Is it possible to hide anything from the IRS? Even when you think you’re safe, it appears the IRS has an eye in the sky. That eye seems to be all reaching, at least in Pennsylvania. A wealthy real estate developer and CEO of Automated Health Systems owns a luxurious 32,400 square-foot mansion that apparently caught the eye of IRS agents flying in and out of Pittsburgh.
After authorities began to ask questions that eventually lead to the mansion owner’s personal secretary ending up in some serious trouble. That’s because the secretary, who also acted as the bookkeeper for her boss, recently pleaded guilty to tax evasion, which reportedly could be as much as $250 million. The mansion owner has not been charged in the case at this point and his attorney claims that the case is nothing more than a tax dispute.
However, the attorney for the secretary claims that his client was only following her boss’ direction and simply did what he directed her to do. He did concede that it was still criminal activity and his client is aware of that. The scheme reportedly involved re-characterizing her boss’ personal expenses to appear as business expenses. Formal charges include “conspiracy to fraudulently pay for and unlawfully deduct as business expenses, millions of dollars in personal expenses of co-conspirator 1.” It would appear that “co-conspirator 1” is her boss, although he has yet to be named.
The lesson here is if you’re going to build a big mansion, make sure it’s nowhere near a major airport, or else the eye in the sky might decide to take a closer look.
It’s back to school and for many that means school supplies and new clothes, but what about kids who are heading off to college? Their expenses are much greater than a few new outfits, pencils, paper and glue sticks. Besides the cost of tuition, most college students have to deal with the added expenses of room and board. Add it all up and college is definitely expensive. But what if there were a way to make your room and board expenses work for you, in the form of a nice tax break?
It is possible and it could actually be a great way to save. Here’s how it works. You buy a rental property for your own child to live in and have him/her find a few roommates. There are several advantages to this arrangement if you do it right. First, you get to keep the normal tax deductions that you would from owning a rental property. You can also hire your child to be the property manager and then use the net income you pay your child towards his/her tuition, with either very little, or no tax at all. Meanwhile, the monthly rent payments from the roommates can go towards the mortgage payment.
After graduation, you have two options. You can hold onto the property and continue renting it until it’s paid off and then use it as a retirement property. You could also use it for a 1031 exchange, which would allow you to defer the tax on your capital gain if you buy another “like-kind” property. So, if you have the ability to invest in a rental property you could save yourself thousands in college expenses and taxes.
It used to be that if you owed a large debt to the IRS you didn’t have a great chance of catching a break. Even though the IRS has always been able to compromise, at least a little, the tax agency has never been really eager to do so. Some people might not even be aware that this was a possibility, but it is. It’s called an offer in compromise and it gives taxpayers with overwhelming debt the chance to pay off that debt for less than the total amount owed.
During the 10 years between 2000 and 2010 the IRS accepted somewhere in the neighborhood of 25-30 percent of these petitions on average, but never reached the 40 percent threshold. However, recently, especially during the last three years the IRS seems to have become a lot more charitable with offers in compromise. That’s good news for taxpayers with large amounts of tax debt.
In the 2012, the IRS accepted 24,000, or 38 percent, of these offers and that number jumped to 31,000, or 42 percent in 2013. In 2014, the number dipped slightly to 27,000 accepted offers, or 40 percent. Typically the IRS does not accept OICs if the agency feels that the taxpayer has the means to pay off the entire debt. However, every situation is different, so if you are considering making an offer in compromise to the IRS to settle your tax debt, then you might want to speak with an experienced tax accountant from GROCO first, in order to weigh your options. You can contact us by clicking here or by calling 1-877-CPA-2006.
While the majority of people pay the most attention to the taxes they see regularly, i.e. income and sales tax, there are other taxes that cost you a lot of money that you may tend to forget about. One of those taxes that cost a lot, but that kind of goes unnoticed is property tax. In fact, depending on where you live and how much property you own, your property taxes can be huge. For some people, like residents of New Jersey for example, property taxes seem extreme.
A 2014 study by Monmouth University found that 26 percent of New Jersey residents said that they were “very likely” to move to a different state, with the most common reason being the high price of housing and property taxes – with property taxes being the main culprit. Residents of Connecticut and New York are also often on the list of highest property taxes. Why is that some locations have much higher property taxes than others?
There are several reasons that property taxes vary from state to state and city to city. Here are just a few of the main causes:
- State employees make a lot of money – if your state pays its workers well, like New Jersey does, then chances are your property taxes are higher in order to help foot that bill.
- Not Much Tourism – if your state lacks a lot of out-of-town visitors then property taxes could be higher to make up for lost revenue.
- Good schools – in order to have the best schools you have to pay for the best teachers and education services. The funds for those expenses often come from property taxes.
- Valuable property – no matter where you live, if you have a valuable home then you will almost assuredly pay more in property taxes. That’s because your property tax is based on the assessed value of your home times the local tax rate. A higher value home equals higher property taxes.
There are other possible reasons for high property taxes, but these are some of the most common. If you want to avoid outrageous property taxes, then your best bet is to simply move to a state where property taxes are lower.
Do you know where your tax return is? Are you sure that next year’s tax return is safe? It’s clear that the IRS does not have a strong prevention plan in place to stop would-be tax scammers from getting to your personal information and then using it to steal your tax return. According to a recent report from the top tax agency, the Treasury Inspector General for Tax Administration (TIGTA) has received about 600,000 contacts since October 2013 in regards to tax scams. The TIGTA also noted that there have already been thousands of victims who have collectively lost more than $20 million in that time.
