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Small business taxation, corporate tax rates, and changes to popular deductions are just some of the many complex changes to the Tax Code being debated in Congress. At the time this article was posted, the Senate is expected to approve, along party-lines, a sweeping overhaul of the Tax Code written by Senate Republicans. The House has already approved its tax bill, also along party-lines. If the Senate passes a tax bill, House and Senate conferees will seek to resolve differences between the two bills. Conferees will likely aim to reach an agreement quickly to send a bill to the White House before year-end.


As an economic incentive for individuals to save and invest, gains from the sale of capital assets held for at least one year unless offset by losses, as well qualified dividends received during the year, may be taxed at rates lower than ordinary income tax rates. The tax rate on long-term capital gains and qualified dividends for individuals is 20 percent, 15, percent, or 0 percent depending on their income tax bracket.


Information reporting has become a growing part of IRS’s enforcement and compliance strategy. Data matching, or even the inference that the IRS has the data to do so, statistically has increased overall income reporting nine-fold. Use of information returns, either in the form of Forms W-2, 1098s or 1099s, is here to stay, and growing.


Life insurance proceeds are received tax-free. However, any interest earned on life insurance proceeds, usually referred to as its cash value, is subject to tax. Special rules apply to transfers of ownership in a life insurance policy, accelerated death benefits, and viatical settlements.


The method and systems by which a taxpayer calculates the amount of income, gains, losses, deductions, and credits and determines when these items must be reported, constitute the taxpayer's method of tax accounting. Although the Tax Code and the regulations authorize the use of several accounting methods, and permit certain combinations of methods, a taxpayer must use the accounting method on the basis of which the taxpayer regularly computes book income. Further, the method must be used consistently and must clearly reflect income.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important federal tax reporting and filing data for individuals, businesses and other taxpayers for the month of December 2017.


As the 2016 filing season gets underway, many individuals will be receiving new information returns from their employers and/or health insurance providers. The information returns reflect new reporting requirements put in place by the Affordable Care Act. Some taxpayers will need to wait to file their returns until they receive their information returns, but most taxpayers will not.


The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended and enhanced many popular tax breaks for individuals and businesses. Included in the large number of extended incentives is transit benefits parity. Moreover, Congress made transit benefits parity permanent. Many individuals may benefit from this tax break, depending on their employers.


In recent years, identity theft has mushroomed and as the filing season starts, tax-related identity theft is especially prevalent. Identity thieves typically file fraudulent returns early in the filing season, before unsuspecting taxpayers file their legitimate returns. Criminals gamble that the IRS will not detect the false return and will issue a fraudulent refund.


Everyone in business must keep records. Among other things, good records will help a business prepare the business tax returns, and will support items reported on tax returns. Taxpayers also must keep their business records available for inspection by the IRS.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of February 2016.


Small business tax reform was the topic of two Congressional hearings in July. House and Senate lawmakers heard from small business owners and leaders in the tax and accounting area about concerns over tax complexity, compliance, and penalties. After the hearings, the chair of the Senate Small Business Committee said that he is moving forward with a small business tax compliance reform bill.


An S corporation may own an interest in another business entity. An S corporation can be a member of an affiliated group by owning 80 percent or more of the stock of a C corporation. The group then can elect to file on a consolidated basis, if other affiliated group rules are met. But the S corporation itself cannot join the consolidated group.


Employers generally withhold from wages by way of the wage-bracket or percentage method (Code Sec. 3402(b) and Code Sec. 3402(c)). However, an employee may request that the amount of tax withheld by the employer from the employee's wages be computed on the basis of the part-year employment method (Reg. §31.3402(h)(4)-1(c)(1)). Under this method, an individual who is employed no more than 245 days in the aggregate during a calendar year may request that the employer withhold on the basis of the part-year employment method to prevent overwithholding. Under this method, the amount of tax to be withheld is determined as if the wages paid to a part-year employee were spread evenly over the calendar year, whether or not the employee actually was employed during all of that period.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of August 2015.


