Demetrius J. Karos, Ltd. Tax Representation From A Former IRS Employee
If you started a business in 2019, you probably heard that you wouldn't get many tax breaks because of the 2017 Tax Cuts and Jobs Act. While some self-employment deductions have gone away, some only temporarily, you still have others you can take advantage of when you file your taxes.
As you plan the remainder of your year in anticipation of tax time, it would help you to know what you can and can't do when it comes to filing your taxes.
When people think of setting up a limited liability corporation, or LLC, it is usually for business reasons. For example, a businessperson may like the idea of having some degree of legal protection like what an LLC offers. Moreover, an LLC also offers important tax benefits to businesses.
In some cases, it may even be a good idea for a person to use an LLC as an estate planning device. Basically, to use this device, a couple would spend the money to form an LLC. Typically, the directors and officers of an LLC would be the parents. However, the LLC would also include the children as non-voting members so they can receive the benefits from the LLC.
A businessman in another state recently pled guilty to federal charges alleging that he engaged in a rather elaborate scheme to avoid paying taxes. The man was involved in supplying building materials as well as other businesses, some of which he operated with his family.
According to the IRS, the man used his business account to pay the real estate taxes on his vacation home. While this would qualify as an in-kind benefit, and thus, reportable business income, he did not report this on his individual 1040 tax return.
Taxing authorities in the United States, in Illinois, and even throughout the world are reportedly cracking down on wealthy individuals and others who are using cryptocurrency to avoid taxes.
The authorities in several countries, including the United States, see these efforts as a form of tax evasion, and these major economic powers are now pooling resources to curb what they see as an abuse of the system. What this means for those in the greater Chicago area is that if they are heavily involved in cryptocurrency, they may be subject to some additional scrutiny by the IRS over the next few years.
A common source of payroll tax disputes is when the IRS disagrees with an employer's decision to classify a worker as an independent contractor as opposed to an employee.
In some situations, it may be fairly clear that a worker is an independent contractor, such as in the case of a business's regular plumber coming in from time to time to work on the toilets, sinks or pipes. In these situations, the employer does not have to withhold payroll taxes but may have to provide the plumber a 1099.
Most people would agree that going to college is expensive. Even if you, your spouse or one of your children is an Illinois resident and attends a state school, tuition represents a significant expense. Private and out-of-state tuition could reach well into the thousands of dollars per year.
When it comes time to do your income taxes, you could receive some relief from those costs. Admittedly, you may not get back as much as you would like, but something is often better than nothing.
Many family members in Frankfort and other parts of the Chicago community help their loved ones out by loaning them money. In many cases, these loans are either officially or unofficially forgivable.
To give a practical example, few Illinois parents would honestly expect their children to repay the parents loaned their children for a house if the children are financially not able to do so.
Trusts are popular among residents of Frankfort and other parts of the greater Chicago area primarily because they can keep a person's estate out of probate and greatly simplify the process of passing along property to loved ones after the person dies.
In most cases, Illinois residents wanting to take this route will create a revocable trust, that is, a trust that they can still easily change or, for that matter, even withdraw altogether. The revocable trust allows a person to maintain control over her own property while still getting the benefits of having a trust.
With April 15 coming up quickly, most residents of Frankfort and the other Chicago suburbs are looking forward to filing their taxes, paying what they owe or collecting their refund and being done with income taxes for the year.
However, some residents of Illinois and Illinois business owners will inevitably face an audit from the IRS. At times, these audits are simply luck of the draw, but in many if not most cases, the IRS has a reason to want to check over a filer's tax return and see if there are any mistakes.
The last thing anyone wants to see when doing their income taxes is that they owe money to the IRS. It can be tempting to just ignore the situation. After all, there is no debtor's prison in the United States.
However, the IRS is not powerless when it comes to collecting taxes it believes you legally owe. You could suffer dire financial consequences for not addressing the situation, and the longer you wait, the worse it can get.
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