Tag: IRS


IRS Getting Tough on Small Business Owners

Sanjiv Gupta CPA - 8 years ago
Internal Revenue Service will not compromise while inspecting on pay-roll taxes, tax- advocates confirmed. Many will suffer consequences on having to deter tax payments,Payroll taxes are federal or central taxes that an employer is entitled to pay or withhold on behalf of his employees. Under its fold, the employing organization has to take the liability of paying social security and Medicare taxes also. There have been a large number of cases where small business entities or small companies have been found deterring central payroll tax payments. The tax lawyers express that following this the IRS has started acting stricter about exercising penalties and fine on accountants, executives, and business individuals for the tax-delays or evasion.Paying business payroll taxes must be considered a priority. The different tactics available at the hands of the IRS to treat these cases are freezing a company’s business accounts, grabbing assets, imposing garnishment on wages of a debtor. Other than tough methods it can assess substantial penalties and impose tax liens on the property of the defaulters.In the opinion of Sanjiv Gupta CPA, the payroll tax debt can be very dangerous so much so that they can completely bring down the company. To support his argument he described the instance of an equipment company that had to bite the dust for not paying the federal payroll taxes. Similar things happened to a medical care center and a group of licensed schools.According to the report of government agency findings every year $54Billion as employment dues goes unchecked. To curb this serious loss to the government exchequer the IRS sees it necessary to amend payroll-tax parameters by approximately 6600 employers for the upcoming tax years. Robert E. Mc Kenzie a tax-layer based at Chicago opposes the IRS actions and expresses that the tactics adopted by the IRS by individualizing tax-payers to penalize for defaulting are particularly harsh and cannot treat the actual cause accountable for the tax-debts.The tax laws allow certain freedom which causes an unnecessary payroll tax debt by laying the sole responsibility of tax evasion on the officers, bookkeepers, business owners, and anyone who prevents the company from clearing employment tax by taking sole control of business accounts and governing the debt payment process.When the IRS charges penalties the payroll tax debt stands double the actual amount. The three grounds that IRS can exercise its right to penalize are in the case of nonpayment of the debt, failure to state/ itemize the debt and finally for late payment. Fines that are charged for payment delay shot up to 25% tax debt.  A person who has previously failed to report tax should not make the mistake of deterring from filing tax in the future. Adverse to this there will be more penalties.The best way to avoid mounting debts with the addition of penalties is by clearing it off before the deadline and also to pay the taxes to the IRS before it imposes a personal liability.

Tax Tips That Offer Better Results for Small Businesses

Sanjiv Gupta CPA - 8 years ago
Come the month of January/February and the nation prepares itself for tax sessions. It is time to check that all your financial records are in perfect order. The Certified Public Accountant who will start corporate accounting can call you any time and ask for your spontaneous cooperation if certain papers to prepare the actual audit results are missing. Are you ready? Still, worrying if 2012 will be an expensive Tax-year? Follow the below-stated tips to prepare yourself better for the tax-return file. Establish your business as an entity with the state:This is a great tactic as it allows you to enjoy tax benefits by protecting your personal assets and possessions from your business’ sponsors or financers. This you can simply do by listing your business as an entity with the state. Being an entity of the State increases your brand value and authenticates you as a trustworthy and reliable entity to both the clients and the IRS. In order to enjoy this kind of tax benefit or tax break, you need to undergo paperwork proceedings with the Secretary of State. This process is completely different and is in no way similar to the process of filing with the country records office for an assumed-name certificate. Anyone with such a paper gets permission to conduct business under an assumed or imaginary name. If the firm is recognized as a legal entity then it attracts some amount of costs which is normally capitalized for tax purposes and considerable amortization is done for a period of 15 years. The first tax tip states that for the current year if the total start-up expense for a firm does not exceed $50000 annually then up to $5000 can be deducted from the expenses. Business owners need to keep track of their expensesThe domain of tracking expenses covers home, office, auto, and client development expenses. All these expenses are integral to the development of the business and as such is considered to be an integral part of it. The costs incurred on these heads are liable to be deducted from tax but to get the benefits there are certain rules to be followed. The IRS will ask you for the mileage bills in cases of business automobile usage. It is very well known that small businesses overstate automobile expenses and so bills must be kept for the actual information. If you fail to keep a record of your transport cost then the IRS can decline a small or major part of your deduction from auto expenses. Just like auto and home-office expenses, client development costs are also subjected to some specific rules. In matters of deductible client development costs, there must be a clear mention of time, date and place – these include details such as when you went to meet the client, the business contact’s name and the business you thought of generating as a direct effect of your expenditure. Unreasonable client development expenditures are not considered and only 50% of the business meal prices and other client entertainment expenses are deductible. Small business owners need to invest in equipmentThere is a provision of a total tax cut of $139000 on total business equipment expenses ranging between $560000 and less. This is calculated annually. If in any case repair extends the life of equipment or the equipment is used for a different cause other than the requirement of the company, then the cost will be regarded as an improvement that is entitled to be capitalized and depreciated for the purpose of tax deduction. Need to collect past due accountsIf you are running a proper business you must be well aware that for some obvious reasons there may be a few clients who will refuse to pay you the due money. The work will become easier for you if you have some valid documents to prove your claims such as a receipt, contract, or written slip which documents the fact that these people owe you money. This will place you in a position to exercise your right to collect past-dues. For speeding up the collection process write a note to your client requesting him to clear off their payment and if they express their inability or refusal to pay then you can place your claim on this amount as a “bad business debt loss” for tax purposes. But the debt has to be appropriate and on business grounds. Only then will it be granted for a tax deduction by the IRS. The need to protect payroll taxesBeware of using the payroll taxes for financing any kinds of business operations or proceedings such as clearing the dues of the creditors and suppliers. This is one common mistake that small businesses commit. Payroll taxes are strictly inspected by the IRS and in cases of tax-default or evasion, the IRS can also freeze your personal assets. Even though you have established yourself as an organized business firm the IRS will not entertain any reason while calculating payroll taxes.

You Can Deduct Up To 55.5 Cents a Mile in 2012

Sanjiv Gupta CPA - 8 years ago
Now you can deduct up to 55.5 cents a mile for business driving expense.   You can use this rate for all kinds of vehicles including cars, vans, pick up and panel trucks.  The rate increase was recently announced by the IRS for the year of 2012.You can deduct the actual cost of vehicle operation by keeping track of expenses.  However, Standard Mileage deduction can be used by those who do not keep track of the actual costs.  The standard mileage rate is determined by authorities using the annual study of the fixed and variable cost of automobile operation.In addition to the mileage rate, you can claim a separate deduction for expenses like parking fees or tolls.  You can also deduct interest and state and local taxes relating to the purchase of the automobile.Please note when the standard business mileage rate is used, automobile depreciation will be considered to have been allowed at a rate of 23 cents a mile. This depreciation will reduce your cost basis in the vehicle.Where you cannot use the standard deduction?For the most part, standard deductions are a great place to start if you do not document each expense.  However, in some cases, the standard deduction is not your friend. For example, you cannot use standard mileage deduction for automobiles used for hire like taxicabs.  You cannot use the standard deduction of the vehicle that was previously depreciated by other than the straight-line method.We recommend you consult with your Tax Professional to ensure your deduction is calculated accurately.

Free Resources For Tax Preparation

Sanjiv Gupta CPA - 8 years ago
With so many tax rules changes, you may find it very hard to do your taxes online or yourself.  I would like to point out some of the free resources available to help you with your taxes.Let’s start with California Tax Service Center, which has forms and information on important dates, credits & deductions, payment options and how to file your taxes online. The center is sponsored by the California Fed State Partnership, which includes the Board of Equalization, Employment Development Department, Franchise Tax Board, and Internal Revenue Service.You can also find similar information on our website by visiting sanjivcpa.com.I have also notice that many people are concerned about 1099 they are receiving for mortgage forgiveness.  Similarly, low-income folks are curious to know about the earned income tax credit.Here is an easy way for you to see if you qualify for these benefits.Mortgage Forgiveness Debt Relief. Under Senate Bill 401, a law authored by Senator Wolk in 2010, taxpayers can exclude up to $500,000 in income from mortgage debt forgiveness resulting from a short sale or loan modification on a recourse loan. SB 401 applies retroactively to the 2009 tax year and through 2012.The Earned Income Tax Credit (EITC) is a refundable federal income tax credit that helps low to moderate-income working individuals and families keep more of what they earn. Those earning under $49,078 should see if they qualify for an EITC refund by going online to http://www.irs.gov/eitc, or by contacting a local volunteer assistance site.The Office of Sanjiv Gupta can also answer your questions regarding your personal situation. Feel free to give us a call at 510-825-7563.   We are the only month and a half away from tax time and appointments are filling fast.   Get your appointment set up today.

Let Sanjiv Gupta File Your Return Via eFile

Sanjiv Gupta CPA - 8 years ago
What is e-File? During the 1980’s the concept of e-filing was not at all a known term. It was after six years since then that it gradually started getting attention as 25000 returns were e-filed in the USA. To put it in simple terms e-file stands for Electronic Filing or sending of income tax returns through the internet to the IRS or state tax authority. The whole thing can be operated through computers as there is free tax software that contains the complete format of federal e-files. Advantages of e-files: There are several advantages of e-file:When e-filing is done through an electronic process, the tax data and details of tax returns of taxpayers are transferred directly to the IRS computers. This, therefore, reduces manual labor of document scanning. This helps in getting a quicker tax refund. The IRS claimed that e-file is an efficient and fast mechanism and is much less prone to errors compared to traditional tax returns.Another factor that makes e-file a better option is its ability to save taxpayers money and cut on the bulk of paperwork. The IRS commissioner Doug Shulman talks favorably about e-file as he reports that millions of American dollars which are the taxpayers’ money is being saved by e-filing processes. How to pay taxes through e-files? If you choose to pay your taxes through e-file you cannot do it yourself, working in your own manner. There are proper channels that are to be kept in mind. Some has been discussed below:Appointing a registered and licensed tax return preparer.Using software programs like Turbotax or TaxAct. Using the IRS free filing portal. The important information that must be known to all is that while filing tax returns through a tax preparer and software program certain fee-charges are applicable. However, on the other hand, filing with the IRS facility is totally free of cost. Welcome to the CPA firm of Sanjiv Gupta: How we can help?Sanjiv Gupta is a professional financial advisor cum certified public accountant who runs his corporate business in the USA. He and his associates are experts in the field of personal and business tax payment assortments and offer valuable service to their clients through consultation and guidance. The facilities provided by Sanjiv Gupta’s firm are many. The services offered here are not too expensive and the firm’s prime concern is to provide accurate GAAP and tax reporting services. This results in a substantial saving of the client’s money. The company has its own website and every detail of the company have been given in it. Anyone who wants to get professional help regarding tax, business, and financial matters may contact Sanjiv Gupta at his firm address.

