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Boston Tax Law Blog

Cancelled debt on a home mortgage, part 1: Is it taxable income?

Technically, when some or all of your mortgage debt is cancelled in a foreclosure or short sale, the amount of cancelled debt is supposed to count as income.

But is this really how the IRS expects you to handle things, when you have a debt cancellation on your home mortgage? In this two-part post, we will answer that question.

Third-party payroll services: outsourcing and tax liability

As the owner or operator of a small business, you face multiple pressures. Marketing your product or service effectively, driving revenue growth and managing employees are only some of the many demands on your time and attention.

Given these demands, it makes sense for many businesses to use a third-party provider to handle payroll services and tax compliance tasks. In this post, we will discuss some of the considerations to keep in mind in using such providers.

What reports must be filed for foreign assets and income?

Last week we concluded a two-part overview on the taxation of foreign accounts and income. In this follow-up post, we will get even more specific about reporting requirements.

But what is it that you may actually have to file? In this post, we want to remind you of the multiple reporting requirements that apply to offshore income and assets.

Offshore update, part 2: Can Uncle Sam tax foreign earnings?

In the first part of this post, we sketched the evolving compliance landscape for offshore accounts and income. With the Foreign Account Tax Compliance Act (FATCA) taking effect, U.S. account holders with foreign assets find themselves under more scrutiny than ever before.

In this part of the post, let's look at an aspect of offshore compliance that is often overlooked: the foreign earned income exclusion.

Offshore update, part 1: foreign banks feeling FATCA pressure

Boris Johnson, the flamboyant mayor of London, has quietly agreed to pay substantial U.S. taxes on the sale of his home in the U.K.

This constitutes what political pundits might call a "flip-flop." After all, only a few months ago Johnson was denouncing the imperial overreach of U.S. taxes on expatriates. Though he has dual citizenship, Johnson hasn't lived in the U.S. since he was five years old -- and claimed it was therefore unfair to tax him. We wrote about this in our November 26 post last year.

The IRS sometimes goes after the wages of those with tax debts

For most people, their paychecks from work are their financial lifeblood. Receiving such wages is often an essential part of a person's ability to meet the various expenses they incur as a part of everyday life. Thus, one could imagine how alarming a person would find it if the amount of their wages that actually went to them suddenly dropped significantly. This situation is one that individuals who have a federal tax debt may find themselves in.

This is because wage garnishment is one of the tactics the Internal Revenue Service is allowed to use to collect back-due taxes a person owes. This tactic involves redirecting a person's wages from work away from the person and towards the tax debt.

Tax preparers, part 2: credentials and legal responsibility

In the first part of this post, we began discussing the importance for millions of taxpayers of choosing the right tax preparer. As we noted, a very basic place to start is with making sure that the preparer has a Preparer Tax Identification Number (PTIN).

But there are several other factors to keep in mind as you choose a preparer to work with. In this part of the post, we will discuss the various credentials that different types of preparer have. We will also discuss consequences for the taxpayer that can result from fraud by a preparer.

Paid preparers and tax compliance, part 1: choosing a preparer

The IRS will begin accepting tax returns for the new filing season on January 20, one week from today. It's a time of year when taxpayers across the country are considering what resources they need to comply with a federal tax code that has become notorious for its complexity.

Some taxpayers choose software to help them navigate this complexity and file on their own. For those who do not itemize deductions, this may well make sense. But for tens of millions of others, it is important to find a competent and trusted tax preparer.

In this two-part post, we will discuss the role of tax preparers in facilitating tax compliance.

How does divorce affect your taxes? Part 2: property transfers

Let’s continue our discussion of ways in which divorce can affect your taxes. In part one of this two-part post, we explained that even something as seemingly simple as filing status is not always as straightforward as it seems.

In this part of the post, we will consider the question of property transfers between spouses.

How does divorce affect your taxes? Part 1: filing status

For many years, the divorce rate for first marriages hovered around 50 percent in the U.S. It was as if every marriage were a coin flip.

The rate has declined somewhat now, to around 40 percent. But this still means a lot of people end up getting divorced, raising issues that range from the emotional to the financial.

One of those issues is the effect of divorce on taxes. In this two-part post, we will discuss that question.

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