When a husband says, “We are partners,” what does he REALLY mean?
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When a husband says, “We are partners,” what does he REALLY mean?

The husband ran a successful medical practice earning over $650,000 in gross income. He employed his wife as a sales representative and paid her a little over $30,000/year. The couple had four small children. The wife didn’t participate in her husband’s meeting over finances and management.
The IRS found that the medical practice underreported its income by over $100,000. Over $40,000 tax liability notice of deficiency was mailed to the couple. The couple also faced a significant penalty for the underreporting/ underpayment.

IRS’ application of petitioner’s remittance after the tax liabilities has been assessed constituted a payment of that tax liability.
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IRS’ application of petitioner’s remittance after the tax liabilities has been assessed constituted a payment of that tax liability.

On December 28th, 2021 the US Tax Court reviewed and decided whether “the taxpayer has paid more than was owed, where such a determination is necessary for a correct and complete determination of whether the proposed collection action should proceed”. (per T.C. Memo. 2021-142 UNITED STATES TAX COURT Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent…

Investment Strategy
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Investment Strategy

Investment Strategy. Options. Important. This post is NOT investment advice. Investments in Etrade options are NOT FDIC-insured and may lose value all the way to $0. Buying puts/shorting a stock has severe or unlimited risks.  Day trading option has very big leverage and serious potential to profit (or to lose money). One of my favorite…

What is new in tax filings for 2020 tax period?
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What is new in tax filings for 2020 tax period?

IRS tax forms change all the time. The most beneficial way to find the latest forms is: IRS.gov/latestforms IRS.gov/allforms IRS.gov/draftforms IRS.gov/formchanges IRS.gov/formsupdates Sometimes forms are not updated by the April 15th. You can view a draft of the form to see approximate expectations of what might be new and changed. For example, in 2018 form…

What’s New In 2020 Tax
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What’s New In 2020 Tax

What’s new in 2020 tax? Let’s recap 2020 deductions from adjusted gross income: jury duty 199A deduction capital losses unemployment benefits repayments foreign housing (limitations applies) unreimbursed travel expenses (National Guards and Reserve members) certain attorney fees unreimbursed employee expenses self-employment medical insurance certain moving expenses (limitations apply) 50% SE tax now you can deduct…

Loopholes of your 2020 tax return. Plan for them now!
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Loopholes of your 2020 tax return. Plan for them now!

Energy credits for home and vehicle: (IRS source)?Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles, including passenger vehicles and light trucks. For vehicles acquired after 12/31/2009, the credit is equal to $2,500 plus a car that draws propulsion energy from a battery with at least 5-kilowatt hours of…

College Tax Credit
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College Tax Credit

College Tax Credits What does the U.S. tax code say about college tax credits? 26 U.S. Code ??25A.American Opportunity and Lifetime Learning credits The code says, there are two credits that shall be allowed against the tax imposed by this chapter for the taxable year the amount equal to the sum of? (1)the American Opportunity…

Biden Tax Plan Proposal

Biden Tax Plan Proposal

Biden Tax Plan Proposal Biden proposes a 10% offshore surtax penalty and a 10% onshore “Made in America” tax credit.? The 10% penalty applies to US multinational companies that manufacture their products offshore. Income outside the US is subject to GUILTI (GILTI is the income earned by foreign affiliates of US companies) now. What Biden…

Foreign Accounts Tax Compliance Act
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Foreign Accounts Tax Compliance Act

Who is responsible for reporting foreign accounts? Entities that don’t comply with FATCA are subject to 30% withholding. FATCA is about disclosing accounts, not about collecting taxes. What are the key participants? Who is required to certify? Foreign financial institutions Non-financial foreign entities Withholding agents US taxpayers, form 8938 irs.gov/FATCA is where entities register to…

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What’s New at Qualified Business Income Deduction?

Section 199A -Qualified Business Income Deduction What business are eligible: available to individuals with Qualified Business Income C-Corporations and pass-through entities are not eligible. Qualified Business Income may be generated by Sole proprietors S-Corporation partnerships trusts estates and reduced by self-employment tax, self-employed health insurance, contributions to retirement plans, etc Real estate – taxpayer chooses…

What US Tax Obligation I have If I Bought US Real Estate From a Foreigner?

What US Tax Obligation I have If I Bought US Real Estate From a Foreigner?

FIRPTA Withholding Requirements: What is FIRPTA? If you bought US real Estate from a foreign person, you may be subject to U.S. income tax on foreign persons selling U.S. real estate or FIRPTA. The tax is 15% of the purchase price. What transactions subject to FIRPTA? a foreigner (non-US citizen, a foreign corporation, foreign partnership,…

Returns relating to cash in excess of $10,000 received in a trade or business.
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Returns relating to cash in excess of $10,000 received in a trade or business.

?Returns relating to cash in excess of $10,000 received in a trade or business. What forms to use when reporting receiving cash in trade or business in excess of $10,000? If you look at 26 CFR ? 1.6050I-1 – Returns relating to cash in excess of $10,000 received in a trade or business, you will…

Recapture of Excess Employment Tax Credits Under the Families First Act and the CARES Act
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Recapture of Excess Employment Tax Credits Under the Families First Act and the CARES Act

Recapture of Excess Employment Tax Credits Under the Families First Act and the CARES Act If you are taking advantage of Employment tax Credit under the Families First Act and the CARES Act, please read this Federal Register document to get details on it (as of 07/29/2020). There might be more changes to this document,…

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Tax Implications When Foreigners Investing In Real Estate in the US

Tax Implications When Foreigners Investing In Real Estate in the US The tax would be reported to the US because the property is located in the US. Under the treaty, it states ARTICLE 6 Income from Real Property1. Income derived by a resident of a Contracting State from real property (including income from agriculture or…

How To Abate Penalties?

How To Abate Penalties?

How To Abate Penalties? Before we start working on your penalties abatement, please, check out this IRS Handbook that shows how you can get in trouble with the IRS: https://www.irs.gov/pub/irs-utl/tax_crimes_handbook.pdf 1-1.01 Statutory Language I.R.C. ? 7201 – ATTEMPT TO EVADE OR DEFEAT TAX Any person who willfully attempts in any manner to evade or defeat…