Internet Tax scams
From time to time people forward me chain emails related to tax issues that are swirling around the internet, asking me if they are true or not. Lately, a couple of them have been sent to me repeatedly. Let’s deal with them here: Scam #1AN EMAIL SAYS THE NEW HEALTH CARE LAW WILL REQUIRE THE VALUE OF EMPLOYER PROVIDED HEALTH CARE TO BE SHOWN ON YOUR W-2 FORMS AND FOR YOU TO BE TAXED ON IT. This is not entirely correct, but also not completely incorrect either. While it is true that the Obamacare law will require employers to disclose...
No Equality, No Justice!
Here in California, the State granted Registered Domestic Partners (RDPs) the same legal status and rights as married couples. For tax purposes, this change forced RDPs to file income tax returns as either married jointly or married filing separately. Anyone who is a RDP must use the married rates on their California state tax return. However since the Federal government does not recognize such unions, for Federal tax purposes RDPs must use the Single (or Head of Household if there is a qualifying dependant) filing status. This causes no small amount of hassle if you are preparing a tax return...
Wanted: One dead Billionaire
Ever since the inheritance tax was temporarily repealed on January 1, 2010 (for only one year), there have been many that have called for its reinstatement. Regardless of how you feel about taxing estates, it can be argued that it is inherently unfair for a wealthy person’s estate to completely escape tax simply because that person happened to die in 2010 rather than 2009 or 2011, while other heirs of estates not so fortunate pay such a stiff tax. While Congress has been promising to fix this leak since last year, like the reaction to the BP disaster in the...
Major S change?
There currently is a bill wending its way through the House called the American Jobs and Closing Tax Loopholes Act. Wait a minute - why don't they ever label one the "We're going to stick it to you act"? What happened to truth in advertising? Sorry. I digress. Anyway, this bill has a lot of tax stuff in it, something for (or against) almost everyone. One item that sticks out is a change in the way S corporation dividends are taxed. S corporations do not pay tax. They are treated similar to partnerships in that the net income of the...
Wow – How bad was it?
In Dayton, Ohio a man who was upset at being audited by IRS fired several gunshots at an H&R Block employee whom he blamed for the audit. He approached her car in a parking lot outside a bar last Sunday morning and opened fire. Thankfully she managed to escape with just a few new holes in her car. There’s a better way to react to an IRS audit. If you prepare and keep good records prior to doing your taxes, an IRS letter will be nothing more than an inconvenience, and you won’t need to resort to mortal combat to...
Who slid this in?
As reported at CNN yesterday, Buried deep within the Obamacare law is a change in rules that have a huge impact on 1099 reporting for all businesses. Currently only noncorporate vendors receive 1099 forms for amounts paid for services. However, starting January 2012, businesses will need to issue 1099 forms to all vendors that were paid over $600 in a year FOR ALL GOODS AND SERVICES. This means that if you are an independent contractor, or landlord, or any other form of business, you will issue 1099 forms annually to every vendor (ie Office Depot, Verizon, etc.) for any amounts...