Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 627 other followers

  • Blog Stats

    • 239,432 hits
  • Posts By Day

    September 2017
    M T W T F S S
    « Aug    
     123
    45678910
    11121314151617
    18192021222324
    252627282930  
  • Subscribe

  • Special Pages

IRS unable to harass as many people as normal…

Posted by taxguru on March 6, 2017

Most people would consider this to be good news:

Chances for a tax audit have rarely been this low

No mention yet of when we should expect the telethon for the poor underfunded and understaffed IRS.

 

From Jimmy Kimmel via NewsMax:

The tax deadline is about five weeks away. And this year, because of all the budget cuts at the IRS, the odds of getting audited are lower than they’ve been in 13 years. Last year, only 0.7 percent were audited, down by 16 percent. This year, it’s expected to be lower than that. In other words, there has never been a better time to claim your Chihuahua as a dependent.

Posted in irs audits | Comments Off on IRS unable to harass as many people as normal…

TaxMan Parody

Posted by taxguru on February 23, 2017

Over the past decades, I have posted dozens of different versions of George Harrison’s classic song, TaxMan.  Some of them can be found on my ScreenCast page.

While those are all different artists singing the song in their own styles, I just came across a different variation.  Weird Al Yankovic recently posted a new parody of TaxMan, called Pac-Man.  While Weird Al’s words no longer relate to the dreaded taxes that we have to pay, the music is still the same as it was on the Beatles’ Revolver album.  I defy anyone to listen to this and not also hear the original lyrics in their head.   

Posted in Music, TaxMan | Comments Off on TaxMan Parody

Let’s not forget the IRS crimes under Obama

Posted by taxguru on February 21, 2017

Now that there is a new occupant in the White House, there is a tendency not to want to dwell on the misdeeds of the previous tenants, such as the many criminal acts of the Clinton Organized Crime Family.  To consider those unpunished acts as water under the bridge and not worth pursuing at this time sends a dangerous message to the public and undermines our faith in the fairness of the laws we are all supposed to obey and live under.

This also applies to the unpunished criminal acts by various IRS employees, such as Lois Lerner and  Commissioner John Koskinen, who used this all too powerful government agency to harass political opponents of the bHo Regime and then blatantly committed perjury when they testified about it before Congress. 

We the people, as lowly taxpayers and servants of our IRS masters, are required to reveal to them every tiny detail of our personal finances under the presumption of a level of fairness, privacy and confidentiality that we can’t reasonably expect any more, as long as we know that nobody at IRS has been punished for their crimes.  We do need to keep the pressure on our rulers in DC to continue to pursue real justice, including dismissal, prosecution and prison time for the lawbreakers inside the IRS so that we can trust that all too powerful agency. 

There are a lot of good, honest people working at IRS.  I would hope that they would do everything they can to help clean house of the miscreants who have given them such a bad reputation.  Firing the perjuring Commissioner would be a good place to start so that everyone could see that such crimes will no longer be tolerated. 

Here’s a good look at this issue from the American Spectator:

Who Will Hold the IRS Accountable?

Posted in Crooks, IRS | Comments Off on Let’s not forget the IRS crimes under Obama

No ObamaCare Penalty On 2016 1040s

Posted by taxguru on February 16, 2017

Trump has done what the Supreme Court refused to do and wiped out the penalty for not having health insurance.  It appears to be effective for the 2016 1040s that we are currently in the process of preparing.

Major Blow to Obamacare Mandate: IRS Won’t Reject Tax Returns That Don’t Answer Health Insurance Question

 

Unfortunately, this isn’t retroactive to previous years, so no refunds will be allowed for the penalties already paid in.  But, those amounts were much smaller than the penalty is scheduled to be for 2016 and future years. However, people who have not yet filed earlier year (2015 and back) returns can most likely now skip that penalty when they get around to filing them.

Update: IRS statement on this issue.

