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Boston Tax Law Blog

Home mortgage debt cancellation, pt 2: eligibility considerations

Let's pick up the thread of a two-part post we began earlier this spring on the taxation of cancelled debt from a home mortgage.

The general rule of course is that a cancelled debt is considered taxable income. But as we explained in our March 5 post, the Great Recession and the real estate crisis that accompanied it put that general rule to the test. With so many people experiencing forclosure or a short sale, Congress responded with legislation that excluded income from cancelled mortgage debt.

Foreign assets: Which ones do you have to report on Form 8938?

This is a follow-up to a post we did last winter on filing requirements for foreign assets and income.

As we noted earlier, there are actually two sets of filing requirements that can come into play. The first set involves checking the appropriate box and filing Form 8938 as part of your regular income tax return. The second set involves filing FinCEN Form 114 (otherwise known as the FBAR) if you have offshore accounts that exceed certain valuation thresholds. We discussed this in our February 19 post.

Civil forfeiture, part 1: When is the IRS allowed to do it?

If you are a small business owner, the bank account you use for your business is vital to you. Day by day, the transactions that occur there are like your life blood

It is therefore obviously a huge problem when the IRS seizes that account, contending that there has been suspicious activity under the Bank Secrecy Act or some other federal law. In this two-part post, will describe the problem of civil forfeiture and update you on recent efforts to reform the process.

Residency and state taxes, part 2: proposed federal law has not passed

In the first part of this post, we discussed some of the detailed rules on residency status affecting state income tax returns. We focused, in particular, on part-year residents and what state tax obligations they may have in Massachusetts.

In today's post, let's look at how states tend to treat people who live in one state but earn income in another. More specifically, we will take note of a proposed federal law to encourage more uniform standards for this type of taxation.

Residency and state taxes, part 1: Do part-year residents have to file?

We focus most of our pieces in this blog on federal income tax. This makes sense because state tax systems tend to mirror the federal system.

But state tax systems also have detailed rules on residency status as it relates to filing requirements for tax returns. In this two-part post, we will address some of these rules. Let's start with a particular question: When must partial-year residents file a Massachusetts tax return?

Innocent spouse relief: the role of proven tax counsel

A recent media story focusing upon instances where a divorced party might summarily receive a nasty surprise from the Internal Revenue Service owing to actions taken by an ex-spouse during marriage likely solicits instant empathy and understanding from most tax attorneys.

Following is a hypothetical scenario (yet certainly a matter that often plays out similarly in real life) described in the above-cited article. One spouse -- who routinely handled all the financial matters during a marriage that subsequently failed -- fudged a couple's tax returns by engaging in so-called "financial infidelity." That spouse's partner -- oblivious to any wrongdoing -- dutifully co-signed the joint tax return.

Communicating with the IRS: the important role of letters

Letters are a remarkably durable form of communication, with roots dating back into the ancient world. They were a medium of exchange that flourished for centuries, from the epistles of the New Testament to the love letters of the Romantic era and beyond.

But the increase in electronic options for connecting with others has greatly affected the use of letters for many of us. Phone calls, e-mail, social media - all seem much more immediate than an old-fashioned letter.

What if a levy on your bank account creates undue hardship?

If you have financial problems, tax debt is a double whammy. Difficulty in paying that debt is one problem. But things could get even worse if the IRS were to garnish your wages or levy against your bank account.

Is the IRS allowed to do this? In this post, we will address that question.

Keeping records of business expenses for deduction purposes

One of our recurring themes in this blog is the importance of record keeping for tax compliance.

After all, the quality of your records - or lack thereof - can be crucial in many different types of tax controversies. In this post, we will provide a reminder of why these records are so important.

Not getting your tax refund? Consider your options

A tax refund is your money, not the government's. But sometimes the government does not give the money back the way it should.

When that happens, you don't have to wait passively for a response. In this post, we will explain how you can take action to get the refund you have coming to you.

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