IRS Warns of Late Refunds – Check Your Status Now

Sanjiv Gupta CPA - 8 years ago
The Internal Revenue Service has pointed out the fact that refunds have a possibility of getting delayed by about a week. Since this tax season, the new anti-fraud measures will be taken. The bad news is for people who filed tax returns early. The IRS has let tax professionals know that the delay is owing to the putting in place of the technical system that would prevent identity theft cases. This notice has come under heavy criticism.The IRS has included new stringent measures offering additional screening processes to avoid fraud identity cases which have increased in the past years. But, they assure that some of the taxpayers will receive their tax refunds in a timely manner. The delay will particularly affect those who filed returns on any time from the first day of the tax season, i.e. January 17th- January 24th. As the 2012 filing season opened IRS issued a circular for taxpayers using the electronic filing method that said that they would receive their refunds within 10 days. It further pointed out that most of the refunds will be provided within 21 days. Some taxpayers may get their refunds much faster than they thought they would but currently, the taxpayers will expect returns as mentioned in the IRS guidelines.The IRS has also highlighted that the time frames for a refund provided by the “Where’s My Fund” tool on its website will undergo changes. This is so as several factors could lead to alterations of time for refunds. However, IRS apologizes for any inconvenience caused due to this notification. Some taxpayers have reported that the “Where’s My Fund” tool has failed to give proper information and is showing error messages. This technical glitch has been reported to IRS and the answer they gave was that IRS’s fraud screening and detection processes will have an impact on 60 to 70 percent of the returns that have been accepted before 11 am on January 18th as a part of testing on January 10th, 11th, and 12th.Here at Sanjiv Gupta CPA Firm, we do file whenever possible, this is the fastest way to file and get your refund.

IRS Employee Stole Tax Payer Refunds and Filed Fraud Returns

Sanjiv Gupta CPA - 8 years ago
A former Internal Revenue Service employee in the US, Thomas W Richardson of Mansfield, Texas was sentenced to prison for nine years nearly since he was found guilty of identity theft and also of theft of government property. He was also ordered to pay $30,649 for the same. The case had been investigated by the IRS-Criminal Investigation. Trial Attorneys Robert A. Kemins and Jed Silversmith of the Justice Department’s Tax Division, as well as Assistant U.S. Attorney Joe Revesz, prosecuted the case.The US District Judge Jane J. Boyle in Dallas handed down this sentence after being notified that Richardson, the former employee of the IRS had used his expertise on IRS operations to do the wrong act.  However, on being prodded Richardson had admitted to all his crimes. He confessed that from April 15-17, 2006 around the deadline for filing tax returns he presented 29 fraudulent 2005 income tax return sheets.Each of those false sheets claimed a refund of an amount ranging from $215,801 and $473,832. The total of all the tax returns amounts to $7,922,657. He also added that the taxpayers were couples who did a joint filing on tax returns. The Social Security number mentioned on the tax returns was assigned to the names of the husband and wife.  In almost all of the cases, the names on the tax returns matched the name of the individuals to whom these numbers were given. Interestingly these returns were prepared without the knowledge of the taxpayers listed on the tax return sheets.All of the returns directed the IRS to have the payment done from Richardson’s bank accounts. As per the records the IRS made a payment of seven refunds which amounted to $1, 865,401 between May 12, 2006, and May 19, 2006. $30,649 was recovered by the IRS. After this, Judge Boyle had ordered Richardson to report to the Bureau of Prisons on 6th March, 2012.How about your financial information. Is it safe with your CPA or Tax Professional ? Please tells us if you are concerned about your personal information. Being a technical consultant, I will talk about the “security measure” you can ask for when you go visit your tax advisor.

IRS Declare No Reconcile of Reports Required On Credit Card

Sanjiv Gupta CPA - 8 years ago
IRS has pointed it out to a small business advocacy group that it was not a must for organizations to reconcile their tax reports with merchant card transactions on the latest 1099k information reporting form.The circular sent recently clearly brings out the fact that no reports would be required to be shown to the IRS on 2012 business tax forms or for forms in the coming year as well.  In a previous circular, it was mentioned that no tax forms would be required on 2011 income tax returns and now it seems this has been extended as a general rule.The elaboration on the rule was a response to the query raised by Susan Ackerly, senior vice president of public policy of who wanted to know whether forms 1120 and other business forms require a reconciliation of gross receipts and merchant card transactions. The IRS deputy commissioner Steven T. Miller wrote in response to this that the reporting on gross receipts and transactions on the 2012 tax forms will be actually based on 2010 income tax forms. NO other changes concerning the payment card need to be reported.A pair of lawmakers, Rep. Aaron Schock and Bobby Schilling has recently protested against the Housing and Economic Recovery Act of 2008. The Act states that IRS will begin collecting forms of 1099-K from the third party entities which will include credit card companies and for merchant card transactions it will be credit and debit card payments. This form will reveal all credit transactions of a merchant’s business for the year before if they have exceeded $20,000 or 200 transactions for a calendar year.The lawmakers passed legislation against this Act in the Congress to prevent Congress from implementing this new reporting technique as they strongly believe that the IRS is using the 1099-K to exert extra pressure on small businessmen by asking them to show the report with the merchant’s own internal numbers. They also pointed out that when this reconciliation occurs, customers who ask for cask back, returning merchandise bought on credit for cash or gathering deposits on rentals, all will ultimately lead to a huge difference in facts and claims.  This is so since small business is not properly equipped with advanced accounting software, bookkeeping technology, or time to conduct cross-reference or reconcile their internal numbers with the third party generated numbers. This entire process will actually lead to a huge accounting workload for small businesses.However, the IRS has responded to the concerns and claims of the lawmakers and also to those of NFIB. The bill also received huge backing from the US Chamber of Commerce as well. Thus, the NFIB and several other advocated achieved a huge victory last year when the Congress cancelled the extended requirements in 1099-K reporting. President Obama has signed the legislation supporting the concerns of the lawmakers.

Taxes on Airline Frequent Flier Miles ?

Sanjiv Gupta CPA - 8 years ago
Citibank customers were in for a surprise when they got emails saying that they have to pay tax on Airline miles. The bank claimed that those who opened a checking or savings bank accounts with Citibank were subjected to 1099 tax forms as miles is considered to be miscellaneous income. However, those who used credit cards of Citibank were exempted from paying such a tax. This further created confusion among the customers.It was found that few customers were notified to pay several hundred dollars of taxable income for what they thought to be as free perks. Some customers were shocked to receive a tax form of 1099 mentioning they have to pay $645-$750!Some tax experts say that most frequent flyer miles earned by credit card holders are not taxable. Frequent flyer miles, cashback schemes and other in-kind benefits are treated as rebates and are not taxable. According to Citibank, customers are provided free miles as a gift for opening an account with them. This gift is actually treated as income and subject to reporting. Citibank claims that the January and May 2011 promotions had clearly stated that taxes will be imposed on miles. But, their February 2011 promotion is quite vague and the 1099 tax form has not been mentioned.  The surprising part is that none of these disclosures talk about the high per mile price in which 2.5 cents for every mile will be charged leaving the customer in a fix trying to make ends meet.IRS spokeswoman Michelle Elridge agrees with Citibank on this term and explains that frequent flyer miles offered as a premium for opening a financial account can be a taxable situation subject to reporting under current law. However, she added that the value of the free miles awarded for opening an account would be according to how much they would be worth to a customer and not how much the bank paid for them which are obviously less. She continued saying that under the income tax law, the tax imposed on the taxpayer is the value of the property received and not what the business had spent to acquire the property. Other types of reward programs awarded by other companies other than airline free miles may also need to be reported but that depends on the nature, value and other facts and circumstances concerning the particular incentive. So far, the IRS has not issued any official guidance on this matter after the clarifications from IRS media relations folks. It was also reported that Sen. Sherrod Brown, chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection was extremely disappointed with this clause and has asked Citibank not to evoke fear among the middle-class families who are already under financial pressure

Late penalty Relief for Unemployed and Self employed

Sanjiv Gupta CPA - 8 years ago
IRS announced a new relief program under its “Fresh Start” initiative.  Unemployed taxpayers and some qualified self-employed can take advantage of this relief program. (IR 2012-31).What Kind of Relief Can You Get and Who Qualifies?According to a recent post on the IRS website:  You can relief from the failure-to-pay penalty and is available to two taxpayer classes.  Please note it is subject to your AGI limits.Taxpayers who have been unemployed for any period of 30 consecutive days or longer at any time in 2011 (or in 2012 up to April 17); andSelf-employed individuals who experienced a reduction of 25% or greater in their business income in 2011 relative to 2010.What can you do to get this relief?File the return by April 17, 2012, or obtain an extension and file by October 15, 2012;File Form 1127-A by April 17, 2012, regardless of whether the return is extended; andPay taxes due by October 15, 2012.Does this cover all penalties and interest?No, You are still subject to other penalties and interest. Also note that the failure-to-file penalty will still be in effect, so taxpayers must timely file. We recommend you contact your tax professional in advance to make sure what kind of relief you can qualify for. As always, you should avoid having to deal with IRS penalties and interest.One more good news for those who do plan on paying taxes late this year?IRS has also introduced a new threshold for simple installment agreements from $25,000 to $50,000.  You can learn more about this program by visiting the IRS website.

IRS Seeking One Billion Dollars For Hiring

Sanjiv Gupta CPA - 3 months ago
How Many Tax Returns IRS Can Audit Each Year?It depends upon how much resources IRS has available.   And IRS is just getting ready to increase those resources.   Obama administration has recently asked Congress for an additional one billion dollars so that IRS can go on a hiring spree.  Why not? – after all, IRS is the best money-making department for the government.Obama’s administration estimates that hiring more IRS agents can bring in $1.5 billion dollars in additional revenue.  That is lots of money and the United States can sure use it to fund all the wars we are fighting.Just to be fair, the IRS budget was trimmed down in the year 2011 and this increase will bring a total IRS budget to about 12.8 billion dollars.  Just like the Obama administration, IRS is very happy this kind of budget increases. After all – more budget means more agents and more agents means more revenue.  You don’t need a certified public accountant to do this math.NTEU president Collen M. Kelley announced in a statement that the additional funding is critical to repair the damage of the harmful cuts during the past two years.  He further clarified that the IRS collects some 93 percent of all government revenues — it only makes sense to view IRS funding as an investment towards economic recovery.How many more agents can IRS hire with additional funding?“Rough figure is around 4000 agents,” according to National Treasury Employee Union.More jobs and more revenue – what’s there to lose for slow and sluggish recovery excepts fewer dollars in US taxpayer pockets.Share your thoughts, should IRS get this additional funding?

Freelance? Get Ready For IRS Audit

Sanjiv Gupta CPA - 8 years ago
Do you make money freelancing or doing consulting work?  You need to be extra careful with your tax returns as there is a good chance that your return may be audited. So, get ready in advance and avoid future trouble.“It is no secret that freelancers and self-employed people get audited more often than others,” said Sanjiv Gupta CPA.   He further explained that with a huge IRS budget there are more free agents than ever, the I.R.S. wants to take a closer look at self-employed and freelance professional’s growing numbers and make sure they’re doing their taxes correctly.In recent years the number of people doing consulting and freelancing has increased mainly due to layoffs and hiring freeze.   Consulting is a great option for expert professionals but one needs to be careful when it comes down to filing taxes.Similarly, Small business owners are at risk of being audited.  According to recent surveys,  if you’re a sole proprietor, you’re almost three times as likely to get audited as a corporate filer.  This may be a good reason to incorporate your business.   According to IRS, auditing small businesses is not because they don’t like small mom and pop shops but its because they are more likely to find errors and omission in small business owner tax returns.Small business owners should consult with their Certified Public Accountant to make sure taxes are filed properly.  This will significantly reduce their chances of being audited.  At the very least, you will have peace of mind that there are no errors in your tax return.

