Odds and Ends About Taxes

A deceased person no longer pays income taxes, but there could be up to three distinct tax filings. Contact the Medford Tax Experts office for more information to manage the stock dividends, bank interest, and rents of someone who has died this year.

Self Employed Tax calculations now exclude the costs of health insurance premiums. Taxpayers can also exclude dental insurance and long term care premiums.

If you pay someone to care for your children in your home, you might need to file Schedule H and make timely FICA payments. If you pay someone to clean your home, the same requirements might also apply to you.

S-Corps and LLC’s must file returns each year. The monthly federal penalty is $195 for being late. If you have incorporated a business, you must file special corporate tax returns in addition to your personal income tax return.

Charitable Donations are only allowed if documented and if the taxpayer itemizes deductions. Those Thank You follow up letters are your IRS approved documents.

IRS e-mails are probably bogus. The usual method of communication by the IRS and MA DOR is post office mail.

Tax Preparers are find $5,000 for disregard of the tax law.

Roth IRA’s may be used for college tuition payments and are NOT reported on the FAFSA.

Only one taxpayer may claim a child exemption. If the dependent child does not live with the parent making the claim, a special form 8332 must be filed with the signature of the custodial parent.

The US Treasury Inspector General for Tax Administration calls for more examinations and audits of rental activities that report an income loss. It is estimated that half of these returns incorrectly reported income, expenses and their eligibility for a business loss. If your monthly rents are below the normal market rates, you are not running a business and you are not allowed to report a tax loss. The IRS is NOT telling you what to charge for rent. The IRS is telling you that if you rent out to family members, a tax loss is prohibited.
The Voluntary Off-Shore Disclosure Program is not exactly optional. All taxpayers must file an annual report of accounts in foreigncountries. Failure to do so includes penalties that are 50% of the account balance. Businesses and income properties in other countries also must be reported.

Increased penalties apply to late returns. The IRS penalty is now $100. There also are state penalties. Be sure to file on time, even if you can’t pay the balance in full! The failure to file a timely partnership or S-Corp return is $395 per partner

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The Medford Tax Experts, Inc.

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