You have money coming to you from a pending law suit, but you’re wondering whether Uncle Sam will want a share of it. The answer varies, depending on various factors such as how you were damaged, how the case is resolved and more. Here are a few facts you should know before negotiating a settlement. [Read more…] about How Litigation Affects Your Taxes
Have an Office Outside the Home? You Can Still Deduct Home Office Expenses
You may have heard that your home office expenses may not be deducted if you already have an office outside the home. This is a common misconception. While it is important to carefully examine the language of the Tax Code, in most instances it is perfectly permissible. IRS publication 463 states, “You can have more than one business location, including your home, for a trade or business.” Sounds good, but what qualifies as an administrative office for your business? The IRS in publication 587 says: “Your home office will qualify as your principal place of business for deducting expenses for its use if you meet the following requirements: [Read more…] about Have an Office Outside the Home? You Can Still Deduct Home Office Expenses
NJ Court Clarifies Contingent Interest for Estate Asset Valuation
NJ Inheritance Tax is computed on the clear market value of property transferred, valued at the date of death. In the Estate of Claire Schinestuhl,the NJ Division of Taxation determined that the shares of a publicly traded company inherited by the decedent, Claire, from her brother, Prescott Schinestuhl must be separately valued as of the date of Claire’s death and not about two years later when the sale proceeds of the shares were distributed by her brother’s estate. [Read more…] about NJ Court Clarifies Contingent Interest for Estate Asset Valuation
New IRS Online Tool to Check Tax-Exempt Organization Status
The IRS website now offers a search tool that allows users to search for tax exempt organizations and check information about their federal tax status and filings. The new tool combines three former search sites into one, making it a quick and efficient way to search for organizations that:
- Are eligible to receive tax-deductible charitable contributions
- Have had their tax-exempt status automatically revoked because they have not filed Form 990 series returns or notices annually as required for three consecutive years
- Have filed a Form 990-N annual electronic notice
The Exempt Organizations Select Check webpage can be accessed at Tax-Exempt Organization Status
Form 8938: Statement of Specified Foreign Assets
The IRS has added Form 8938 to the individual 1040 tax return, taking another step to collect tax on unreported interest on overseas accounts. In addition to the risk of a third party disclosing the taxpayer’s foreign accounts to the IRS, this form now puts an affirmative duty on the taxpayer to disclose his foreign accounts. The sanctions for not completing and attaching the form (when required) include numerous severe civil penalties and potential prosecution followed by a term in federal prison. If you fail to file Form 8938 or fail to report a specified foreign financial asset, the statute of limitations for the tax year may remain open for all or part of your income tax return (Form 1040) until three years after the date you filed Form 8938. [Read more…] about Form 8938: Statement of Specified Foreign Assets
Three Common IRS Audit Red Flags You Can Avoid
No one likes to get audited. It probably ranks somewhere between a root canal and having your e-mail account hacked on the misery scale. While only about 1% of all individual tax returns are selected, certain factors can bring your return under the IRS radar. Some may be unavoidable, such as the nature of your business, but here are a few red flags you can avoid: [Read more…] about Three Common IRS Audit Red Flags You Can Avoid