Category: Individual Income Tax

Now’s a great time to purge old tax records

May 30th, 2017 by

Whether you filed your 2016 tax return by the April 18 deadline or you filed for an extension, you may be overwhelmed by the amount of documentation involved. While you need to hold on to all of your 2016 tax records for now, it’s a great time to take a look at your records for […]

No Refund for Untimely Filed Offshore Disclosure Program Amended Returns

May 30th, 2017 by

The Offshore Voluntary Disclosure Program (OVDP), which is for taxpayers that have failed to meet foreign bank account reporting requirements, requires the filing of amended returns for eight years. The taxpayer was an OVDP participant for whom the disclosure period was for tax years 2003 through 2010. For all tax years except 2008, the taxpayer […]

Bed and Breakfast Owner’s Deductions Were Disallowed

May 24th, 2017 by

The taxpayer held a 50% interest in an LLC (a partnership for tax purposes) that owned and operated a bed and breakfast house in Indiana. After several years of unprofitability, the property was listed for sale while caretakers resided at and maintained it. During that time, the taxpayer made several trips from his home in […]

Procedure—Innocent Spouse Relief Granted

May 18th, 2017 by

Before their divorce, the taxpayer and her husband filed a joint return with two Schedule C’s (Profit or Loss from Business): one reporting a net profit of $95,686 for the taxpayer’s realtor income, and one reporting a net loss of $133,277 for her husband’s cattle ranching activity, in which the taxpayer was never involved. The […]

No Dependency Exemption for Grandmother Who Supported Grandchildren

March 3rd, 2017 by

The taxpayer provided financial and household support to her grandchildren because their father (her son) was an unemployed drug addict. She claimed the grandchildren as dependents on her tax return after being assured by her son that he wouldn’t claim them. On audit, the taxpayer’s dependency exemptions for the grandchildren were disallowed because they had […]

Taxpayers Must Validate Identities When Calling the IRS:

February 28th, 2017 by

In a news release, the IRS reminds taxpayers that they will be required to validate their identities when contacting IRS call centers. If the matter involves a personal tax account, the taxpayer must have the following ready: (1) Social Security numbers and birth dates for those listed on the tax return; (2) an Individual Taxpayer […]

Court’s Change to Beneficiary Didn’t Create Inherited IRA

February 24th, 2017 by

During his lifetime, the decedent designated a trust as his IRA’s beneficiary. However, the IRA’s custodian didn’t have a copy of the trust instrument and found no evidence that a trust had been created. According to his will, the decedent’s entire estate was left to his spouse, who wanted to roll over the account to […]

IRS Won’t Reject Returns If Health Coverage Information Missing

February 21st, 2017 by

Earlier this year, the IRS made changes to its system that would automatically reject tax returns that failed to provide information on health coverage. However, on 1/20/17, President Trump issued an executive order that directed federal agencies to waive, defer, grant exemptions from, or delay implementation of Affordable Care Act (ACA) provisions that impose a […]

Foreign Reporting—Passive Foreign Investment Company (PFIC) Ownership Rules

February 8th, 2017 by

Final regulations (TD 9806) were issued that provide guidance on who is an owner of a PFIC, the annual filing requirements for shareholders of PFICs, and statements required to be filed with the IRS by those excepted from certain foreign corporation return rules. Under IRC Sec. 1297(a) , a PFIC is any foreign corporation if […]

Health Care—Final Regulations on Premium Tax Credit

February 4th, 2017 by

The IRS has issued final regulations regarding the premium tax credit that finalizes portions of proposed regulations issued in July 2016 with minor modifications. These final regulations include provisions on eligibility for the premium tax credit, computing the premium assistance amount, and the applicable benchmark plan premium. The regulations do not cover provisions on the […]