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Tax Tip by Julie Welch
Compare modified adjusted gross income to applicable base amount to determine taxable portion
Up to 85% of Social Security benefits can be taxed. It is possible, however, that none of your clients' Social Security benefits are taxable. To determine how much of their Social Security benefits are taxable, you must figure the modified adjusted gross income. Generally, modified adjusted gross income is the sum of:
n Their income for the year
n One-half of the Social Security benefits
n Their tax-exempt interest
You compare this amount to a base amount. The base amounts are $25,000 for single people, $32,000 for married couples filing jointly, and $0 for married people filing separately. If the modified adjusted gross income is less than the base amount, then none of the Social Security benefits are taxed.
If the modified adjusted gross income is more than the base amount, then a portion of the benefits are taxable.
Use the following worksheet to determine the amount that is taxable.
Welch1.pdf
Welch2
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Business Owners in 419, 412i, Section 79 and Captive Insurance Plans Will Probably Be Fined by the IRS Under Section 6707A
Business Owners in 419, 412i, Section 79 and Captive Insurance Plans Will Probably Be Fined by the IRS Under Section 6707A
by Lance Wallach
Taxpayers who previously adopted 419, 412i, captive insurance or Section 79 plans are in big trouble. In recent years, the IRS has identified many of these arrangements as abusive devices to funnel tax deductible dollars to shareholders and classified these arrangements as “listed transactions.”…
ContinuePosted by Lance Wallach on December 27, 2011 at 2:42pm
how to get sued
Accounting Today
‘Don’t Become A Material Advisor’
JULY 1, 2011
BY LANCE WALLACH
Accountants, insurance professionals and others need to be careful that they don’t become what the IRS calls material advisors.
If they sell or give advice, or sign tax returns for abusive, listed or similar plans; they risk a minimum $100,000 fine. Their client will then probably sue them after having dealt with the IRS.
In 2010,…
ContinuePosted by lance wallach on November 17, 2011 at 2:00pm — 1 Comment
Research and Development Tax Incentives for the Software Industry
Research and Development Tax Incentives for the Software Industry
Many software development companies are unaware that the government offers generous research and development (R&D) incentive programs. Those that are aware often fail to capture the full extent of tax credits for R&D to which they are entitled. For example, many companies may be capturing relevant expenses from their programming cost centers, but not all qualifying R&D activities take place…
Posted by Thomas Tysl on November 9, 2011 at 4:26pm — 3 Comments
Get Sued
June 2011
The IRS is cracking down on what it considers to be abusive tax shelters. Many of them are being marketed to small business owners by insurance professionals, financial planners and even accountants and attorneys. I speak at numerous conventions, for both business owners and accountants. And after I speak, I am always approached by many people who have questions about tax reduction plans that they have heard about. Below are the most common 419 tax reduction insurance…
Posted by Lance Wallach on June 27, 2011 at 1:15pm
IRS Audits 419, 412i, Captive Insurance Plans With Life Insurance, and Section 79 Scams
June 2011
By Lance Wallach
The IRS started auditing 419 plans in the ‘90s, and then continued going after 412i and other plans that they considered abusive, listed, or reportable transactions, or substantially similar to such transactions.
In a…
ContinuePosted by Lance Wallach on June 23, 2011 at 12:25pm — 2 Comments
six overlooked deductions
CPA Tax News Today, April 14th, from CPA Magazine
Today the Wall Street Journal reminds us of six overlooked deductions.
Although on Charitable donations Donors may not deduct time, they may deduct expenses for mileage or uniforms. Board members or chosen representatives also may deduct unreimbursed expenses for attending a conference or meeting. Also, Employees who give to charities with payroll deductions at work may forget to include them on their…
ContinuePosted by T. Steel Rose on April 14, 2011 at 1:07pm
IRS YouTube & Tax Tips from CPA Magazine
Today the IRS announced that you can find a wealth of tax-related information on the IRS YouTube channel. The IRS YouTube channel is home to hundreds of tax videos that have received 1.7 million views making it the fifth most viewed out of more than 125 government YouTube channels. The Hot Topics for the Final Week of Filing Season are: Last-Minute Tax Tips and a video on Owing Taxes But Can't Pay?
Today, the IRS also announced a Small Business…
ContinuePosted by T. Steel Rose on April 13, 2011 at 3:58pm
Tax Freedom Day
According to the Tax Foundation, today is Tax Freedom Day, the day on which Americans will have earned enough money to cover federal, state, and local taxes and now can start working for themselves. Tax Freedom day is three days later than it was last year.
Forbes Magazine reported today that the three most overlooked tax deductions are Employee Business Expenses, Business Use of the Home and…
ContinuePosted by T. Steel Rose on April 12, 2011 at 2:52pm
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Captive Insurance 4 Replies
IRS Audits Focus on Captive Insurance PlansApril 2011 Edition By Lance Wallach The IRS started auditing § 419 plans in the 1990s, and then continued going after § 412(i) and other plans that they…Continue
Tags: audit, tax, plan, 419, IRS
Started by Lance Wallach in Sample Title. Last reply by lance wallach Dec 15, 2011.
acct lawsuits
Notice: IRS Hiring Agents in Abusive Transactions GroupLance Wallach Council Member President, VEBA Plan October 28, 2010 PremiseBy Lance WallachSome people…Continue
Started by lance wallach in Sample Title Nov 22, 2011.
