Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Let the finger-pointing begin…

Posted by taxguru on February 11, 2016

IRS chief: Blame rotten customer service and data hacks on Obamacare

Posted in IRS, ObamaCare | Leave a Comment »

Gift Tax Reporting

Posted by taxguru on February 11, 2016

From a Reader:

Subject: 709 form question

Hi, If my husband and I want to both gift the max ($14000) to our child and we both write separate checks, do either of us need to file a 709 ? Thank You

 

My Reply:

As long as either of your total gifts to your child for the year, not counting the exempt types (medical & education), don’t exceed $14,000 for the calendar year, neither of you will need to file a 709.

This is important to be aware of because if you each give him/her $14,000 this early in the year, additional gifts later in the year could push the total for 2016 over the $14,000 threshold and 709s may end up being necessary.

I have attached a short flyer that explains the gifting rules in a little more detail.

Good luck.  I hope this helps.

Kerry

 

Follow-Up Q:

Hi Kerry,

   One last follow-up … Do the checks need to be written out of separate accounts that belong solely to myself and my husband ? Meaning, not joint accounts.

thanks

 

Follow-Up A:

It really doesn’t matter which accounts the money comes from.

It can all come out of a joint account and you can claim that half of the gift is made by each of you.

Likewise, all of the money can come out of a separately owned account and using the IRS approved concept of Gift Splitting, the gift can be attributed to both spouses.

I have attached more info on this from one of my main tax reference books.

I hope this into is useful.

Kerry

 

Final Q:

Thank you!  But as long as both checks are under 14k , we do not need to file the 709, is that correct?

Final Reply:

You may have missed my point from the previous email about joint gifts.

The gifts don’t have to be in separate checks or from separate accounts. 

They can be in one or a dozen checks.  All you need to worry about is that the total given to your child during the year is less than $28,000.

I hope this info helps.

Kerry

Final Comment:

Ok, thanks again !  appreciate the return !!

TaxCoach Software: Finally! Plain-English Tax Planning That Builds Your Business!

Posted in Gifting | Comments Off on Gift Tax Reporting

Corp tax rates by State

Posted by taxguru on February 7, 2016

Tax Foundation has an interesting look at the different tax rates that the various states levy on corporations

State Corporate Income Tax Rates and Brackets for 2016 

It has long been a common tax savings technique to shift income from high tax states to those with low or zero State income tax rates.  When we were in California, we helped clients shift a lot of income from that state’s high rate corp tax to zero tax states, such as Washington and Nevada.

There are a number of requirements to do this legally and avoid problems with the high tax state agencies who obviously don’t like this strategy; so anyone considering doing this should work with an experienced professional tax advisor and not try this technique on their own.  

Posted in corp, StateTaxes | Comments Off on Corp tax rates by State

Do you feel patriotic?

Posted by taxguru on January 26, 2016

Common memes from fans of Big Government is that the most patriotic thing we can all do is to pay in as much of our wealth in taxes as we can and that taxes are necessary to pay for the roads, bridges and other items for the “common good.” 

That may be the case in the fantasy world our exalted rulers reside in.  Anyone who pays attention to how things are in the real world in which we mere mortals dwell knows that Jodi Miller has it right in this excerpt from this week’s episode of NewsBusted.

 

The truth of the matter is that every penny we send to our ruling masters is pissed away.  On top of that, they continue to “borrow” trillions more to piss away and never repay.  

Posted in taxpayers | Comments Off on Do you feel patriotic?

Confusion over 1099/W-2 Due Dates

Posted by taxguru on January 25, 2016

For as long as I can remember, there have been two different deadlines for information returns, such as 1099s and W-2s.  For decades, I have been writing about the importance of these different dates.  This year, I have seen more misinformation going around about this issue than any time I can recall.

1.  First is the date that they should be given to the payees or employees.  That has always been the end of January.  Because that is on a Sunday this year, the deadline is February 1 for reporting 2015 payments.  A little known fact is that this is really a courtesy for the payees and there is no official late penalty from IRS or anyone else for not providing the 1099s or W-2s by January 31. 

Likewise, any workers who claim they can’t do their tax returns until they receive their 1099s are full of beans.  1099s are not required to be attached to tax returns and all small business owners should have their own records of how much money they received.  1099s are just a second level income reporting mechanism that is required to keep taxpayers “honest” in the eyes of of our overlords at the IRS. 