FBAR | Forign Bank Account Reporting: June 30th 2012

Sanjiv Gupta CPA - 8 years ago
FBAR | Foreign Bank Account Reporting Deadline June 30th, 2012If you live in San Francisco Bay Area, you must have heard Sanjiv Gupta CPA talk about FBAR filing.   Sanjiv has been explaining FBAR on TV and Radio for the last couple of years.  We have talked about FBAR on our blog a lot as well.  None the less, there are many questions still floating around and folks are sill finding confusion about FBAR.One of the most common questions our client ask us is:Do I need to file FBAR on April 17th along with my tax return?No – FBAR deadline is June 30th and you need to send it to a different address (than your tax return)I filed FBAR this year but didn’t file for the last several years. What should I do?Well, it depends if you were required to file the FBAR or not.   You should start by consulting with your CPA or Attorney to make sure if you were required to file the FBAR or not.   Once you the answer, you can work on the strategy to deal with the situation.Can I file past due FBAR?Of course, you can but please do note there are penalties for late filing.Is there a way to avoid penalties?Maybe – you will need a good reason.  You will be required to explain why you didn’t file FBAR in the first place?I live in San Jose, Santa Clara, Cupertino, Palo Alto area and didn’t know that I have to file FBAR?More than likely this statement won’t work.   You need to work with your accountant or attorney to clearly explain why you didn’t file FBAR.  You may not know about FBAR but you still need to articulate your argument.  According to the IRS website, Here are the penalties for not filing the FBAR :Failure to file FBAR PenaltiesThere are very heavy penalties for failure to file FBAR.  The following chart highlights the civil and criminal penalties that may be asserted for not complying with the FBAR reporting and recordkeeping requirements.ViolationCivil PenaltiesCriminal PenaltiesCommentsNegligent ViolationUp to $500N/A31 U.S.C.§ 5321(a)(6)(A)31 C.F.R. 103.57(h)Non-Willful ViolationUp to $10,000 for each negligent violationN/A31 U.S.C. § 5321(a)(5)(B)Pattern of Negligent ActivityIn addition to the penalty under § 5321(a)(6)(A)with respect to any such violation, not more than $50,000N/A31 U.S.C. 5321(a)(6)(B)Willful – Failure to File FBAR or retain records of accountUp to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.Up to $250,000 or 5 years or both31 U.S.C. § 5321(a)(5)(C)31 U.S.C. § 5322(a)and 31 C.F.R. § 103.59(b) for criminal.The penalty applies to all U.S. persons.Willful – Failure to File FBAR or retain records of the account while violating certain other lawsUp to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.Up to $500,000 or 10 years or both31 U.S.C. § 5322(b) and 31 C.F.R. § 103.59(c) for criminalThe penalty applies to all U.S. persons.Knowingly and Willfully Filing False FBARUp to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation.$10,000 or 5 years or both18 U.S.C. § 1001,31 C.F.R. § 103.59(d) for criminal. The penalty applies to all U.S. persons.Civil and Criminal Penalties may be imposed together. 31 U.S.C. § 5321(d). Want to Learn more about FBAR | Foreign Bank Account ReportingHere are some links to other FBAR discussion on Sanjivcpa.com Offshore voluntary disclosureSanjiv explains FBAR on TVIRS reminds FBAR requirementsDo office of Sanjiv Gupta CPA files FBAR | Foreign Bank Account Reporting?Yes | We help both businesses and individuals with FBAR filing.  You can call our office at 510-825-7563 to make an appointment. Do you only offer FBAR for Fremont Residents?We have clients from across the globe filing FBAR using our services.   However, most of our customers filing FBAR are of Indian origin and usually located in Fremont, Hayward, Santa Clara, Sunnyvale, Palo Alto, Cupertino, San Jose.  We serve clients from the San Francisco Bay Area.Are you open on weekends?Yes, we are open to atleast on Saturday.I am not sure if I need to file FBAR, Can you help?It is a good idea to make an appointment to understand if you should file the FBAR or not.  As you know, the consequences of not filing (if required) can be painful.  Sanjiv Gupta CPA can sit down and learn more about your situation and advise if you should or you should not file FBAR?I live in the San Francisco Bay Area but can not come to your office?We offer an appointment by phone and video conferencing.  Give us a call and we will try to find a solution for you.

Taxes Due Today | Did you file ?

Sanjiv Gupta CPA - 8 years ago
Did you file your taxes?Tax returns are due today.  You must get your tax return and tax payment postmarked by today. Unlike previous years post offices are not open late today.  So, get to the post office on time.  Most post offices will close at standard 5:00 closing time.Need to file extension?If you are not ready to file then make sure to file an extension for your tax return.  Filing extension will buy you additional time to file the tax return but it won’t buy you time to pay your taxes.  It is a good idea to make an estimated tax payment if you feel you will end up owing taxing.   If you end up owing taxes when you file tax returns, you will have to pay penalty and interest.You can file for the extension by visiting the IRS site here.  You can file form 4868 to get an automated 6 months extension.Here is some important pointer you should consider if you are thinking about filing late:1. File on time even if you can’t pay:   Some customers don’t file tax returns because they don’t have enough money to pay for taxes. This is not good. You should go ahead and file the taxes. There is no reason to request an extension. Pay as much as you. IRS will send you the bill or notice of balance due. You can also apply for a payment agreement by calling the IRS at 1-800-829-1040. You can also apply for a payment agreement online from the IRS website.2. Extra time to file An extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the April 18 deadline, plus you may owe penalties.3. Form to file   As stated earlier, if you do not an extension than make to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to the IRS by April 18, 2011. You can also make an extension-related electronic credit card payment.4. E-file extension  You can also get an e-file for an extension.  You can go to your CPA or using one of the tax software. Don’t worry IRS will acknowledge receipt of the extension request if you file by computer.5. Traditional Free File and Free File Fillable Forms   Filing for an extension is Free.6. Electronic funds withdrawal While you are filing for an extension, you can also request for electronic funds withdrawal. Have a question about filing your taxes ? Give us a call at 510-825-7563 or leave us a comment below.

What To Do If Your Refund Is Stolen

Sanjiv Gupta CPA - 8 years ago
I recently wrote about an incident where the IRS employee filed returns under different taxpayers' names and walked away with their refunds.  Today, I want to add more to this conversation. This topic is especially interesting to me because I spend lots of time educating clients about the security risks involved in financial transactions.  Just like last decade, identity theft topped the list of consumer complaints received by the FTC in 2011, with nearly 280,000 complaints, according to a report released on Tuesday.   Now, the interesting news is that a bigger chunk of those cases is tax-related, with 24% of identity theft complaints being tied to tax or wage-related fraud, up from about 15% in 2010, according to the FTC.  This is the cause of concern for most taxpayers – no matter how and when they file their tax returns.Victims may not discover this kind of fraud until they file their tax return and receive a rejection note from the IRS.   In some cases, it may take even longer to know something is wrong.  The victim may wait a couple of months waiting for their refund check only to find out someone else has already filed a return or information of your tax return do not match the IRS records.Are you concerned about this kind of fraud? IRS advises taxpayers to report suspected fraud by calling 1-800-908-4490. This number will connect you with a department specialized in dealing with identity theft problems.  IRS also recommends taxpayers to hold on to any letters sent to them from the IRS.  The taxpayer will need to fill out the IRS Identity theft Affidavit, a form for reporting fraud or suspected fraud and file it with IRS.  Moreover, Victims of such fraud will also need to prove their identity by sending in documents; such as W-2 forms, previous tax returns, and a photo ID.  Fraud victims should also check their credit reports for recent activities and alert the credit reporting agencies about any accounts or charges fraudulently made in their names.  The taxpayer should also check their bank account and change their password for all online accounts.  In addition to all, The Federal Trade Commission also recommends filing a report with your local police department and placing a fraud alert on credit reports. This can help police catch the fraudster on the run and save you from future trouble.How long does it take to get your stolen refund back?Humm – depends on the IRS, and your luck.  I have heard of cases where it took more than a year to get this mess cleaned up and you can expect at least six months in most cases.  Want to know the process of the IRS?I am not sure but from what gathered on the internet is that the IRS has to confirm the victim’s identity, track down the fraudster and locate the funds.  Once all is said and done, the victim will get the refund along with very tiny interest.As I stated earlier, tax return fraud is on the rise and the agency has stepped up enforcement actions, including the use of the latest technology to identify false tax returns before the refunds are issues.   Just to give you an idea, in the month of January, 58 arrests were made related to tax frauds.   IRS is also actively warning taxpayers about this kind of fraud.  You can now find a special fraud section on the IRS website that is regularly updated with new information.How can you protect yourself?Simple – do not share your information with others.   Fraudsters collect taxpayer information via emails, websites, phone calls and now using social media.   Under no circumstance give out your personal information to anyone no matter how legit it may sound.  IRS already has your information and therefore they will never ask for your social or any other personal information.

Our Troops Owe Roughly $390 Million to IRS

Sanjiv Gupta CPA - 8 years ago
Recent data from IRS shows that about 60,000 active-duty service members and reservists owe close to $390 million in back taxes.  The primary reason behind this is “CONFUSION” as per IRS.   Apparently frequent overseas deployments and address changes by the military personal make it very complicated for them to file a timely tax return.“Military Personal Tax Returns are till bit trick, ” said Sanjiv Gupta, CPA.   He further pointed out a few things that make it harder for military personals to file timely tax returns.What kind of tax breaks do I qualify for?  This is one of the most commonly asked questions among all taxpayers.  But when it comes down troops stationed around the world, even a qualified CPA can get confused.Some time tax documents are mailed to an old address and taxpayers may never get it.Troops stationed around the world may not get an opportunity to timely respond to IRS.Stress from a job can also contribute to the late filing of tax returns.IRS can also seize part of a servicemember’s paycheck until the taxes are paid off.  Then why do we have $390 Million in back taxes from military personals?  Well, just like the rest of the taxpayers, our troops also have some rights.  IRS gives time to all taxpayers to get their act together and file the taxes.However, the delinquency rate among military personals regarding federal taxes is less than the rate among the civilians working for the federal government.   I guess you can’t really compare the rest of the Govt. Employees with troops.  But just so you know, approximately 2% of service members are found to be delinquent, compared with nearly 3% for federal civilian employees.As per data from IRS, military retirees have even hire delinquency rate: Nearly 4% owe $1.5 billion in back taxes, IRS data show.  Do they really make that kind of money? You will be surprised to know how much an active service member makes. Especially when they are stationed outside the county.  Just ask someone in your neighborhood – they might not tell you.  But you can try.At the end of the day – its worth it.  Service members make good money and this is another great reason for young citizens to join our forces.  Yes, you do have to pay taxes on this income but you have lots and lots of tax benefits and break.Have a question about a military tax return or tax benefits? Call our office at 510-825-7563.

