automotive cpa Archives - Page 13 of 36

Who in your Business can be Hit with the Trust Fund Recovery Penalty?

There’s a harsh tax penalty that you could be at risk for paying personally if you own or manage a business with employees. It’s called the “Trust Fund Recovery Penalty” and it applies to the Social Security and income taxes required to be withheld by a business from its employees’ wages. Because taxes are considered property of the government, the employer holds them in “trust” on the government’s behalf until they’re paid over. The penalty is also sometimes called the “100% penalty” because the person liable and responsible for the taxes will be penalized 100% of the taxes due. Accordingly, the amounts IRS seeks when the penalty is applied are usually substantial, and IRS is aggressive in enforcing the penalty. Wide-ranging penalty The Trust Fund Recovery Penalty is...

03 Aug 2021

10 Facts About the Pass-Through Deduction for Qualified Business Income

10 Facts About the Pass-Through Deduction for Qualified Business Income

Are you eligible to take the deduction for qualified business income (QBI)? Here are 10 facts about this valuable tax break, referred to as the pass-through deduction, QBI deduction or §199A deduction. It’s available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships and S corporations. It may also be claimed by trusts and estates. The deduction is intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate. It’s taken “below the line.” That means it reduces your taxable income but not your adjusted gross income. But it’s available regardless of whether you itemize deductions or take the standard deduction. The deduction has two components: 20% of QBI from a domestic business operated as...

27 Jul 2021

Business Meal and Vehicle Expense Recordkeeping DOs and DON’Ts

Business Meal and Vehicle Expense Recordkeeping DOs and DONTs

If you’re claiming deductions for business meals or auto expenses, expect the IRS to closely review them. In some cases, taxpayers have incomplete documentation or try to create records months (or years) later. In doing so, they fail to meet the strict substantiation requirements set forth under tax law. Tax auditors are adept at rooting out inconsistencies, omissions and errors in taxpayers’ records, as illustrated by one recent U.S. Tax Court case. Facts of the case In the case, the taxpayer ran a notary and paralegal business. She deducted business meals and vehicle expenses that she allegedly incurred in connection with her business. The deductions were denied by the IRS and the court. Tax law “establishes higher substantiation requirements” for these and certain other expenses, the court noted....

20 Jul 2021

IRS 2021 “Dirty Dozen” – Persuading Taxpayers into Unscrupulous Actions

IRS 2021 Dirty Dozen - Persuading Taxpayers into Unscrupulous Actions

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. This year's "Dirty Dozen" is separated into four separate categories: Pandemic-related scams like Economic Impact Payment theft (See Blog Post 1049) Personal information cons including phishing, ransomware and phone "vishing" (See Blog Post 1050) Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud (See Blog Post 1051) Schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements (This Blog Post) The Internal Revenue Service, in IR 2021-144, concluded the "Dirty Dozen" list of tax scams with a warning to taxpayers...

20 Jul 2021

IRS 2021 “Dirty Dozen” – Preying on Unsuspecting Victims

IRS 2021 Dirty Dozen - Preying on Unsuspecting Victims

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. This year's "Dirty Dozen" is separated into four separate categories: Pandemic-related scams like Economic Impact Payment theft (See Blog Post 1049) Personal information cons including phishing, ransomware and phone "vishing" (See Blog Post 1050) Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud (This Blog Post) Schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements (See Blog Post 1052) The Internal Revenue Service, via IR 2021-141, continued its "Dirty Dozen" tax scams with a warning for people to watch...

20 Jul 2021

IRS 2021 “Dirty Dozen” – Pandemic-Related Scams

IRS 2021 Dirty Dozen - Pandemic Related Scams

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. This year's "Dirty Dozen" will be separated into four separate categories: Pandemic-related scams like Economic Impact Payment theft (This Blog Post) Personal information cons including phishing, ransomware and phone "vishing" (See Blog Post 1050) Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud (See Blog Post 1051) Schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements (See Blog Post 1052) Economic Impact Payment theft A continuing threat to individuals is from identity thieves who try to steal Economic Impact Payments...

20 Jul 2021

IRS Releases It’s “Dirty Dozen” Scam List for 2021

IRS Announces Dirty Dozen Scams for 2021

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. On 6/28/21 the Internal Revenue Service, via IR 2021-135, began its "Dirty Dozen" list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for these 12 nefarious schemes and scams. This year's "Dirty Dozen" will be separated into four separate categories: Pandemic-related scams like Economic Impact Payment theft (See Blog Post 1049) Personal information cons including phishing, ransomware and phone "vishing" (See Blog Post 1050) Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud (See Blog Post 1051) Schemes...

11 Jul 2021

Revisiting the Employee Retention Tax Credit