Posted in ObamaCare | Comments Off on No ObamaCare Penalty On 2016 1040s

Loose Lips…

Posted by taxguru on December 23, 2016

With holiday parties and adult beverages loosening people’s inhibitions, it’s a good time for another warning that if you have tax or other secrets that you don’t want the IRS to know about, keep your mouth shut.  Just as with people confessing to all kinds of nefarious acts on social media, there are also numerous cases where IRS agents catch people who feel safe bragging about their abilities to cheat on their taxes, while trying to impress people at parties.  There is a name for those folks; idiot blabbermouths.

IRSAgentAtParty(12-23-2016)

Posted in IRS | 1 Comment »

Gifting Confusion

Posted by taxguru on December 16, 2016

Q:

Subject: S Corp Gifting 

I stumbled into your web site back in 2007 when I was thinking of changing from a C Corp to an S Corp.
Very helpful information written for the non-accounting business owner.

My company (S Corp) has had a banner year and I am now facing a HUGH tax check payable to Uncle Sam.

Here is my question: Obliviously trying to lower my bottom line as much as I can before years end, can I
gift 2 of my best employees $100K each. Our company would pay the taxes for them but then they would
gift back to me $50K each making all of us happy and lowering my bottom line?

I love these guys and they have been employed here for over 35 years each. I have already given them
a bonus of $20K to employee #1 and $13K to employee #2 this Thanksgiving. They are both happy to
receive and willing to file form 709 on their taxes for a cut of the $100K. Can I do this?

Thank you for any help –

 

A:

I don’t want to seem harsh, but I’m getting the impression that you have been trying to navigate the tax waters on your own, without the assistance of professional tax advisors. Any tax pro would have been able to explain how misguided your proposed gifting plan is.

Your ideas regarding the use of gifting as a tax savings strategy are dangerously off-course. Here are just a few of the reasons why this idea is completely wrong for achieving your goal of reducing your 2016 taxable income.

Gifting is a strategy for reducing future Estate (aka Inheritance) taxes and does not produce any kind of current income tax deduction. You could give away everything you have and it would have zero effect on your current year income taxes.

Gifting can only be done by individuals, because only humans are subject to the Estate Tax. Corporations have potentially infinite lives, so they are not ever subject to the Estate Tax.

Gifts have to be no strings attached. Having the recipients gift you back half of the gift clouds what the transaction really is.

True gifts are tax free to the recipients and not deductible by the giver, unlike wages and bonuses, which are reported on W-2s and fully deductible by your business. If you were to gift any person more than $14,000 during a calendar year, you as the giver would need to file a Form 709 Gift Tax return and either pay Gift taxes or utilize part of your lifetime exclusion. The gift recipients do not file 709s. Only the givers do.

There are a number of simple ways that you can still actually reduce your 2016 taxable income. Since most of them will need to be done by 12/31/2016, you need to start working with a professional tax advisor ASAP.

Good luck.

Kerry

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

Posted in Gifting | 1 Comment »

Lower IRS Mileage Rates for 2017

Posted by taxguru on December 13, 2016

The recently lower fuel prices have caused IRS to reduce their standard rate per mile deductions for business, medical and moving in 2017.  Only Congress has the power to modify the per mile cost that can be claimed as a Schedule A Charitable Donation from the 14 cents per mile rate that they cemented into the Tax Code rather than allow it to fluctuate with current costs as calculated by IRS.

From the IRS press release:

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

While these rates are for 2017 miles driven, to be claimed in 2018 when preparing 2017 1040s, having this info now is very useful for employers who use the IRS rate for their own employee reimbursement policies.

My Standard Reminders in regard to deducting vehicle expenses:

Most State tax agencies synchronize their allowable deductions with what IRS allows; but some don’t.

For heavy business use of vehicles, it’s a good idea to keep track of actual operating costs.  In many cases, it is possible to switch back and forth between standard rate and actual expenses from year to year. 

The IRS rate is based on average costs that may not represent your actual operating costs.  For example, if you are like many motorcyclists and owners of older cars, who use the much more expensive Ethanol Free gasoline to prevent the expensive carburetor problems that Ethanol causes, your fuel costs will be much higher than what IRS has built into their standard rate. 