Red Flags | Invite For An Audit

Sanjiv Gupta CPA - 8 years ago
One of the common questions asked by Tax Payers is “Can I get audited?” or “What can flag my tax return for an audit?”. These questions bug so many taxpayers that we are often bombarded with the same question via email and phone calls.Good News | Less than two percent of taxpayers get audited a year. Your chances of getting audited increase with your income. How IRS selects tax returns for audit is “Top Secret” and I would assume that even the IRS employees don’t know the answer to that question. However, experts presume that it is a combination of multiple factors that may prompt your tax return for audit. You will need to have multiple flags in order to get audited – but you never know.1. Making Calculation/Math Error(s): “This is simplest but one of the common flags for an audit,” says Sanjiv Gupta, CPA. Most taxpayers use computers these days and this reduces the risk of a math error. However, the software depends upon the data you enter. So if a moved a couple of zero’s here and there – you may be called for an audit. Sanjiv pointed out that common math errors typically time pressure. Folks trying to do their tax return at the minute are more prone to making a mistake.2. Taking Abnormal deductions. How about $100,000 charitable donations from someone making $50,000 year – possible but outrageous. If something is out of ordinary, attach proof with your tax return.3. Submitting inconsistent information. What happens if you report income of $25K but your employers report $45K? Audit, of course. Make sure information going to IRS from all places matches with numbers you put on your tax return. This is especially true if you were paid in cash or have any kind of reported income.4. Making More Money. Yes – you have a better chance of getting audited if you make $200,000 or more. How much more you may ask? Recent IRS data shows that audit of taxpayers making $200,000 increased by 34& during 2010 tax year. Just imagine, how is it like if you are making over 1 Million dollars.5. Filing a business return. Most businesses run into losses every now and then. However, if you show loss three out of five years than you are at higher risk of getting audited.6. Taking home office deductions. This sounds like an easy deduction but big guys at IRS are looking out for home deductions.7. Handwriting your return. Still, filing paper tax return? It is a well-known fact that handwritten tax returns have more errors than the ones generated by the computer. Guess what, IRS knows this too.

Do I Need To File FBAR If I Didn't Earn Any Interest ?

Sanjiv Gupta CPA - 8 years ago
Recently a gentleman asked a simple question,” Do I need to file FBAR ?”.And we asked him a few other questions:Do you live in the United States (Citizen, Green Card Holder, H1 or any other kind of visa)?Do you have a kind of foreign account?At any given time, did you have more than $10K in your foreign account?If the answer is YES to these questions then you must file FBAR.  But this was very hard for the client to understand and he gave us many reasons why he should not be required to file FBAR.  Let me share those reasons with you.I am not a US Citizen or Green Card Holder.  I am on H1B Visa.The United States does not have any right to know my investment in a foreign country.I declared the money when I sent it to India via Bank and therefore the US already knows about this.IRS is confused about the FBAR and has no clue about the requirements.I didn’t make any kind of money in a foreign country.Some of you may or may not agree with these reasons but all of you will love this reason.“I read online that I don’t need to file FBAR.”  This statement made me curious to find some information about FBAR online to see what others are saying and here is what I found:Comments Posted on immigrationvoice.comI think 2011 FBAR is only for the previous calendar year (2010). I doubt that IRS would go back to 2008 and check. Also you have hardly accumulated any interest for that $25K. But if you still want to be 100% compliant do it. Its just paperwork and hassle.I know another friend who has a similar situation where he deposited some funds in 2009 to pay off a loan but it sat in his account for just a week or so before it was removed. There is no intention of gaining interest…only signature authority and such cases are exempt. $25 K for a week or so won’t gain more than Rs 500 (maybe less) or so interest. If IRS wants they can have his $10 in interest.My CPA told me that having amounts like $25K or so previous to the current calendar year is irrelevant and just additional paperwork. The IRS is looking for people who have huge amounts of money sitting and accumulating interest. They are not going to chase and trouble individuals who have no intent to do money laundering or not gaining any significant interest.This is an imaginative post by some users.   I am sure his CPA won’t stand behind this statement and will never give this statement on paper.   FBAR may sound like a complex legal requirement but basics are fairly simple.   If you are a US person (regardless of your visa status), you have a foreign account with a balance of $10K or more at any given time during last year than you need to file FBAR.   If your CPA or financial advisor is telling you otherwise then you should get it in writing or email.   Even if you have this kind of advice in writing it may not protect you from penalties but it may help in avoiding the criminal penalties. I found another post that says that IRS had suspended FBAR during the year 2010. You can read it online at trackitt.comThe Internal Revenue Service has temporarily suspended the requirement to file a Report of Foreign Bank and Financial Accounts for the 2009 and earlier calendar years, for people who are not U.S. citizens, residents or domestic entities.Announcement 2010-16 temporarily suspends the requirement to file Form TD F 90-22.1, also known as the FBAR, as the IRS tries to clear up the definition of “United States person.” In addition, the IRS issued Notice 2010-23, which provides FBAR filing relief for some persons with signature authority and who own commingled funds.In October 2008, the IRS published a revised FBAR form, together with accompanying instructions, changing the definition of “United States person.” The IRS received numerous questions and comments from the public concerning the changed definition. In response, and to reduce the burden on the public, the IRS issued Announcement 2009-51, 2009-25 I.R.B. 1105, which directed people to refer to the definition of “United States person” in the July 2000 version of the FBAR instructions to determine if they had a filing obligation.Once again, this is an online post.  Do not rely on such communications unless you have personally written to IRS and got similar advice in the mail by the IRS.  Even if you receive such communication in the mail by IRS, you will still be required to file FBAR but you may not have to penalty for that specific period of time.FBAR law is much simpler than most people think.  The issue is that many US persons with accounts in foreign countries have not filed FBAR for years and now they are willing to file the FBAR but do not want to file because penalties for previous years are huge.  There is an amnesty program that can help in cleaning up the mess but you are still required to pay some penalties.We strongly recommend our readers “NOT TO DEPEND” upon online blogs and other media.   Please speak with your CPA or get written advice from the IRS.   Our bias allows us to find blog posts in our favor but we may ignore the official blogs of the CPA and IRS website for real advice.  Don’t be a victim of misinformation. This won’t protect you from penalties.Want more on FBAR? Stay tuned for a TV interview with Sanjiv Gupta on FBAR?

Non Profit Tax Filing | Due Date is May 15th 2012

Sanjiv Gupta CPA - 8 years ago
Tax time is over? Not for everyone.Exempt Organization needs to file their tax return by May 15th, 2012.  Non-Profit tax returns are complicated and very tedious.   We strongly recommend that you consult with CPA for the filing for tax return.   Our office can also help with your non-profit tax return.Not-Ready to file your non-profit tax return?No problem. Simply file for an extension. You may incur penalties if you file a tax return late without filing for an extension.What do I need to file:  There are many requirements for filing the tax return but the key is Form 990 and its related schedules. This form and schedules include a significant amount of financial reporting. Here are just some of the things you will need.Revenue and Income Statement:  This should include categories (e.g. salaries, postage, rental revenue),Balance Sheet:  Once again, this sheet should include categories (e.g. cash, accounts receivable),Statement of Functional Expenses:  Tell how all expenses are allocated to either program services, fundraising, or operations.Expenses Report: This report should have all expenses divided into individual program services (e.g. mailings, a seminar program).Revenue Report:  This report should include the details of sources of revenue, with categories.  Basically, the IRS wants to know how money was raised.As you can see IRS wants the detail of your operation including income and expenses.  This can be quite tedious especially if this is your first time filing the return.  Also, note that the IRS provides specific categories and classes for revenue and expenses.  Your tax return can be quite complicated if are not using these categories.Our firm can help you set up a proper bookkeeping practice for the non-profit and help you file your tax return.

Know How To Distinguish Independent Contractors

Sanjiv Gupta CPA - 8 years ago
Independent contractors are those people or businesses who provide freelance services to other companies. As they are not qualified as employees of a company, the independent contractors are not liable to enjoy any employment taxes or benefits. As employers can save a lot of employee’s taxes and other benefits with independent contractors, they classify many employees as independent contractors to save money on payroll taxes. To stop this practice there are certain factors that can distinguish an independent contractor from an employee.Understanding The Concept Of Independent Contractors Having a clear understanding of the concept of independent contractors is the first element to distinguish between them and an employee. An independent contractor can be a person or a company that offers its services to another company. What makes them different is that these contractors follow their own schedule and work as per their own free will. So the employer company has a limited hold on these independent contractors. The employer companies cannot regulate which jobs the contractors accept or how much pay they will demand and when they will work on a certain project. Another point of difference between independent contractors and employees is that the independent contractors will usually bring in their own supplies, or have some kind of investment in equipment. The employer company also is not liable to provide any insurance or any compensation to them. Determining Ways To Identify Independent ContractorAs hiring independent contractors relieve the employer of giving payroll taxes and other liabilities, many companies list a portion of their employees as independent contractors to save taxes. Some companies also outsource their work to independent contractors to achieve the same goal.  Therefore, the IRS has the knowledge of a few factors with which they can identify a contractor from an employee. The first thing that IRS notices is the way the employers exert their authority on the worker. If it is an independent contractor the employer will only give details about the work but if it is an employee, the employer can exercise more control over the way he works, how it is ultimately carried out and his performance. So if the employer is giving out a more defined and whole set of instructions the worker is considered as an employee. Whereas if the instructions are limited and the worker has the freedom to execute a project on his own terms then he is considered an independent contractor. IRS will consider any worker to be an employee if the employer can regulate the way the worker gets paid or if it is the employer who provides all the tools and supplies. Whereas if the worker is paid in accordance with the job done, can offer his services to other companies at the same time or has a considerable amount of investment in the supplies used for the job then the worker is considered as an independent contractor. In addition, if the worker faces profits or losses in a certain work then he is an independent contractor.If the worker and the employer have a written contract and if the employer is liable to pay insurance, casual leave and sick leave then the worker is considered to be an employee. Another way to identify an independent worker is to check if the worker expects to work for the employer only for a specific period of time then the worker can be classified as an independent contractor. These are the factors through which the IRS distinguishes an employee from an independent contractor. It is crucial for the employer to classify his workforce properly as a miscalculation can make one liable for penalty and payment of all possible dues. 

