be able to “harvest” it or at least reposition
Late February 1099-B Mailings Will Compress Tax Season for Many
Some brokerage customers of Fidelity Investments won’t receive Forms 1099-B until after the newly extended Feb. 17 general deadline for sending out the information returns, the company said Thursday. Fidelity, the nation’s largest mutual fund company, asked for and received from the IRS an additional extension to the end
IRS Issues Further Guidance on Loss Corporations Acquired in Bailout
The IRS has issued a second notice (Notice 2009-14) that expands on, clarifies, and supersedes the guidance issued in Notice 2008-100 on the application of IRC § 382 to loss corporations whose instruments Treasury acquires pursuant to the Troubled Asset Relief Program (TARP) under the Emergency Economic Stabilization Act of
Early Tax Returns Show Numerous Recovery Rebate Errors
The IRS reported on Jan. 30 that an early sampling of this year’s tax returns shows great confusion about last year’s recovery rebate. According to the Service, about 15% of all individual tax returns filed so far contain errors involving the recovery rebate credit. The mistakes include returns that claim
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COMMENTS SOUGHT ON REVISED SSTSThe AICPA released for comment an exposure draft of proposed revisions to Statements on Standards for Tax Services (SSTS). The revisions are intended to address changes in federal and state tax laws and new requirements for providing certain types of tax opinions. SSTS no. 1, Tax
Income Tax Rates Fall as Governments Compete Globally
Income tax rates are falling as governments feel the pressure to compete due to increasing global labor mobility. Top personal income tax rates around the world have fallen by an average of 2.5 percentage points in the past six years, according to KPMG’s Individual Income Tax Rate Survey 2008. Worldwide,
FICA Required on 403(b) Salary Reductions
The Seventh Circuit affirmed a district court’s ruling that FICA must be withheld on contributions made by salary reduction to a section 403(b) retirement plan. The circuit also affirmed the trial court’s upholding of a penalty for failing to deposit the taxes. The University of Chicago made contributions to purchase nontransferable
Subsequent Deferrals Under Section 409A
Nonqualified deferred compensation plans must now comply with a vast set of new rules. The transition relief expired on Jan. 1, and the final regulations under IRC § 409A are now in effect. These rules include the subsequent deferral election rules, which could bring unpleasant surprises for employers and employees.
Creating Joint Ownership: Avoiding the Tax Traps and Other Pitfalls
Many property owners add their children and other family members to the title of their property without thinking through the consequences. Many seem to favor joint tenancy—a convenient way to ensure that assets will ultimately pass to family members without the need for probate and other costs. Joint tenancy—commonly referred
Partners’ Agreement Subject to At-Risk Rules
The Court of Federal Claims denied a taxpayer’s claim that the terms of his partner’s closing agreements with the government allowed him to use previously disallowed passive losses to offset nonpassive income. Lyman Bush was a limited partner in two partnerships, Lone Wolf McQuade and Cinema 84, which were among
IRS Releases Revised Per Diem Rates and Rules
In October, the IRS provided an optional method by which employees and self-employed individuals may compute the amounts deemed paid or incurred for business meals and incidental expenses for which they are not reimbursed. Revenue Procedure 2008-59, which was effective Oct. 1, 2008, also updated rules for substantiating employees’ ordinary
Securities Trader Status Not Satisfied
The Tax Court ruled against a couple’s deduction of securities losses as ordinary rather than capital and against expenses as trade- or business-related, saying the taxpayers failed to qualify as securities traders and therefore were subject to the capital loss and itemized deduction treatment of investors. William Holsinger and Joann
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SPONSORED REPORT
Preparing clients for new provisions next tax season
As the 2025 filing season approaches, H.R. 1 introduces significant tax reforms that CPAs must be prepared to navigate. These legislative changes represent some of the most comprehensive tax updates in recent years, affecting both individual and corporate taxpayers. This report provides in-depth analysis and guidance on H.R. 1.
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