According to the IRS, most scammers pose as employees of the IRS and go after those that are most vulnerable, especially the elderly. However, their threatening tactics are clear-cut signs that they are not with the IRS. The agency will never call anyone and ask for personal information over the phone. The IRS will also always send a letter in the mail first, before contacting you by phone.
However, as the number of scams increases so do the scammers’ methods and abilities. Every year tax scammers get more sophisticated in their efforts. This year the IRS found that scammers have started to change phone number caller IDs in order to make it look as though the IRS is actually calling. Additionally, many scammers are starting to learn more about their victims even before they call, so they can appear to be even more legit.
If you think anyone has tried to scam you out of your tax return then the IRS suggests calling the following number: 1-800-829-1040.
There’s been no shortage of confusion since the Affordable Healthcare Act became a law. Likewise, there has been no shortage of discontent with the bill, either. Obamacare, as it is widely known, continues to find ways to leave people in the dark not only about their healthcare, but also about their taxes. So what’s the latest issue surrounding Obamacare?
It turns out that some people, who would normally not be required to file a tax return, may actually need to file a return, after all; that is if they want to keep receiving their health care tax credit subsidies. That’s true, according to the new health care law, even if you would normally be exempt from filing a return.
The White House and the IRS are hopeful that the nearly 1.8 million U.S. households that received those tax credit subsidies to help pay their insurance premiums that haven’t yet filed will be asking for an extension very soon. While the monthly average tax credit was only about $270, with nearly nine million taxpayers taking advantage of those credits that is a lot of money to be giving up for next year. Add it all up and it totals about $28.4 billion.
The IRS is reportedly attempting to alert those who might still need to file a return. Therefore, if you receive a letter from the IRS regarding Obamacare make sure you give it a good reading. Of course, you should never throw any letter from the IRS away without reading it first. And if you get any kind of letter from the IRS that you’re not sure about, you can always contact our office at 1-877-CPA-2006.
Many people from all over the country enjoy gambling. Whether it’s big time poker, playing the slots or betting on sporting events, there are a lot of people who enjoy games of chance and the idea of winning something for nothing. Of course, most of the time, the house wins and the player walks away empty handed. When a player does win, it’s usually cause for a celebration. However, the big victory can be short-lived when the winner discovers that the taxman wants his piece of the pie as well.
In fact, the IRS is looking to really crack down on gambling earnings. As it stands rights now, when a person plays the slots he or she has to report any earnings of $1,200 or more to the IRS. The machine even stops working as soon as someone wins. It won’t start again until after a casino worker has presented the lucky winner with the necessary tax papers. However, recently the IRS threw out the idea of lowering that threshold down to just $600.
To no one’s surprise, many gamblers hate the idea. Realistically, they have a good point, too, because most people who play the slots never win enough to make up for their losses, so why should they have to pay taxes if they get lucky once or twice? Time will tell if the IRS end up getting the threshold lowered or not, but gamblers and casinos alike oppose the idea. For small time gamblers the idea seems unfair, and casinos say it would only take the fun out of the game for players.
While democrats and republicans will continue to fight it out over taxes and how to improve our economy, especially during the run-up to the presidential election, the battle generally stays the same. Democrats want to take more money, especially from the wealthy, and the republicans want to keep more money in taxpayers’ wallets. Surprisingly, however, democratic frontrunner, Hillary Clinton recently proposed a tax credit for businesses.
Of course there is a catch, but anytime a democrat offers a tax credit to wealthy corporations it’s newsworthy. According to reports, Clinton says that in an effort to convince corporations to share more of their profits with their employees she would offer these companies a tax credit. The proposal would give businesses a tax credit that was good for two years, which would be the equivalent of 15 percent of profits that were distributed to employees. The credits would be capped at 10 percent of wages.
It’s estimated that the credits would cost $10 – $20 billion over a 10 year period. Shutting off corporate tax loopholes would reportedly be the means for paying for the credits. Corporations would only be eligible if their profit sharing was more than existing wages and benefits. Despite the proposed tax credit to businesses, her republican rivals were quick to counter that Ms. Clinton is a face of the past and a perfect example of what’s wrong in the Nation’s capitol. It remains to be seen if the proposals will pass but of course, first, Ms. Clinton will have to be elected. That won’t be determined for more than a year. Stay tuned.
In early June, the IRS announced to the public that it had allowed thieves to steal the private information of thousands of taxpayers. According to those reports, the thieves accessed the information through the IRS’s online “Get Transcript” website and then used it to file fraudulent tax returns to the tune of about $50 million before the breach was discovered. At the time of those first reports, the IRS failed to give an explanation as to how it happened. The Nation’s top tax agency stated that the scammers were not amateurs and that was about it.
While there have still been no definite reports as to how the breach occurred, there are some, including the chairman of Credit.com, who have their theories. One real possibility is that the scammers used the so-called “Dark Web” to purchase the necessary personal identifiable information (PII) in order to cut through the IRS’s security measures. The Dark Web is where criminals buy and sell PII, regularly.
Another possibility of the breach is simply taxpayers themselves. Scammers and con artists use many measures to trick people into revealing their important PII. Another real threat comes from social media use. Without really considering the possible consequences, people reveal a lot of details about their lives on social media. If you share the right information the wrong people can get a hold of that and use it against you.
One other possibility is that it was an inside job. Although that scenario is unlikely, the possibility that the scammers had someone on the inside that helped them access the PII does exist. It’s very likely that the thieves might never be caught and the IRS might not ever know how they got in. However, one thing is sure; the IRS has to make sure they don’t allow this type of breach again.