Picking a Good Business Bookkeeping Services in San Francisco Bay Area

Sanjiv Gupta CPA - 8 years ago
In a recent Bookkeeping services review on Yelp, reviewer name Girlie commented that “If you are ever audited, hire an accountant who is organized, respectful, a good communicator, and a good listener, someone who respects the IRS and treats them seriously.”Girlie summed up the qualification for a good accountant but more importantly of a good bookkeeper.   A good bookkeeper can make an IRS audit as easy as eating a pie.  Having a bookkeeper who works under the direct supervision of a certified public accountant or one with the number of years experience can be very helpful.   Apparently, Girlie didn’t do enough research and further explained the frustration “First of all, he is not a CPA. This is a personable guy who opens up a chic office in Noe instead of working at HRBlock.”So, how do you pick a good Bookkeeping service in the San Francisco Bay Area?  Not required but strongly recommended that you stick with a CPA firm that also provides bookkeeping services.    Check their reviews on Google, Yelp, Yahoo or other online sites.   Ask for reference letters from their past client or current clients.  You may even ask for a client phone number and speak with other business owners to get an understanding of the CPA firm and their process.You don’t have to be super picky but you want to do business with a firm you can depend upon.  You want to know the truth before you end up in an Audit or some other serious tax trouble.   You can take advice from Girlie, ” the CPA I finally hired to take over my tax situation had 30 years experience, advanced degrees in accounting and tax law, and charged 30% less than Mark. His financial advice is golden. So if you want to pay for a real accountant, you can find one.”Before picking your next bookkeeping service provider, make sure to:Check the reviewsCheck the degreeCheck the references andCheck the feesWhat are some of the red signals you can look out for?Picking a new bookkeeping services provider can be challenging.  After all, you will depend upon this person to be a safe keeper of your financial documents and ensure complete compliance with current tax laws.   There are some things you can look out for that can help you avoid trouble.Inexpensive or Cheap:   Sure, you want the best deal in town.  But you get what you pay for.   Is it worth paying hundreds of thousand dollars in taxes to save a couple hundred dollars of bookkeeping fees?Office and Staff:  We live in a society where companies like Google and Facebook came to life from a garage.  But those are just a couple of examples.  Truth is that hundreds of companies are born and die in a similar garage.   If the office and staff of your CPA or Bookkeeper look unorganized than you are surely heading for trouble.   Look around the office to see if paperwork is properly filed. How is the desk of accountants?Pay attention to phone calls. How is staff answering the client's phone calls?   If possible, ask to see the profile of the office staff.  Good CPA or bookkeeper will happily share the work experience of their staff.Office Hours:  Odd office hours or office that is only open during weekends can be troubling.  Make sure that your CPA or bookkeeper will be available when you need them.We hope that your next bookkeeper is better than your expectations.  Please share your experience regarding bookkeeper or CPA services.

Obama's Health Care Plan and Tax Deductions

Sanjiv Gupta CPA - 8 years ago
As many of you may know that starting 2014 Obama’s healthcare plan will kick in that may allow low-income families to enroll in a qualified health care plan and claim the insurance premium as a tax credit.  However, some of us are still wondering what if a qualified health plan offered by Obama's health care plan is cheaper than the one offered by our employer.    Can we switch to a different plan?  If we make the switch, can we still deduct premium?Answers to these questions are equally important to the employers.   Employers would like to predict their exposure to the employer responsibility excise imposed should if they offer the healthcare that does not provide minimum value (What is the minimum value?), or is unaffordable.   After all, employers want to know if they should continue with their health plans or not?“Have IRS not finalized the rules?” you may ask.  You can read T.D. 9590 published by the IRS and Treasury Department.  You will find many rules to determine eligibility for and calculation of the tax Code section 36B refundable health insurance premium tax credit added by the Patient Protection and Affordable Care Act, as amended.   These rules address many matter e.g treatment of required waiting periods or relief from erroneous automatic enrollment in an employer-sponsored plan.  But at the same time, they leave many issues for future guidance and public interpretation.For example, Employers can find out when employer plan coverage is affordable for the employee by using a simple formula (i.e., the employee’s contribution is no more than 9.5% of household income) but do not address whether coverage is affordable for related individuals who can enroll in the employer plan.Many groups are working closely with IRS and Obama’s administration to finalize the rules and calculation methods to determine how much premium should be deductible.  Taxpayers are also being invited by the IRS to comment on these matters.Would you like to share your thoughts on this matter?

A To Z Of Home Office Tax Deductions

Sanjiv Gupta CPA - 8 years ago
If you have a home-based business you can save money by availing home office tax deductions. The IRS allows you to save money on insurance, mortgage, repairs, and other utilities if you have an office at home. Home office deductions are applicable for all kinds of homes irrespective of apartments, flats, and even mobile homes. So if you are wondering how to claim a home deduction this article will provide you with all the basic information.Requirements for home deductionsThe internal revenue service or the IRS has created certain specific requirements that must be met with to claim home office deductions. They are as follows:Regular use: For you to claim home office tax deductions you have to work from your home on a period of over two years.Exclusive use: You can also be eligible for home office deductions if you use your home exclusively for work. You can either have a separate area for work or a room within your house but it must only be used for work-purpose.The principal place for your work: Your home must serve as a principal area for your work. You cannot claim tax deductions if you use your house occasionally for the purpose of your business. But even if you have another office at some other location but use your house regularly for client meetings and other administrative and executive purposes you can easily be eligible for home office tax deductions.What percentage of the house is being used: Another requirement that will decide the deductible amount is what percentage of the house is being used for work. So before you file your house deduction claim you need to understand what percentage of the house is used for work if you are using more than one room or only a portion of a room as your home office.Rules for employeesThe IRS has specified a couple of other rules for employees claiming home office deductions. So if you are an employee in addition to the above-stated rules you would also have to comply with these other criteria.For an employee looking for home deductions, he must show that he's working from home is actually more beneficial for the employer. You can easily claim home office deductions if your office does not provide any space for you to work in their location and you have to work from home. However, the IRS does not have any specific rules to judge if your work is actually beneficial for your employer. They base their decision on facts and circumstantial information.You cannot be eligible for tax deductions if you rent a part of your home to the employer and use that part to work for that same company.What can you saveFiling for a home office tax deductions can reduce your tax bills considerably. If you meet all the required compliance criterion you can easily save a lot by home tax deductions. The IRS will deduct mortgage insurance, rent, repair, real estate taxes, depreciation and any other type of utilities.However, your deductible amount will depend on the percentage of the house you are using for your work.Also if your income is lesser than the expenditure incurred for your business your deductions will be constrained.How to file your claimIf you are thinking of claiming your home office deductions and you are meeting all the compliance criterion you can easily reduce a considerable portion of your tax bills. Here is how you can claim your home office deductions. Self-employed: For those who are self-employed and using their homes as the office they have to fill Form 8829 to understand the amount of deduction they will be eligible for. Then this amount has to be stated in Schedule C.Employees: Employees have a different procedure for filing home office deductions. If you are an employee you can calculate your deductible amount using the worksheets of IRS publication 587. Once you have calculated your deductions you can then claim them as itemized deductions on Schedule A.These are the basic information that one needs to know and follow to file a home office tax deduction. Successfully filing your claim can easily reduce a considerable amount of tax burden from your shoulders.

Can’t Pay Your Taxes? Get Help From IRS

Sanjiv Gupta CPA - 8 years ago
Those that fall under the ax of taxation will tell you how difficult it is to cope with inflation on one hand and to abide by taxation policies on the other. Nonetheless, there is no exception to paying taxes. But then there is good news – Those that have genuine monetary problems can appeal to the IRS to reduce taxes. Provided the tax filer provides original documents and proofs to support his claim, the IRS can also provide potential tax relief programs.Most of you, I assume, know that evading or missing the payment of taxes is considered a crime. Paying taxes is mandatory for everyone as it the source of government revenue. The government, therefore, has given the responsibility to the internal revenue system or IRS to make sure that everybody files their tax return. While it is a criminal offense not to submit your taxes, the IRS shows a certain amount of leniency for those who are financially distressed and cannot file their taxes.Distressed taxpayer? IRS can helpThe internal revenue service identifies those people who have missed their tax payment owing to severe financial distress as distressed taxpayers. The IRS has devised certain relief measures for these distressed taxpayers. Here is how the IRS can help distressed taxpayers:Flexibility: If a person is unable to pay his taxes on time due to certain financial difficulties then the IRS provides him with a more flexible payment plan. If the IRS identifies you as a distressed taxpayer then they can either provide you with a flexible installment plan for your taxes, reduce the amount you have to pay and in some situations allow the complete nonpayment of the installment.The offer in compromise: The IRS in many situations comes to an agreement with the distressed taxpayer if the taxpayer can show that his expenditure is more or equal to his income. But in some cases, there can be a problem, especially if the taxpayer has equity in real estate. The IRS finds that the real estate measurements to identify if a person is in a state to pay his taxes can at times be unreliable which in turn causes certain problems for the offer in compromiser to be accepted by the IRS. But to solve this problem the IRS is trying to introduce another review of information gathered about the financial condition of the taxpayer so that the IRS can correctly asses if the offer in compromise can be applicable for that individual.Preventing defaults in offer in compromise: In many situations, the IRS face defaults even in the amount agreed to be paid in the offer in compromise terms. In such conditions, the IRS has a special team that will help the individual to find out ways to pay the agreed amount of taxes and not be a defaulter.Delaying collection: If an individual has recently faced a serious financial crisis, the IRS in some cases delays the date for tax payment. They do not need any kind of documentation for implementing such actions and can be taken by the employees to ease out the financial burden on the taxpayer.Speeding up levy realizes: In many cases if the distressed taxpayer requests an emergency quick levy release, the IRS relaxes the requirements from the taxpayer and allows an expedited delivery of the levy release. However, the taxpayer must provide the IRS with a fax number of the bank or the employee handling the levy when asking for an expedited levy release delivery.Here are a few ways the internal revenue service can help distressed taxpayers. While paying taxes is compulsory these measures relieve a lot of the burden from those facing serious financial hardships. Moreover, the additional review of the offer in compromise and the delaying of the collection action give more time to the taxpayer to get help from the IRS and to pay their taxes. IRS’s laudatory efforts to help the distressed taxpayers will surely help them to a great extent.

What Are The Available Medical Deduction Plans?

