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.
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.
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.
For those considering bankruptcy because of the weight of student loan debts, they likely have unfortunately learned that discharging such debt is notoriously difficult. Essentially, bankruptcy debtors seeking to eliminate student loan debts must follow a rigid standard and show that their financial situation is going to persist and that they have made a good faith effort in paying them. However, courts have held this bar so high that few debtors actually qualify.
The theme of TurboTax commercials reminds us that the fear of the unknown can really control our lives and force us to procrastinate on completing our tax returns. We may fear that we may make mistakes that will lead to unfathomable penalties. We may also fear the power of the federal government to collect on back taxes.
The beginning of April is a very popular time to talk about tax refunds; unless, of course, you are poised to owe Uncle Sam money. Nevertheless, it is still important to think about your tax return in terms of the interest free loans that you may be giving to the federal government because of the withholdings in your paycheck.
While the potential for a startup company to be worth millions of dollars after inception drives many entrepreneurs, the reality is that new businesses do not always realize a profit in their first year of operation. Some many not may not make money for a couple years before becoming profitable (e.g. Amazon). During this period, new businesses may not be required to pay federal income taxes (because of the lack of profit), they still must be responsible for payroll taxes; an expense that is not tax deductible, of course.
Flipping houses may be an attractive way to make money. Taking a distressed house, making repairs and putting it back on the market seems easy enough, especially when you have a penchant for craftsmanship or a good relationship with a contractor. Nevertheless, as much money as you think you will make flipping houses, always remember that Uncle Sam will want his cut.
When a lender decides to cancel a debt (most likely because it is deemed uncollectable) it usually is a benefit to the consumer despite the negative effect on his or her credit rating. Nevertheless, the cancellation of a debt could have important tax implications.
Who knew that when the Atlanta Falcons led the New England Patriots 28-3 midway through the third quarter in Super Bowl LI that the Patriots would prevail? Ask any Patriots fan and they believed. Indeed, they probably put their faith in their team with their wallets before the game by placing bets.