As this blog has reported on previous occasions, several people and businesses in the greater Chicago area are going to face a tax audit from the IRS in the upcoming weeks and months, assuming they have not done so already. It may leave an Illinois resident wondering what their chances of getting audited really are.
Facing an audit of one's federal tax returns is rarely a pleasant experience and is more often than not downright stressful.
Every year around this time Illinois residents begin scraping together their W-2s, donation receipts and other tax documentation so that they can submit their state and federal tax returns. Most of the time this is a boring and somewhat straightforward process, wherein a tax payer fills out their tax forms online or hands their tax documentation over to their accountant for submittal. After several weeks those tax payers who are lucky enough to not owe money will receive refund checks compensating them for the taxes they overpaid in the prior year.
The IRS has stated that, for federal tax purposes, virtual currency or cryptocurrency investments are treated as property, with general tax principles applying. For people in the business of trading or mining these virtual currencies, any gains will be treated as ordinary income. For those who invest in or hold cryptocurrencies for personal (non-business) reasons, they are considered capital assets. Net gains are subject to the capital gains tax.
Now that many parents have helped their children with settling into the college or university, parents need to be reminded that our current tax law provides tax credits for certain qualified education expenses. Here is a short summary of some of the benefits available to parents.
There are many reasons to amend a tax return. Before you begin the process, speak to a professional about making changes to your prior filing. With complexities such as statutes of limitation, tax benefit rules and others, changing a return is not a simple decision.
Being able to deduct moving expenses can ease some of the burden of the cost associated with the move. The rules are very specific and somewhat mechanical. Review these rules with your tax person before make the move. Also check with your employer to see if they offer some direct payment for some moving expenses. Some direct payments could be excluded from your income.
Just because you call it a business does not mean that the IRS is required to agree with you. The IRS has authority to presume that an activity can be charecterized as a hobby. As a result, any losses associated with the activity could be disallowed.
Many employers simply do not want employees. There are numerous reasons or justifications for the classification but the question is whether it is correct or justified. There are legal consequences either way.
An offer in compromise is a great way to get a fresh start and out from under a large tax liability. The IRS does look at assets available and ability to pay in order to come to a reasonable offer amount to settle past liabilities. While this seems simple, there are nuances along the road and professional guidance is a good idea. Below are good preliminary steps to be aware of during the initial stages of the process.