Sanjiv Gupta CPA - 8 years ago
A medical deduction plan helps to reduce tax on medical expenses.  This type of plan is beneficial for one who has to spend excessively on medical issues.   Medical deduction plans allow a person to qualify for tax exemptions. However, to file a tax return on medical expenses it is essential for an individual to present all supporting medical documents.Tax Deductible ExpensesTax deduction for medical expenses is available for a large number of issues. One can get a deduction on diagnosis cost, cost of treatments and even cost of medical supplies. Medical deduction plans are available for the following issues generally. Fees payable to doctors and dentistsExpenses that one has to pay for medicines that are prescribed by a doctor.For medical aids and equipment like pacemakers, wheelchairs, hearing aids and dental equipment.Charges of weight loss program which is prescribed by a doctor.  However, the charges of low-calorie foods can not be tax-deductable.Travel expenses due to medical treatment. The cost of any type of surgery including eye surgery and cosmetic surgery.However, one point to remember is that medical expenses that improve general health such as vitamin deficiency are not tax-deductible.Who can have the benefits of a tax deduction?A taxpayer can deduct medical expenses for his/her own medical treatment, cost of equipment and surgery.A taxpayer can receive tax deduction for the treatment of a spouse.A taxpayer can claim a tax deduction for the medical issues of a person who is dependant on him/her.  Is there any exposure for non-dependant?IRS generally offers no tax deduction offers for the non-dependants. However, in some special cases tax deduction rules can be changed.IRS does not offer any coverage for a non-dependant even if it is one’s, own child. But if the child is a non-dependable according to the law of divorce or separation. A taxpayer can not claim a person as a dependent if he/she gets $3,700 and more. How to apply for tax deduction? A taxpayer can claim a deduction of medical and dental expenses if the services were made during the tax year.  An applicant can apply for a tax deduction when the payment is complete. This is applicable for each type of payment, such as online payment, payment by phone or credit card.Deduction plans for long term medical expensesIRS offers a tax deduction for long term medical expenses.  If a person suffers a long time from a severe medical issue, he/she can claim a tax deduction for diagnostic, therapeutic, treatment and personal care costs. In order to avail of a long-term medical deduction, one must meet all criteria as specified by the IRS.Medical issues must be of chronic type:  a person can be diagnosed as a chronic sufferer if he /she has been suffering for one year or more and is unable to perform daily activities without substantial cooperation.  if the mentioned person requires extensive care to maintain personal care andDiagnosis, treatment and all other necessary medical services should be executed under the supervision of a recognized doctor or medical practitioner. What should be included in long term medical deduction plans?A tax deduction can also be granted for the following issues. Expenses of meals that a person takes at a hospital or nursing home. However, such meals must be part of medical care. Charges paid for the medical conferences including transportation and admission costs. The time of the conference must involve medical sessions. A person is not capable to claim a tax deduction for food and lodging charges that he/she has to pay during the medical conference. IRS offers a tax deduction for medicines, injections and other medical supplies that are prescribed by a certified medical practitioner. For diabetes patients, the charge of insulin is deductable without prescription. A chronic patient some times requires additional nursing services to perform regular activities. In such a case, the cost to appoint a nurse or an attendant or a caregiver is deductable. Cost of operation, eye surgery can be tax-deductible. On the other hand, IRS does deduct amounts that are spent due to unnecessary surgical treatments such as some kind of cosmetic surgery, artificial implantation, etc.IRS offers a tax deduction for certain issues. These are mentioned in the following points.Stop smoking programPsychoanalysisSterilizationPregnancy test kitsSpecial educationWeight loss programIssues that do not tax deductableChildcare services for a healthy babyCosmetic Surgery except for a medical requirement.The weight loss program is only for general health and appearance improvement.Household serviceElectrolysisExpenses for funeralHair TransplantIllegal surgical treatmentsCost of Insurance PremiumsImported drugs and medicinesNutritional SupplementsFees for Veterinary treatmentDiaper Service

New Financial Help Coming From Feds

Sanjiv Gupta CPA - 8 years ago
Although Federal Reserve has been thinking about introducing some new stimulus to help deal with the financial pressure it is still debating whether to implement it. The reason for this hesitation stems from the average interest rate being 3.5% on a 30-year-old mortgage. While these rates are still above zero making a lot of officials believe that economic growth is possible by lowering these rates but at the same time these rates are at an all-time low triggering the doubt of how long these rates can sustain without damaging the normal activities of the financial market.It is being concluded by the fed officials that the economy is not developed enough to reduce the increasing levels of unemployment and that extra action is needed to help the economy bounce up. However, the federal officials are divided among themselves on whether these additional actions will prove beneficial or will put more pressure on an already stressed economy.Many are concerned about the effectiveness of the tools of the feds. It is under speculation that if the Fed pulls out assets in circulation, it can lead to major market downsize. Many are also skeptical about the feds reducing the interest rates as there is also a possibility that they go back up creating more pressure on the financial stability of the market. The federal decision-maker Brenanke understands the risk of implementing these tools and therefore would not take any decision unless the majority of the officials agree to it.The feds have already taken a number of actions to stabilize the weak economy. They have reduced the borrowing costs for businesses and customers. As a result the interest rates on short term loans are almost zero and will continue to be so till 2014. They have acquired 3 trillion mortgage-backed securities and treasury securities. The acquiring of these securities has resulted in the lowering of the supply of assets which in turn has resulted into the lowering of the interest rates. It has also pushed the investors to accept a lower rate of return as the scarcity of assets has led to a rise in price. The result of the implementation of these policies coupled with a weak economy has resulted into lower demands for loans and has pushed the borrowing cost to lower levels. The feds have also given a boost to the stock market and controlled the value of exports by regulating the value of the dollar.The benefits of these lower rates have been reaped by both the homeowners who can buy better homes and also the companies that can refinance their budget.

Things to Consider Before Closing Down Business

Sanjiv Gupta CPA - 8 years ago
Well if you are closing your business it’s not bad news. You are sensible enough and you know that lately, your business has not been bringing you the money you thought it would and so you took the right decision or maybe that you have got a plush offer, etc. Once the decision has been made now the only thing to focus upon is how to close that small business most effectively.Well, the above words might have sounded crazy but nevertheless, they are facts. If you are quitting from your small business venture then do it properly. And to help you in that here are the few checklists that you should keep in mind while retiring.Things of importance while clearing that office Of course, as per the IRS norms for closing your business, you need to ensure that important forms regarding the company’s annual tax returns and deductions are filled out and kept in proper order for future requirements. Again documents related to business property disposal, reporting of exchange of similar type property and documents relevant to changing the form of the business. Also if you can check on internet sites and browse relevant pages that may guide you towards closing that business most successfully, then you can try “ Close your business: What you need to do “ FindLaw page. Here you will find in detail the necessary things you ought to do before closing down that business. Besides other important suggestions, it gives detail about the concepts of licensing, tax considerations, dissolution and many more. If you want personal opinions too then also you can go to the Hub pages site learn about how to close a small business.  “A Road Map to Closing Down Your Business (FindLaw)” this has step by step remedies of suggesting proper methods of closing down your business.So whatever may be the reason for your closing down of business do it properly and I wish you all the luck for your next venture. For more information visit the site 

How Tax Shelters Help To Reduce Tax Burden?

Sanjiv Gupta CPA - 8 years ago
A tax shelter is a great way of reducing tax. It can effectively reduce your tax burden to the IRS (Internal Revenue Service). But tax shelters can turn to be a problematic issue if the law is violated. So make sure that the tax shelters are legitimate.A tax shelter is actually a financial arrangement that helps to reduce a taxpayer’s tax burden. Tax shelters accomplish such difficult jobs by decreasing and sometimes eliminating your taxable income. This is also a great tool to create tax-deferred or tax-exempt income.You have to be very cautious while setting up the tax shelter. It should be legitimate. If it’s proven abusive then it can create a big problem. When the purpose of a tax shelter is avoiding tax, then that is considered as an abusive tax shelter. There are many other purposes involved with legal tax shelters.A legal tax shelter can effectively reduce taxable income. The main purpose of setting up a legal tax shelter is to report the IRS very little of your income. Tax shelters are extremely beneficial for high-income professionals. Especially big companies are to take the help of tax shelters for avoiding tax payments.The most common examples of tax shelters are charitable donations, pension plans, retirement accounts, municipal bonds and so on. Investments like life insurance and health insurance plans can also be considered as tax shelters. Investing in real estate is also a perfect example of a legal tax shelter. So it can be said that tax shelters work great as an incentive for investment.A tax shelter is actually a great strategy. The more intelligent reason you can show to the IRS the easier will be to reduce the amount of payable tax. Larger firms have no way but to use this subtle way of cutting the taxable amount.Without much stretching the laws, you can really set up a beneficial tax shelter. A charitable donation is a legitimate way to avoid taxation. The authorities of the IRS monitor tax shelters efficiently. So going with laws is the best way to reduce your taxable amount. To know the laws better you must visit

IRS and YouTube Partnership To Educate You

Sanjiv Gupta CPA - 2 years ago
Internal Revenue Service has partnered up with an online video site, YouTube, to deliver its message to the general public.  You can find hundreds of useful tax-related videos on YouTube.   You can estimate the popularity of this combination by looking at the viewership of the IRS channel.  Over 1.7 million views make the IRS YouTube Channel the fifth most viewed online channel out of more than one hundred and twenty-five YouTube Channels.IRS conducts online webcasts on various topics and posts those webcasts as the video’s on YouTube.  You can participate in an online webcast to ask your questions live to an IRS agent or simply view the video’s to enhance your knowledge.  During tax time you find videos about last-minute tax tips or how to arrange a payment schedule with the IRS.   However, you will also find a wealth of knowledge even after tax time.Just last month, IRS conducted a webinar called “Small Business Advantage: Put our knowledge to work for you.”  The webinar was over one hour long and included multiple resources to help small businesses thrive.You can easily find the IRS YouTube channel by simply typing IRS in the search box on YouTube.Sanjiv Gupta CPA advises all his clients to learn from online videos but don’t depend upon that advice entirely.  Often time interpretation of online video can cause quite a bit of confusion and usually end up costing penalties and late payment charges to taxpayers.  ‘You should watch the video to understand the basic concept but always consult with tax professional to understand how you can apply the concept in your business” explains bay area’s popular certified public accountant Sanjiv Gupta.

IRS Extends a Helping Hand to Students

Sanjiv Gupta CPA - 8 years ago
Financial aid forms are the things that are responsible for boggling the minds of students and their guardians. In the year of 2009-2010, the Internal Revenue Service has brought a new service for reducing the financial aid form related confusions. This is no doubt a great help for students.The IRS offers the IRS data retrieval tool without any charge. This tool helps to transfer automatically the tax data from the taxpayer’s federal tax return to a FASA form.The process includes tax forms from the previous academic year. At first, you are directed to the IRS website. Then you need to input some vital personal identification information.  After that, you get the chance to fill out the free application for federal student aid (FAFSA). The main advantage of this is that your financial informationFrom sources like a bank, balances will be automatically entered.So gone the days when the first days of college are full of tensions due to registration and form fill-ups. The IRS data retrieval tool has made the process much easier. The chances of making errors have also been reduced. Students have now become much relaxed due to this useful tool of the IRS.IRS has brought a great opportunity to cut college costs. This is actually a great way to track expenses. Basically, students are in need of financial help. Therefore such steps taken by IRS are helpful indeed. This kind of help is great to manage the price of education.This initiative by IRS is commendable. This is actually a great effort for student’s fiscal help. Students are now free from the stress of facing the challenge of filling up the vital forms like financial aid form. So this year if you are going to take admission in a college, try to gather knowledge about how to get financial help from authorities like IRS. Your little effort can help you to cut down the cost of your education. Today it has really become easier to file such a demand. So go ahead and take the help of the IRS for completing your education without any expense.