Should you File, and then Opt Out?
Should you File, and then Opt Out? Announced…Continue
Started by Lance Wallach in Sample Title Sep 7, 2011.
419 Get Audited 1 Reply
IRS Audits Focus on Captive Insurance PlansApril 2011 Edition By Lance Wallach The IRS started auditing § 419 plans in the 1990s, and then continued going after § 412(i) and other plans that they…Continue
Started by Lance Wallach in Sample Title. Last reply by Lance Wallach Jun 24, 2011.
Re: How to Get Audited by the IRS and Sued!-419 & 412i Plans
Consulting Management 12/29/10 IRS makes taxpayers aware of many scams that will get them in trouble. By Lance Wallach “Taxpayers should be wary of scams to avoid paying taxes that seem too good…Continue
Started by Lance Wallach in Sample Title Jun 24, 2011.
As SOON as you get an IRS Notice or Telephone call call your Tax Pro!
Many people make the major mistake, they either get an IRS Letter or Notice and never even open the letter, or they put it aside until AFTER the deadline to do " something " has passed, then they…Continue
Tags: resolution, tax, taxes, IRS
Started by Paul M Dolnier EA in Sample Title Jun 23, 2011.
Accountants Business owners and others face large IRS fines
Lance Wallach NewsletterSince the late nineties, unsuspecting business owners and professionals have purchased retirement plans and other plans from insurance professionals. The IRS has organized…Continue
Tags: plans, audit, IRS, insurance, retirement_plans
Started by Lance Wallach in Sample Title Jun 16, 2011.
What is #1 need? 1 Reply
What is you #1 need that can be fulfilled through membership in Accountants Tax Society?
Tags: accountants, tax, memership
Started by Angie Rose in Sample Title. Last reply by ROBERT ADDISON CALDWELL, CPA, EA Jun 28, 2010.
IRS Audits 1 Reply
IRS AuditsThe IRS is bearing down on audits and tax practitioners more than ever. They are denying reasonably documented transactions. Any comments you have on how practitioners should respond when…Continue
Started by T. Steel Rose in Uncategorized. Last reply by Amit Chandel CPA, CFE CVA, CTRS Sep 3, 2009.
What kind of Tax Preparer Regulation should there be if any? 2 Replies
Welcome Tax AccountantsI would like to submit your ideas on tax preparer regulation to the National Tax Payer Advocate. Please post your ideas on the Accountants Tax Society Forum.T. Steel…Continue
Started by T. Steel Rose in Uncategorized. Last reply by Amit Chandel CPA, CFE CVA, CTRS Sep 3, 2009.
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Tax News
Number of U.S. Expatriates Continues to Soar
Andrew Mitchel reports that the number of individuals renouncing their U.S. citizenship (or terminating their long-term U.S. permanent residency) and expatriating from the U.S. continued to soar in 2011 -- a 16% increase from 2010, and a 671% increase from 2008:TIGTA: IRS Fails to Ensure That Defendants Convicted of Tax Crimes Actually Pay Taxes Owed
The Treasury Inspector General for Tax Administration today released Procedures Are Needed to Improve the Accounting and Monitoring of Restitution Payments to Prevent Erroneous Refunds (2012-30-012): When a defendant pleads guilty or is found guilty of a tax-related crime, the terms of a defendant’s sentence can include various combinations of...Laffer: <em> Gingrich's Tax Plan Beats Romney's</em>
Wall Street Journal op-ed, Why Gingrich's Tax Plan Beats Romney's, by Arthur B. Laffer: Mr. Gingrich has a significantly better [tax] plan than does Mr. Romney, and he has twice before been instrumental in implementing a successful tax plan on a national level—once when he served in Congress as a...Chodorow: <em> Charitable FSAs -- Combining Healthcare and Charitable Giving</em>
Adam Chodorow (Arizona State), Charitable FSAs: A Proposal to Combine Healthcare and Charitable Giving Tax Provisions, 2011 BYU L. Rev. 1041: This article considers two unrelated tax provisions – healthcare Flexible Spending Accounts (FSAs) and the charitable deduction. FSAs permit eligible taxpayers to set income aside tax-free to use for...Hatfield: <em> Legal Ethics and Federal Taxes, 1945-1965</em>
Michael Hatfield (Texas Tech), Legal Ethics and Federal Taxes, 1945-1965: Patriotism, Duties and Advice, 12 Fla. Tax Rev. 1 (2012): [This article] provides a timely historical review of legal ethics and federal taxes. Focusing on the first two decades of the modern income tax (1945-1965), the Article reviews the ethics...Badge
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