Owe Taxes? Consider Your Options

Posted on November 21, 2009 by William Brighenti

What do recent changes in tax payment options mean to taxpayers? What are the different alternatives available to taxpayers to resolve a tax assessment?  What are the differences between these options?  Herein is a review of three tax payment options:  Installment Agreement; Partial Payment Installment Agreement; and Offer in Compromise.  Which payment alternative is best for you?

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Is a Partial Payment Installment Agreement all that it’s cracked up to be?

Posted on November 21, 2009 by William Brighenti

If you owe taxes, penalties, and interest of more than $10,000 and cannot pay them in full, you might consider requesting a Partial Payment Installment Agreement (PPIA) with the Internal Revenue Service.  For your application to be considered by the IRS, you will need to file Form 9465 Installment Agreement Request, Form 433-A or Form 433-B The Collection Information Statement (for an individual and a business, respectively), a letter requesting a Partial Payment Installment Agreement, and three months of documentation substantiating all income and expenses reported on Form 433-A or Form 433-B.  Ordinarily under a Partial Payment Installment Agreement, you would be expected to pay the available equity in your assets as well as your disposable income over the remaining statutory period of collection of your tax assessment (ten years less the intervening period since the date of assessment) in order to satisfy your tax liability.  Your application for a Partial Payment Installment Agreement may be approved even if you have no assets or equity in assets.  Furthermore, it may be granted even if you have equity in assets but do not sell or cannot borrow against those assets.

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Cruising for Tax Deductions? Your Next Caribbean Cruise Can Be Tax Deductible, by William Brighenti, CPA

Posted on November 21, 2009 by William Brighenti

Are you sick of freezing weather and need some CPE credits?  Consider a Caribbean cruise and deduct its costs.  This article explains how.

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Home Buyer Tax Credits: $8,000 or $6,500 Good Reasons to Buy a Home Before April 30, 2010

Posted on November 21, 2009 by William Brighenti

H.R. 3548 – Worker, Homeownership, and Business Assistance Act of 2009 was signed into law by President Barack Obama on November 6, 2009, offering an extension of generous tax benefits to first-time home buyers as well as expanding nearly comparable tax benefits to move-up, repeat home buyers.  The $8,000 (or 10% of the purchase price, whichever is less) first-time home buyer tax credit was scheduled to expire on December 1, 2009.  Now first-time home buyers have until April 30, 2010 to sign a contract for the purchase of a home, and until June 30, 2010 to close on its purchase to qualify for the $8,000 refundable credit.

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Independent Contractor or Employee? You Better Know!

Posted on November 21, 2009 by William Brighenti

Many employers erroneously think that they can “hire” individuals as independent contractors simply by having them agree to work under that designation, orally or in writing in the form of a contract.  Nothing could be further from the truth.  There are specific criteria established in Revenue Ruling 87-41 for determining whether one employed is an employee or an independent contractor, leaving the burden of proof encumbent upon the employer to substantiate the worker’s status as an independent contractor.  Commonly known as the “Twenty Factor Test”, these criteria should be reviewed by every employer–as well as every “employee”–whenever there is a question regarding a worker’s status as an independent contractor or as an employee:  the penalties for failing to do so can be severe, including back federal and state employment and income taxes, interest, and thousands of dollars in penalties.

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How to Figure Your Home Office Deduction

Posted on November 9, 2009 by William Brighenti

Don’t spend hours reading Publication 587, trying to figure out how to calculate your home office deduction:  read the article, “How to Figure Your Home Office Deduction“, and follow the directives contained therein, including the schedules required for your type of business activity.  Include all of the applicable home office expenses in your deduction, and calculate depreciation correctly.

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Confused by Publication 587’s 35 Pages on Home Office Deduction?

Posted on November 6, 2009 by William Brighenti

While reading Publication 587 “Business Use of Your Home”, and studying its flowchart on page 4 in an attempt to determine if you are entitled to a home office deduction on your tax return, do you find yourself a bit confused?  If so, in the article, “Do You Qualify for a Home Office Deduction“,  is a straightforward, concise, step-by-step narrative interpreting and expanding upon Publication 587’s flowchart (also included for your convenience) so that you can ascertain your eligibility for this very significant tax deduction available to businesses and employees.

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Married Partners Need Not File Partnership Return

Posted on November 5, 2009 by William Brighenti

Are you and your spouse operating a business together and filing partnership returns in addition to individual tax returns?  The Small Business and Work Opportunity Tax Act of 2007 now allows a “qualified joint venture” to elect not to be treated as a partnership for Federal tax purposes and, thereby, be relieved of filing Form 1065, U.S. Return of Partnership Income every year.  Save on tax return preparation fees every year by following the procedure of electing not to file a partnership return, detailed in the article, “Married Business Owners No Longer Need to File Partnership Tax Return“.

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Do You Know Your Basis in Your S Corporation?

Posted on November 4, 2009 by William Brighenti

Do you know your shareholder basis in the stock of your S corporation?  It is your responsibility, and not that of the corporation, to track your stock and debt basis in the business.  Why is this important?  If you as a shareholder are allocated an S corporation loss or deduction flow-through, you must first have sufficient stock and debt basis to claim that loss or deduction.  If you know before year end that you do not, you may be able to increase your basis in order to absorb the loss on your current year’s tax return.  To learn how to calculate your shareholder basis in an S corporation, see the article, “Calculation of Shareholder’s Stock and Debt Basis in S Corporation“.

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Roll Overs for Business Startups ROBS IRS of Tax Revenues: So Tread Carefully Before Rolling Over

Posted on November 4, 2009 by William Brighenti

Promoters have been marketing on the internet the use of 401(k) funds to purchase franchises or startup businesses, which normally require up front material sums of monies to launch. The procedure typically involves the creation of a C-corporation by the business owner, then the setup of a retirement plan by it for its employees, followed by the roll over of the new business owner-employee’s 401(k) funds into this new plan, and ultimately the exchange of corporate stock for the funds in the plan. Hence, the acronym ROBS: roll overs as business startups. However, if you are seriously contemplating pursuing such a financing maneuver, tread carefully. A recent memo issued by the Internal Revenue Service characterized the roll over for a business startup as a “scheme” in the marketplace to access retirement funds to evade income taxes and the withdrawal penalty of 10% on their premature distribution. Although the IRS has not yet classified ROBS as non-compliant per se to federal laws, regulations, and codes, it will scrutinize their setup on a “case-by-case” basis. In other words, you may be flagging yourself for an audit.  In the article, “Roll Overs as Business Startups ROBS IRS of Tax Revenues“, are important steps to undertake if you are seriously considering rolling over your 401(k) into a business startup.

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