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Boston Tax Law Blog

Is that person demanding payment really an IRS agent?

Perhaps the only thing worse than owing taxes is not being able to pay them. Many Boston residents find themselves in this predicament, and they wonder what the IRS will do to collect. Some people receive phone calls, emails or personal visits from people claiming to be agents, but taxpayers need to be cautious. Scammers take advantage of people every day.

IRS agents may make visits and phone calls, but usually only after communicating with taxpayers through regular mail. If numerous notices are ignored, an agent may take other actions in order to get into contact. If an individual has received no notices from the IRS and someone shows up demanding payment, it may not be a real agent.

How to avoid penalties for underpayment of estimated taxes

The second-quarter deadline for all estimated tax payments just recently passed. This means we are officially in the second half of fiscal year 2018, so it’s the perfect time for an internal tax analysis and self-audit. This will allow time before the end of the year to adjust to avoid bigger headaches down the road.

Because of the Tax Cuts and Jobs Act of 2017, there is more ambiguity about what income could qualify for the pass-through deduction of 20 percent. Self-employed business owners who pass through income on their personal tax returns – such as those who own sole proprietorships, S-Corps, partnerships and LLCs – should definitely take the time now to perform a mid-year check of their tax strategy.

Quarterly tax payment guidance as uncertainty continues

The deadline for Q2 estimated tax payments was June 15. It highlights a problem with the 20 percent deduction for qualified business income for “pass-through” entities – generally sole practitioners, LLCs, S Corps and partnerships.

Tax professionals are still waiting on IRS guidance with the specifics of how this pass-through deduction will work. Many question what income will qualify for the deduction. This all makes it more difficult than usual to calculate estimated tax payments.

What you should know about ABLE accounts

Achieving a Better Life Experience (ABLE) accounts are savings accounts that allow disabled persons and their loved ones to save money for disability-related expenses. Such expenses could include technological advances to aid in independence, home renovations for accessibility, and dental/medical costs not covered by government benefits (like social security disability income (SSDI), supplemental security income (SSI), Medicare or Medicaid).

The Massachusetts equivalent of the federal ABLE account is the Attainable Savings Plan. The ASP functions similarly to ABLE accounts, in that they both cover disability-related costs and contributions to them are generally eligible for federal saver’s credits.

Understanding the tax implications of vacation home renting

With the expanding popularity of short-term rental programs like “HomeToGo,” “AirBNB” and “HomeAway,” increasing numbers of homeowners are offering to let strangers use their houses, apartments and condos. These involve allowing someone to use the home for a set time for a fee, similar to staying in a hotel.

Short-term rentals are very profitable for property owners, especially those centered around holidays, festivals, state fairs or sporting events. Some people just prefer an apartment or home instead of an impersonal hotel. The reasons for this vary from person to person, but they include ease of access to cooking facilities, privacy, amenities, and close proximity to their desired location.

Did you receive a CP2000 from the IRS?

In the wake of tax season, taxpayers can receive a variety of notices from the Internal Revenue Service. How you respond when you get such a notice can be very important. One of the most common types of notices is IRS Notice CP2000. Today we will go over some CP2000 basics.

Tax preparer exonerated after jury trial

The old adage “just because you are charged with a crime does not mean you are guilty” is more than just a cliché used by criminal defense attorneys to procure business. Many times there is a real life application.

When it comes to tax preparers charged with federal crimes, the implications can be life changing. This is why the story of a preparer exonerated of criminal charges is a poignant reminder of the importance of a skilled tax attorney.

Three ways an attorney can help with tax audits

For many small businesses, getting their state and federal tax returns filed before the filing deadline is a feat in itself. But for an unfortunate chosen few, the task with taxes is not over just yet. These businesses, when they are chosen for an audit, may have to experience a new gauntlet that could threaten the future of their enterprise.

However, an experienced tax attorney can make the process easier if your business is selected for an audit. This post will identify three reasons why.

How to avoid Massachusetts restaurant sales tax issues

The Suffolk County District Attorney’s Office recently accused the owner of an East Boston diner of failing to report sales. In a lengthy complaint, the state argues the diner failed to properly report $850,000 in sales between 2012 and 2015. Failure to report the income, allegedly resulted in unpaid taxes of roughly $60,000. The owner framed the issue as a misunderstanding.

In Massachusetts, restaurants are required to collect a sales tax of 6.25 percent on meals. Accusations of pocketing money collected for the meals tax, but not paying it to the state are serious. Failure to collect the tax at all is equally serious.

Moving expense deduction to be suspended next year

If you are poised to move because of a new job, or transfer within the same company, you may be curious about what expenses may be tax deductible in the next tax year. After all, moving expenses have been a long-standing deduction that employees and small business owners have traditionally taken advantage of.

However, the moving expenses deduction will be suspended until 2025 as a result of the latest tax reform act. Specifically, the Tax Cuts and Jobs Act (TCJA) that was signed into law last December will not allow this deduction beginning with the 2018 tax year. The new law also suspends the inclusion of employer reimbursed moving expenses into a person’s income.

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