Defending the “hobby loss” Rule with a Business Plan

Sanjiv Gupta CPA - 8 years ago
A business plan is very important where a business is concerned. As long as you have a business idea, you need to draft a business plan so that you can know how to set up the business. When a business is recurring losses, the IRS audits them. Also, the IRS reduces the inference or deductions claimed when a business is not set up to gain profit. The Internal Revenue Service has for many years defended ‘hobby loss” rule with a business plan. Listed below are some of the factors to consider like;Does the taxpayer rely on making an income from the current business?Has the taxpayer made some income from this business in previous years? If the answer is yes, how often has the business made this income and also how huge was the income?Has the taxpayer out aside reasonable time and also dedication to the business to show that he or she has plans of making some income from it?Has it been proven that the taxpayer has a tax plan of losing cash in the business to lessen its taxes from their main source of profit?Is this business used to employ family relations who are in lower tax groups?If the business in itself does not bring any income, does the taxpayer logically foresee generating income from the appreciation of equipment used in the business?Does the income reason for the business overshadow the fun parts of the business?If the business is generating losses, are these losses as a result of conditions out of the taxpayer’s power? Or, are those losses going at the start-up stage of the activity or business?Has the taxpayer made income from a comparable business in years gone?Does the taxpayer have the needed trade or activity understanding to go on with business success and also make the needed income? Or has the taxpayer seen or talked with other people who can provide the right routes and education to run the business very well?If the business is making any losses, has the taxpayer tried to modify its process to make better and enhance income?The secure harbor where the taxpayer is considered is if the business has generated some income in at least 3 years out of the last 5 years of its operation. When a business is not making profits like it should, there is a need for the IRS to come in and check if the reasons are beyond the control of the business. This helps to ensure that, the taxpayer is relieved of paying taxes.For every business, the survey will differ. This is because; every business will have a different issue from the other. So, not all the investigations come with the same results. Due to the fact that there are different companies and also businesses, there is a strategy for every trade or business type to get the best results. If you need a business plan, you may contact me at 510-709-4030.

IRS Wins Foreign Account Case Over Former Mobil Senior Executive

Sanjiv Gupta CPA - 8 years ago
IRS (Internal Revenue Service) has achieved a great victory over the former Mobil senior executive Bryan Williams. He was alleged in a case of offshore tax evasion. He concealed foreign bank accounts of him holding millions from IRS.Between 1993 and 2000 this former executive opened two Swiss offshore in order to hush up his financial activities. He was also accused of purposely failing to fill out documents like foreign bank and financial account forms aka FBAR.In recent years IRS has become more stringent about the regulations. Different cases like this have prompted them to take such an action.  The authority has been petitioning for the more financial resource so that they can expand the tax evasion programs effectively. Their focus is now to catch and prosecute lawbreakers.Initially, the judgment was in favor of Williams. But in the year of 2003, Williams was convicted in a separate case. His case involved fraud and conspiracy. He pleaded guilty for this case. This year finally the fourth circuit court of appeals in Richmond, Virginia ruled in favor of the IRS (Internal Revenue Service). According to the court documents, he has committed fraud.Now IRS will impose heavy penalties on Williams for committing such a crime. He will have to pay a huge amount for each year of evasion.This is a great lesson for taxpayers. This is the high time everyone should be concerned about the consequences of such fraud. So it’s better to avoid the ways to take the help of abusive tax shelter. Going with a legal tax shelter is a quite beneficial way to reduce the taxable amount. A charitable donation is a perfect way of legal tax shelter. Apart from this, you can go for investments. Investments in real estate or health insurance are also considered as a better way of tax shelter.If you are holding an illegal foreign account, then you should stop such financial activity. Any day and any time IRS authority can accuse of doing such frauds. And the rest you know.

$27M Whistle-Blower Award Is Taxed as Ordinary Income

Sanjiv Gupta CPA - 8 years ago
Whistle Blower Award is an incentive for private citizens to uncover and report fraud to the government.   Usually one can get 15 to 25 percent of the money the government recovers from such cases.  In a recent case,  former CFO for a Montana hospital reaped a benefit of $27 million dollars by blowing the whistle on his former employers' accounting fraud.  How is that for an award?Reward sounds good but how about paying tax on this reward?   What do you think?  After all, the government collected the tax they wouldn’t have collected otherwise.  And now you have to pay the tax on the tax collection.As far as the IRS is concerned, this is an income and should be taxed as an ordinary income.San Francisco based 9th U.S Circuit Court of appeals cleared that the income received by Alderson should be treated as an ordinary income.  Alderson filed the case arguing that settlement was a result of the sale of a property and therefore it should be treated as Capital Gains instead of ordinary income.“If Alderson had offered simply to sell or exchange the information to the government in return for a sum of money, the government would almost certainly have refused the offer,” the 9th U.S Circuit Court expressed in its opinion, explaining that  Mr. Alderson had gone to considerable effort to establish the merits of the case before the federal government got interested in it.According to Reuters, Alderson failed to convince the appeals court about his theory that this income should be treated as a capital gain because the value of the asset (this case) increased as the case went on.Well, Sanjiv can figure out the tax on $27M dollars but I am sure its lots of money.  Spending a few thousands of dollars to save millions in taxes was surely a wise try.Tell us what you think?

Dealing With Tax Liens

Sanjiv Gupta CPA - 7 years ago
Federal tax liens are documents that are filed in the county in which a business or a person is conducting his or her activities informing the public that the person or business n question has outstanding tax bills. This lien attaches to the property of the said individual or business allowing the IRS to recover the full value of the tax bill through the sale of the personal and business property of a person or business. In essence, it is a warrant that the IRS places on your pieces of the property allowing them to dispose of them off in the pursuit of tax arrears. Once a lien is filed, then during the period that the lien is effective the IRS can sell off any property and recover the amounts owed in tax before the balance of such a transaction is given to the individual. So what happens when you pay off your tax debt?Well, the major thing is that the lien is lifted. The statute requires that the lien is lifted within 30 days of the settlement of the bill that was due. That is the law that comes into operation once the balance is cleared. However, in reality, this does not always take place. In most cases, the IRS is normally reluctant to release the lien that it has placed on a piece of property. To make up for this oversight, the lien is often issued with the writing that if it is not refilled on the date of the expiry, then the owner of the piece of property should consider the lien released. This option means that at the end of the liens period, the ownership of the pieces of property that had been attached reverts back to the owner.Does the IRS inform your credit agencies of the release of any lien once it expires? The law requires that a Certificate of Release is filed at the courthouse where the original lien had been filed. Once it is filed, the owner of the piece of property can then use it. However, most people have made the proposal for the creation of at least three copies of the release certificate. These copies would then be sent to the credit bureau once they are filed therefore releasing the individual from doing the job himself or herself.Is it possible to have a tax lien on your credit file without your knowledge? The simple answer is yes. In this day and age when identity theft is at an all-time high, the probability of finding a lien in your credit reports when you have no idea of it is very likely. The next step that you should take is to notify the IRS and the court in which such a lien was filed to seek clarification. Often, the services of a lawyer will be required to make the follow up as the process may be tedious and time-consuming. In addition, it is important to keep legal counsel by your side during this process to mitigate the legal impact such a discovery may have on your affairs.

Tax Fraud Case| 150 Bogus Tax Returns Filed

Sanjiv Gupta CPA - 7 years ago
A wise man once said that there are two things human beings cannot fail to encounter one they are born; taxes and death. True, human beings across the world have come up with ingenious ways of trying to skip paying taxes. However, like with many things that humans try to legally avoid, there are people who use fraudulent means to keep themselves from paying taxes. In Hillsborough County, the ugly head of the fraudulent tax persons has been reared once again. Sometime back the IRS federal agents took custody of two women who were suspected of identity theft. These women also cashed in on tax refunds that were worth over a million dollars. The women were apparently shocked to realize that their long-standing tax fraud schemes had been uncovered. However, such is the vigilance with which the government is pursuing the tax fraudsters that they do not know what hits them when it does.Cpl Bruce Crumpler who works at the Economic Crimes Division of the Hillsborough County Sheriff’s Office put is so candidly, “They always believe this day will never come. They always have that look on that face when they’re caught, like hand caught in the cookie jar.” This is a very true statement that affects quite a large number of tax fraudsters. To them, it is bliss time until the government gets on its tail. While it is true that very few people actually plan for the eventuality that they are caught, even fewer people expect that the fraudulent scheme will matter when they are eventually caught. It is not uncommon for most of these people to claim that since tax fraud is a victimless crime, then the punishment that is meted out should not be harsh.The fraudsters, Cullens, and Hawks have been accused by the IRS of colluding with another friend of theirs by the name Kenyon Williams in California, to file just about 150 bogus tax returns, which were used by them to claim in excess of a million dollars in refunds. What made the case a tad bit more interesting is the fact that the women were stealing the identities of patients from both University Community Hospital and the US Naval Hospital in San Diego.Of course, as it is expected the hospital came out guns blazing claiming to be shocked at the actions of the women and their accomplice. Their statement, which says in part; “At Florida Hospital Tampa, our first priority is taking care of our patients and ensuring their safety, security, and privacy at all times. We take any breach of personal healthcare information very seriously. Unfortunately, we recently learned that personal information relating to 45 of our patients had been compromised in January 2012” seems to be a show of force and aimed at showing the world their support for the arrest. Just this year in April, the same hospital is said to have implemented an electronic health records system that is meant to improve the privacy and security of the kind of information that is normally entrusted to the hospital’s database.

IRS Makes Foreigners To Conduct Businesses In USA

Sanjiv Gupta CPA - 1 year ago
Over the past year, the IRS has been clamping down on tax fraud cases, making it very hard for people with ill intentions to actually conduct their businesses. To start with, the pace with which tax refunds are being submitted has been increased to allow for time to handle tax fraud cases. This, in essence, means that the IRS is looking at the avenues through which identity thieves can get to defraud the government. The IRS not only made it difficult for the identity theft victims and fraudsters to get their refunds but it also made it much more difficult for Americans who live abroad and foreigners to mail in their fraudulent refunds. The IRS seems to have something else in mind; to them, they seem to be moving towards decentralization of the whole system. It is moving towards the creation of a specialized identity theft unit, which is set to operate within 21 separate functional areas.For a while now, some of the laws that have been passed by congress have had the net effect of making the process of doing business abroad for Americans much more strenuous than it was. As if this was not enough, the congress and the IRS are back at it again. This time, they are in the process of making it much harder for foreigners to conduct business in the USA. Whether this is a good thing or a bad thing remains to be seen over time. However, as the IRS and congress harden their stance on taxation issues and fraud, the pinch is being felt by the normal American who has the small and medium-sized business. With the new laws, the process of acquiring a tax certificate has become much longer and more of a hassle. In most cases, the law requires that the applicant sends his or her passport to the IRS for extended periods, during which period the IRS processes the paperwork. However, this does not mean that the new laws do not have their advantages. One such advantage is the fact that the process of application has been blown wide open giving applicants more avenues to apply. On the other hand, these laws have also made ITINs (International Tax Identification Numbers) expire after five years. This means that every five years, businessmen across the country will be required to go through the whole process over again if they are to remain tax compliant. This requirement does not only affect foreigners investing in the USA, but it also affects those Americans who are willing to invest out of the country.  Just another little effort by the IRS does to make staying legal as difficult as possible.Even then, the average American and the business community should be happy with the new requirements since it means that the government will be able to net previously excluded tax avenues. The result is that the government will be better able to handle its financial commitments and provide the relevant services to the populace.