The Supreme Court’s decision in Obergefell v. Hodges (2015-1 ustc ¶50,357) on June 26, 2015 continues what was set in motion in 2013: the expansion of tax benefits to same-sex married couples. In Obergefell, the Court ruled 5 to 4 that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex. The Court further held that states must recognize a marriage between two people of the same sex when a marriage was lawfully licensed and performed out of state.


Taxpayers that invest in a trade or business or an activity for the production of income can only deduct losses from the activity or business if the taxpayer is at risk for the investment. A taxpayer is at risk for the amount of cash and the basis of property contributed to the activity. Taxpayers are also at risk for amounts borrowed if the taxpayer is personally liable to pay the liability, or if the taxpayer has pledged property as security for the loan (other than property already used in the business).


Now that summer 2015 is officially here and the main filing season is out of the way, tax planning may be far from your mind. However, typical summer traditions can yield tax benefits. For example, when school lets out for the summer, some parents may decide to send their young children to summer camp. Whether parents do this to supplement their children's education, enhance their athletic skills, provide social opportunities, or simply to get them out of the house, some working parents may be able to deduct certain expenses associated with the cost of sending children to day camp. That's where the child care and dependent credit under Code Sec. 21, might especially come into play.


The IRS has responded to criticism from the Treasury Inspector General for Tax Administration and the National Taxpayer Advocate, among others, that resolution of identity theft accounts takes too long by increasing its measures to flag suspicious tax returns, prevent issuance of fraudulent tax refunds, and to expedite identity theft case processing. As a result, the IRS's resolution time has experienced a moderate improvement from an average of 312 days, as TIGTA reported in September 2013, to an average of 278 days as reported in March 2015. (The 278-day average was based on a statistically valid sampling of 100 cases resolved between August 1, 2011, and July 31, 2012.) The IRS has recently stated that its resolution time dropped to 120 days for cases received in filing season 2013.


Employers generally have to pay employment taxes on the wages they pay to their employees. A fine point under this rule, however, is missed by many who themselves have full time jobs and don’t think of themselves as employers: a nanny who takes care of a child is considered a household employee, and the parent or other responsible person is his or her household employer. Housekeepers, maids, babysitters, and others who work in or around the residence are employees. Repairmen and other business people who provide services as independent contractors are not employees. An individual who is under age 18 or who is a student is not an employee.


Under Code Sec. 25B, a low-income taxpayer can claim a tax credit for a portion of the amounts contributed to an individual retirement account, 401(k) plan, or other retirement plan. A credit is allowed for up to $2,000 of contributions to qualified retirement savings plans. The maximum credit is $1,000 for individuals and $2,000 for married couples. A taxpayer's credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. However, the percentage of contributions for which the credit is allowed decreases depending on the individual's adjusted gross income.


A taxpayer who discovers an error after filing his or her income tax return may need to file an amended return. A change in filing status, income, deductions, or credits would require an amended return. This could happen, for example, if an investment broker sends a corrected Form 1099 that changes the amount of dividends or capital gains earned by the taxpayer. Or a taxpayer who sold stock may recalculate the basis of the stock for determining gain or loss. A taxpayer amending his or her federal income tax return may also need to amend a state tax return, to reflect the change or correction.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important federal tax reporting and filing data for individuals, businesses and other taxpayers for the month of June 2015.


Congress returned to work in April after a two week recess and the House immediately passed a slew of tax-related bills. In rapid succession, House lawmakers voted to repeal the federal estate tax, make permanent the state and local sales tax deduction, and make reforms to the IRS. The tax filing season concluded on April 15 with the IRS Commissioner reporting that return and refund processing went smoothly.


Q. Each year when it comes time to prepare my return, I realize how little I think about my tax situation during the rest of the year. I seem to lack any sort of common sense when it comes to dealing with my taxes. Do you have any general advice for people like me trying to "do the right thing" in any tax situation that may arise during the year?


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