Archive: tax return

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IRS Releases Draft Simplified Tax Return for Seniors

The Internal Revenue Service (IRS) has released a draft of a simplified form for taxpayers age 65 and over, 2019 Form 1040-SR. The new form is similar to Form 1040-EZ, which was eliminated by the Tax Cuts and Jobs Act (TCJA); however, the proposed draft is free of the limitations that previously restricted the use […]

IRS Announces Error in Instructions in Capital Gains Tax Calculation for Forms 1040 and 1041

The Internal Revenue Service (IRS) recently announced that the instructions for calculating tax on capital gains for 2018 Forms 1040 and 1041 contained an error. The IRS explained that the tax calculation in the prior instructions did not work correctly with the Tax Cuts and Jobs Act’s (TCJA) regular tax rates and brackets. According to […]

The Accuracy-Related Penalty: New Disclosure Requirements

The Internal Revenue Service (IRS) has issued Revenue Procedure 2019-9, which outlines disclosure requirements to reduce or avoid accuracy-related penalty. This procedure applies to all tax returns prepared on 2018 forms. The accuracy-related penalty under Internal Revenue Code (IRC) 6662 is imposed if there is a substantial understatement of tax, defined for corporations as a […]

Should your Medical Practice be a “C” Corporation?

The 2017 Tax Cuts and Jobs Act created the Internal Revenue Code (IRC) 199A, which provides for a maximum of 20% deduction of business profits for sole practitioners and pass-through entities and drops the corporate income tax rate to a flat 21%—a dramatic decrease from 35% previously. For specified service trade or businesses, which includes […]

Late Tax Return Filing May Mean Reduced Social Security Benefits

Late filing your tax returns? Here’s another reason to quickly get into compliance: You may be missing out on future social security benefits. Social security calculates retirement benefits based on earnings reported. While the Social Security Administration (SSA) directly gets earnings information from form W-2 (wages), it does not directly receive earnings from self-employment activities, […]

IRS Enhances Security, Puts Hurdles in Place to Tax Transcript Access

In an effort to bolster protections to taxpayer data, the Internal Revenue Service (IRS) recently made two changes to its tax transcript system: redacting personal identifiable information from the transcripts and limiting access to the transcripts themselves. While these changes will enhance information security, they will hinder the ability of tax professionals to receive on-the-spot […]

White House Vows to Issue Tax Refunds During Shutdown

On Monday, January 7, the White House has vowed that the Internal Revenue Service (IRS) will issue tax refunds, despite the ongoing partial shutdown of the federal government. The shutdown is a major source of apprehension for taxpayers and accountants, who are entering the busiest time of the year with tax filing season looming. Only […]

When is a Tax Return not a Tax Return?

In bankruptcy cases that involve discharge of tax liabilities, one of the criteria for consideration is a filed tax return. Various appeals courts have held that a late return is not a return for discharge purposes unless it is filed pursuant to IRC 6020(a). This section provides that if a taxpayer fails to file a […]

How to Protect Yourself from Taxpayer Identity Theft

In the most recent Fact Sheets published by the Internal Revenue Service (IRS) in January 2015, the IRS highlights its continuous efforts to combat taxpayer identity theft. Tax-related identity theft occurs when someone uses a stolen Social Security Number (SSN) to file a false return and claim a fraudulent refund. The IRS advises taxpayers to […]

Jurisdiction to Tax Income Earned in a Foreign Country

If a U.S. company performs a contract, provides services or does some type of work directly in a foreign country or through a branch in a foreign country, foreign tax could be imposed on the revenue earned in that country. If the United States has a tax treaty with the foreign country, the business profits […]