IRS PHONE SCAM WARNING The IRS has issued a warning about a pervasive phone scam. The Treasury Inspector General for Tax Administration (TIGTA) called it the largest scam of its kind. It has received reports of over $20,000 contacts related to this scam, and thousands of victims have paid over $1 million to fraudsters claiming [...]
DON’T BE A CHARITY SCAM VICTIM When a natural disaster strikes, thieves often play on the goodwill of people by posing as representative of real charities to steal money or get information to commit identity theft. Bogus charities use several different tactics to get money and information from unsuspecting individual. They may claim to be [...]
TAXING A CHILD’S INVESTMENT INCOME Some children who receive investment income are required to file a tax return and pay tax on at least a portion of that income (and possibly at the parents’ marginal tax rate). This is often referred to as the kiddie tax. The kiddie tax cannot be computed accurately until the [...]
COMPARING TAXABLE VERSUS TAX-EXEMPT INVESTMENT YIELDS With rising tax rates, some taxpayers are considering allocating at least a portion of their investments to tax-exempt investments. After all, interest earned on tax-exempt investments not only escapes ordinary income tax rates that can be as high as 39.6%, but also the 3.8% net investment income tax (NIIT). [...]
LEASING PROPERTY TO A CLOSELY-HELD CORPORATION Shareholders of closely-held C corporations routinely lease real estate, equipment, and other property to their corporate entity. These leases can be held directly by the shareholder or through a separate entity, such as a partnership, LLC, or S corporation. Of course, the corporation could directly purchase the item or [...]
DOUBLE BENEFIT FROM A TAX DEDUCTION For most taxpayers, the amount of federal income tax they pay depends on where they fall in the federal income tax brackets and the breakdown of their taxable income between ordinary (e.g. wages) and capital gains from the sale of assets (e.g., common stock). Taxpayers eligible for the lower [...]