Understanding Statute of Limitations on IRS Debt

Sanjiv Gupta CPA - 1 year ago
As a rule, anyone who owes back taxes stands the risk of falling into heavy debt as the taxes accrue both interest and penalties for the duration that they remain unpaid. This, in essence, means that the longer you keep skipping payment of the taxes due, the more you are likely to pay when the IRS eventually catches up with you. That is the general length and breadth of the situation. However, the IRS only has 10 years within which it is required to collect the taxes due to it. The counting of these 10 years is supposed to start from the date that your tax bill is finalized until the end of the tenth year. As such, beginning the date upon which your tax bill is finalized and it is agreed that you have tax arrears, then the 10-year window is opened and the countdown begins. It is also important to note that in cases where you did not file a proper tax return, then the IRS will go ahead and make a tax return of their own based on their assessment. The result is that the statute of limitations will be set by them depending on when they would prefer it to. As such, for all intents and purposes, it serves you best to file a tax return on your own, if not to avoid the penalties and interests, then to avoid being slapped with a huge tax bill that has been set by the taxman.The date upon which the statute of limitations expires is very important especially to those persons who are in the process of sorting out their tax mess. To start with, if the Collection Statute Expiration Date, which is an acronym as CSED, is near, then you are normally advised not to do anything that would lead to the extension of such a deadline. This will only work against you as the IRS may opt to start off aggressive actions that are aimed towards the collection of the whole tax debt in full. If for instance, you sign a waiver of the expiry, then you are by all means allowing the IRS more time to come after you for the remainder of the tax debt. However, if the Collection Statute Expiration Date expires and you have not completed the payments, then it is not required of you by law to complete such payments to the IRS.Extensions to the Collection Statute Expiration Date may be given in special circumstances that include: if you chose to solve your tax debt by filing for bankruptcy, if you left the country for an extended period of time or if your tax assessment was completed after you have been convicted of a tax fraud case. In fact, in these situations, your tax debt never expires until such a moment that you actually complete the balance in full. Taxation issues affect virtually everyone at one point in their lives, it is therefore important that you know how the law operates and how you can find some wiggle room.

Watch Out For Ghost Tax Preparers

Sanjiv Gupta CPA - 8 years ago
The Director of Internal Revenue Service Return Preparer Office – David Williams, presented the meeting at the Dallas IRS Tax Debate this summer subtitled “Rumor Control” due to the propaganda neighboring Registered Tax Return Preparers (RTRPs). Given the antagonism and obvious fret, a lot of tax experts were feeling concerning the listing procedure, David Williams began the meeting by explaining that it is an entry-level test.“(It is) not a test to put people out of the business of preparing tax returns,” David Williams said. “We think there are a lot of people still not registered or have or even know what a PTIN (Preparer Tax Identification Number) is.”David Williams also spoke about the fact that a lot of groups are giving out practice tests allegedly based on the authorized test. David Williams exposed that the aptitude test is still being drafted, and a transitory threshold has not up till now been elected but documented vendor’s hard work to rise above the blockade of time.“Most people have anxiety about testing. The tests available today are from vendors that are clairvoyant,” Williams joked.The minimum aptitude is based on the Internal Revenue Service’s publication 17. Continuing education (CE) is intended for 2012 subsequent to finding out how to record the sellers’ contribution to the CE. Necessary, will be yearly 10 hours of tax law, three hours of updates and two hours of ethics.Current figures make the public that present is in excess of 720,000 registered preparers. Of these preparers, 62% are not attorneys, CPAs or EAs. There possibly will be as many as 900,000 RTRPs as soon as authorized listing has started.  Of preparers, as countless as 100,000 have had fulfillment troubles and 50,000 may have been criminals in the previous 10 years, which might leave them out from the program.Not capable to be counted, phantom preparers are tax preparers that are not operational for CPAs or have any type of qualifications, listing or most prominently a PTIN. According to David Williams, PTINs was tenable in 15 minutes online.The inquiry of why to pay a cost of $64.25 while I before now had a PTIN is frequently asked.“For the reason that the course is financed totally by these bills, which comprises community consciousness,” David Williams said. “You have rights as a circular 230 responsible practitioner. The fee could come down in subsequent years. Due process rights are now available, so if your rights [to practice] are removed, you can appeal and eventually take the case to court. You have the right to be heard, to tell the rest of the story; this is also part of the fee.” All labors to revitalize the Central Estate Tax for the year of 2010 just did not get completed to the surprise of many. A good number of witnesses anticipated Congress to do something in some way to stop the jam-packed revoke of the Federal Estate Tax for the year of 2010 only to allow it to return on January 1, 2011, with revenge.

IRS Response to Identity Theft Lawsuits

Sanjiv Gupta CPA - 7 years ago
Like any government office that deals with refunds, the norm has been that those seeking refunds are given the run around until such a moment that they give up. In fact, for years those seeking refunds especially after suffering from identity theft normally end spending more on the follow-up process than the amount that they actually stand to gain from the refund. That has been the IRS and its way of dealing with the identity theft tax refunds that they are required to give. Until the other day when they were sued for the costs of the refund, little had changed at the IRS. However, right now the tide seems to be turning in favor of those looking for their refunds after suffering from identity theft. The IRS seems to have adopted a new policy in which these cases are expedited and solved within a reasonable time. A few of the people we contacted have pointed out the fact that the IRS seems to be more willing to settle the tax issues that they have been facing for a while now. Some people in this category have tax refunds that go as far back as the year 2007.The main question that seems to bug pundits and observers in tax issues is what exactly has changed the tide of things at the IRS? Well, a look at the bulk of the cases now being expedited seems to show a trend in which the IRS is responding to suits from the courts of law. A large number of the people being assisted by the IRS to get their refunds to seem to have at one point sued the IRS for these amounts. As such, it can easily be pointed out that this appears to be the jolting card that changed the tide at the IRS.Do you have to sue them to get your to refund? Bluntly speaking NO; you are not required to sue the IRS before you can be assisted to get your tax refund after a period of identity theft. At least, in theory, this is the law of the land. Those seeking refunds only have to provide the proper documentation and the refunds would be submitted to their accounts of choice within the scheduled time. However, the reality on the ground is a whole different matter. Most of the people who simply fill in the requisite forms and submit them often have to wait for long before such applications are taken care of. Some of them have to make a number of follow-ups before they can be attended to. In some cases, the applicants have resorted to using the court system in order to assure themselves of quick response and in essence, justice for themselves. This option, those in most cases spared for extreme cases, was taken by 16 plaintiffs recently ad of the 16, at least 3 have already received their refunds. A few other refunds were still being processes to be delivered before mid-December.

Handling 2012 Gift Tax Audits at the Internal Revenue Service Appeals Level

Sanjiv Gupta CPA - 8 years ago
The way you plan and deal with the storm of 2012 gifts, the documentation of 2012 tax gains in 2013 for the 2012 gifts and also the ultimate audit a lot of these gifts will unquestionably be taken through; must be backed by how you will take charge of the Appeals of those audits. 2012 will probably show to be the most energetic year in the gift tax record.With the risk of a decline in the yearly gift exception from $5.12 million to very lessee $ 1 million, also with reduction grantor policies, continuous GST shares all being planned for lawmaking constraint, extra well-off taxpayers will create considerable moves in 2012 than they did before.Huge statistics of huge dollar moves will probably affect in growing Internal Revenue Service review action. However, the huge dollars that are moved will consequence in a lot of those reviews departing up to the Appeals Division as taxpayers and the Internal Revenue Service attempt to resolve what will unquestionably be huge appraisals. lack of concentration to the official procedure: The Wandry issue has led in a number of practitioners lessening the significance of a lot of gift setting up facts and in its place depending on the backstop of a distinct worth section to explain any gift levy issues.Wandry v. Comr., 2012-88. Merely put a number of practitioners may have considered that they did not necessitate to be worried concerning the excellence of the evaluation, or whether extra official procedures were stuck to, as they may have completed in former years.In view of the fact that many understand the Wandry case as having prearranged wide permit to the usage of distinct assessment sections, they may have reconsidered the disadvantage of a 2012 gift as additionally unassuming as possibly must have been completed. Step operation policy:The pure occasion force to complete many 2012 gifts will effect in missed steps, the lack of “aging” dissimilar stages of the map, the conclusion of mechanism that is in the earlier period might have been extended in excess of more than a few levy years into a sole tax year, and extra.These might all elevate the presence of the Internal Revenue Service making use of the step operation policy to pack together a lot of dealings into a more expensive tax effect. Competency:If the taxpayer did not have adequate psychological ability to contract (which is a senior amount of ability than that required to sign a will) the gift contract will be unproductive. Given the possible collision of state assets tax in decoupled states and the danger of a lesser central immunity total, a lot of grown-up taxpayers will have certainly been optimistic to create 2012 moves. Post-Gift Operations:As practitioners managing audits and petitions in general outlook the certification finished at the time of the gift as of supreme significance, they must not markdown post-gift certification that might be pertinent to the gift tax appraisal

Avoiding IRS Tax Audit This Year

Sanjiv Gupta CPA - 7 years ago
There are many things that seem to raise the red flag every time a tax return goes to the IRS. This article is going to point out some of the reasons behind an IRS audit. These points tend to increase the probability that you are going to get an audit from the IRS at one point in your life.The first thing that should always put you on the lookout is if you make a lot of money. Generally, people who earn a lot of money tend to underpay their taxes. The problem is that while people make money, they tend to spend it on many different things and forget that they are required to declare all sources of income and pay the taxes that arise from such incomes. This means that there is always the risk that such a person is underpaying his taxes or not paying some of them at all. This is a matter of concern for the IRS.There is also the risk that such a person fails to report all of the taxable income from the 1099’s or W-2’s reported to the IRS. This failure may be intentional or just out of ignorance.Another factor to look into is the charitable deductions that you make or receive. Giving back to charity and accepting charitable donations is one of the ways in which many people keep off paying taxes. However, there are some deductions that are tax-exempt while others are taxable. There are many other types of deductions that you should also lookout for the home office deductions that are claimable the rental losses that you make, business meals and travels as well as entertainment expenses.One of the common mistakes that many people make is to write off the losses that have been acquired from a hobby activity among the business losses. In some cases, business persons who use their vehicles for business activities tend to claim 100% of the use of the vehicle on the business. Some of these things almost always tend to raise red flags all over the IRS servers.Other things that may raise the IRS red flags include running a cash-only business, failure to report the foreign bank accounts that individual holds and trade in currencies. Even then, whatever the reasons that you may have, it is important to avoid IRS audits. Overstating deductions and profits in most cases also attracts the IRS to your doorstep.This is why it is important to use professionals in this field to cover the loopholes that you may have had. Professionals will also help you better organize your financial returns and reduce the possibility of raising the red flag at the IRS.

Home Office Deduction | Video

Sanjiv Gupta CPA - 7 years ago
In this short video, Sanjiv Gupta CPA discusses the “Home Office Deduction”.What is considered as Home Office?Please consider the IRS definition for Home Office.Whether you are self-employed or an employee, if you use a portion of your home for business, you may be able to take a home office deduction.  Here are six things the IRS wants you to know about the Home Office deduction1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:as your principal place of business, oras a place to meet or deal with patients, clients or customers in the normal course of your business, orin any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.2. For certain storage use, rental use, or daycare-facility use, you are required to use the property regularly but not exclusively.3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on line 30 of Form 1040 Schedule C, Profit or Loss From Business.6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.
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