 

Posted in IRS, Vehicles | Comments Off on Lower IRS Mileage Rates for 2017

Another April 18 National Tax Day

Posted by taxguru on December 11, 2016

Practically forever, everyone in the US has associated April 15 with the dreaded income tax deadline.  It’s become such a part of our culture that it is treated as a sick kind of holiday that fosters celebrations and business sales of the kind we see for other more traditional holidays.

For the second year in a row, the calendar and a special Washington DC holiday have aligned so that we have a little longer before 2016 individual income tax returns are due.  As IRS has announced in an official press release, Tuesday, April 18, 2017 will be the magic day for 2016 1040s. 

Most States automatically synchronize their due dates with IRS’s, but you should check with your own State’s tax agency to be certain.

For this coming tax return filing season, there are also going to be several other new due dates for 1099s, 1065s, 1120s and various other types of tax returns.  I will be posting more details on these new deadlines in the next few weeks. 

   

Posted in TaxDay | Comments Off on Another April 18 National Tax Day

Trump Tax Change Proposals

Posted by taxguru on December 9, 2016

The TaxCoach folks have produced a very concise seven page pdf pamphlet with some of the possible changes the Trump Team may try to get passed after they assume power.  You can download it from:

Donald Trump Tax Change Proposals

As with most of the concepts promoted by TaxCoach, they are forward thinking ideas for people, especially small business owners, to use to reduce the amount of their wealth that is confiscated (stolen) by our rulers in government.  Many of the Trump proposals do have opportunities for modifying tax reduction techniques. 

While most of the suggested strategies are at the discretion of the taxpayers. the last one probably isn’t an optional choice for most folks, but would be a win-win if the Trump Team can eliminate the insidious Marxist grave-robbing Estate Tax.

Avoid the estate tax by deferring death to 2017 or later

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

Posted in TaxReform, Trump | Comments Off on Trump Tax Change Proposals

Tax Changes Under the Trump Administration?

Posted by taxguru on November 9, 2016

Now that Hitlery is out of the equation, we don’t have to waste time and energy worrying about the trillions of dollars in new taxes she was promising-threatening.  We can now focus on the what changes we might be seeing over the next few years under President Trump, along with the GOP controlled Congress. 

A good start at analyzing the changes we can expect is the following news release from TaxCoach, one of the most useful resources for any tax pros who are interested in keeping up on the most state of the art tax savings techniques for their clients.

Trump Won…Now What?

On January 20, Donald Trump will take the oath of office as the 45th President of the United States. He’ll have the full support of a Republican House and Senate, meaning an end to the gridlock of the past six years. What effect will his inauguration have on your taxes?

Trump has proposed a conventionally Republican suite of changes: lower rates, new deductions for families, and incentives to repatriate foreign earnings. At the same time, he has proposed to limit certain breaks and cap overall itemized deduction.

However, these are just the latest of several proposals Trump floated during the campaign. Trump appears to be less focused on policy details than on broad themes, so we shouldn’t be surprised if he lets Congressional Republicans take the lead on tax planning policy.

 

Individual Taxes

• Cut brackets to three: 12-25-33%

• Boost standard deduction to $15,000 ($30,000 for joint filers)

• New deduction for individual health insurance premiums

• New deduction for child care costs and “dependent care savings accounts”

• Limit itemized deductions other than mortgage interest and charitable gifts

• Cap itemized deductions at $100,000 ($200,000 for joint filers)

• Tax “carried interest” as ordinary income

• Repeal Alternative Minimum Tax

• Repeal “Obamacare” taxes

Estate Taxes

• Repeal Gift & Estate Tax

• Repeal stepped-up basis on gains over $10 million

Corporate Taxes

• Eliminate deferral of tax on foreign business income

• Impose 10% repatriation tax on accumulated profits of foreign subsidiaries

Repeal most business tax incentives (except R&D).

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

Posted in TaxCoach, TaxReform, Trump | Comments Off on Tax Changes Under the Trump Administration?