2.  Next is the date that the W-2s and 1099s are to be filed or submitted to the Federal and State governmental tax agencies.  There has always been an extra month for this to be done, meaning February 28 or 29.  Practically every year, I have written about how it’s a wise move not to send in the governmental copies in too soon in order to give the employees and payees time to catch any mistakes in the figures on the forms.  Filing Corrected forms with IRS and SSA creates a lot of problems for everyone down the road, so making sure that the original forms are accurate is critical.  Filing with the government agencies late can incur some penalties.

Over the past few weeks, I have seen a lot of supposed tax authorities claim that the 1099s and W-2s are to be filed with the government by the end of January.  I took a live online CPE class a few weeks ago, where the instructor and his PowerPoint slides were claiming that all 1099s and W-2s were due to IRS by Feb 1.  I just received an email this morning from a software vendor that made that same claim.

Knowing that there is a lot of confusion all over the place with the constantly changing reporting requirements related to ObamaCare, I wondered if the deadlines for 1099s and W-2s had been moved up a month.  What I found when I checked with IRS and SSA websites and the official instructions for their forms was that the deadlines have not changed since prior years.  All of these “authorities” who are trying to scare people about an upcoming deadline a week from today are wrong.  The CPE instructor who claimed that W-2s are to be filed with IRS was also wrong about that fact.  They are still to be submitted to the Social Security Administration (SSA), just as they always have.

TaxCoach Software: Are you giving your clients what they really want?

Posted in 1099, W-2 | Comments Off on Confusion over 1099/W-2 Due Dates

Phony IRS Scams

Posted by taxguru on January 24, 2016

I’ve discussed the frequent scams with crooks calling on the telephone pretending to be from the IRS.

Snopes has some tips on avoiding email based scams of the same kind.

Tax season in 2016 triggered a number of novel riffs on common Internal Revenue Service-based scams.

The moral of the story is to always check with your own professional tax advisor before making any response to any type of communication from the IRS, including legitimate ones via snail mail.

Posted in Crooks, IRS | Comments Off on Phony IRS Scams

Only we little people need to obey the law…

Posted by taxguru on January 20, 2016

Certainly not the IRS, whose employees continue to flaunt their law-breaking with complete impunity.

IRS Erases Hard Drive Despite Court Order

Senators press the IRS for information about erased hard drive

It’s impossible to not wonder what would happen to any taxpayers who took this approach to an investigation by the IRS of their records.  The repercussions against those taxpayers would be severe for daring to impede the IRS in any way. 

Posted in Crooks, IRS | Comments Off on Only we little people need to obey the law…

Tax Day is April 18 this year

Posted by taxguru on January 15, 2016

Once again, DC’s special Emancipation Day holiday results in a little extra time for individuals to file their 1040s.

IRS chief Koskinen sets April 18 filing date; promises better service on information lines

We do need to remember Commissioner Koskinen’s poor record for truthfulness with his congressional testimony (aka Perjury).  I do believe him with the April 18 filing deadline, but have serious doubt about his claims of better taxpayer service.

Posted in IRS, TaxDay | Comments Off on Tax Day is April 18 this year

Stating the Obvious

Posted by taxguru on January 14, 2016

IRS May Still Be Targeting Conservative Groups

Why wouldn’t they?  Nothing happened to them for their previous illegal attacks on opponents of the bHo Regime.  The IRS Commissioner even committed blatant perjury when testifying before Congress and he still has his job and will most likely be getting some kind of loyalty bonus.

Posted in IRS | Comments Off on Stating the Obvious

IRS scaling back customer service even more

Posted by taxguru on January 8, 2016

Unless you have a question about problems with your own specific account, asking IRS for tax advice on how to handle things on tax returns has always been a bad idea.  By their own admission, they answer more questions incorrectly than properly.  Their phone advice has never been admissible as a defense against penalties. 

Consulting with a professional tax practitioner has always been the more prudent way to go and well worth the cost.  Our information is usually more accurate than what IRS employees dispense.  More important, if a tax pro gives bad advice, you have recourse against him/her, unlike with IRS employees who can’t be held accountable for improper advice.

I bring this up because of a recent news story about IRS plans to make it even more difficult to get in touch with them.  Last year, they admitted to not answering or hanging up on a majority of phone calls from confused taxpayers. Now, they want to get everyone away from phones altogether and force them to use the internet.  Folks with no internet access will be SOL.

Report warns IRS’s online plans could hurt taxpayers

IRS Web Move May Leave Older, Poorer Filers Behind

IRS watchdog says agency may dramatically scale back certain services

 

IRSNoService(16-01-06)

Posted in IRS | Comments Off on IRS scaling back customer service even more

 
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