Archives for June 2018

MULTI-STATE RESIDENCY

June 26, 2018 by Frank

MULTI-STATE RESIDENCY

What You Need to Know

To Avoid an Unexpected State Tax Liability

Today, taxpayers may have multiple residencies for a host of reasons. An example could be a “snowbird” . . . a PA resident who lives in FL during the winter months to soothe those aching bones during the chilly winter months. This person is a resident of both PA and FL. Another example could be where the PA resident decides that for state tax-savings reasons that they want to show their primary residency as being in FL which does not have a personal income tax versus PA which has a 3.07% personal income tax rate.

We recently met a taxpayer who maintained their PA home but decided to call their FL winter home their primary residence to save state income taxes. The PA Department of Revenue (DOR) assessed the taxpayer’s income earned as if he had resided in PA, despite the fact that he relocated to FL, had a FL driver’s license, voted in FL and attended church and social groups in both PA and FL. He had unsuccessfully attempted to persuade PA that he was not subject to PA’s personal income tax, but his arguments fell on death ears. This is when he requested a consultation with us.

The important factor [Read more…] about MULTI-STATE RESIDENCY

Will Your Passport Be Revoked?

June 22, 2018 by Frank

Will Your Passport Be Revoked?

Update to our January 5, 2016 Blog Posting

In 2016, we had reported that the IRS had added another tool to its tool box to collect back taxes. Taxpayers with outstanding tax debts in excess of $50,000 and who had received a notice of lien or levy being filed and who are not in a payment plan could have their U.S. passports revoked by the U.S. State Department (State).

Due to an inflation adjustment, the $50,000 threshold had increased to $51,000. More importantly, the IRS had clarified that when a taxpayer is certified as a delinquent taxpayer, the IRS’s sole role is to notify State and that State revokes the passport. It had been thought that State would take immediate steps to revoke the delinquent taxpayer’s passport as an effective means to get the taxpayer compliant.

Planning TIP:

While it is most important that taxpayers who owe the IRS back taxes consult with an experienced tax resolution specialist, the IRS has stated that [Read more…] about Will Your Passport Be Revoked?

Reboot Your Home Router – FBI Issues Public Service Announcement

June 20, 2018 by Frank

Reboot Your Home Router

FBI Issues Public Service Announcement

You May Be a Target

The FBI issued a Public Service Announcement (PSA) on May 25 recommending that any owner of small office and home office routers power cycle (reboot) their devices. Foreign cyber criminals have compromised hundreds of thousands of home and office routers and other networked devices worldwide. The criminals used VPN Filter malware to target small office and home office routers. The malware is able to perform multiple functions, including possible information collection, device exploitation, and blocking network traffic.

The malware targets routers produced by several manufacturers and network-attached storage devices. The malware is able to render small office and home office routers inoperable. The malware can potentially collect information passing through the router.

The FBI recommends rebooting the routers to temporarily disrupt the malware and aid the potential identification of infected devices. Owners are advised to consider disabling remote management settings on devices and secure with strong passwords and encryption when enabled. Network devices should also be upgraded to the latest available versions of firmware.

If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

Copyright © 2018 Keystone Financial Solutions, P.C. All rights reserved. BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.

About F. Bryan Haarlander, EA, CTRS:

Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.

ROUND NUMBERS: PLEASE AUDIT ME

June 18, 2018 by Frank

ROUND NUMBERS: PLEASE AUDIT ME

Overuse of Round Numbers

Increases Likelihood of an IRS Audit &

Assessment of Penalties

While most taxpayers are diligent about maintaining documentation and support to substantiate their tax deductions, there are always those who believe that complying with IRS rules is too much trouble and look for the easy way. An example would be when computing the mileage information for the business use of the family automobile. The IRS requires that a contemporaneous (real time) mileage log book be maintained by the taxpayer showing the dates of business travel, the business purpose for the travel, the mileage for that business trip, as well as the odometer readings as of January 1 and December 31 of the tax year. When the taxpayer informs us that the automobile was driven 20,000 miles and 18,000 miles were related to business travel, the beginning mileage was 10,000 miles and the December 31 mileage was 30,000, such information reeks of estimates and guesstimates which the IRS does not allow. The IRS rules are quite simple – if the taxpayer does not maintain a contemporaneous mileage book, no vehicle expense deduction is allowed.

Based on years of experience with dealing with IRS audits, [Read more…] about ROUND NUMBERS: PLEASE AUDIT ME

IRS Examining Education Credits

June 13, 2018 by Frank

IRS Examining Education Credits

Education Credits Catch IRS Attention

The IRS is carefully monitoring taxpayers who claim education credits on their personal income tax returns due to increased filing of fraudulent returns. Accordingly, IRS audits of taxpayers claiming education credits are increasing. Can you substantiate your claimed education credits?

As we have been sharing with our clients, the Form 1098-T used by educational institutions is practically worthless. In fact, these forms (through the 2017 tax year) may have contributed to IRS audits. Most educational institutions left Box 1 blank and completed Box 2. Box 1 reflects the payments received by the educational institution from the taxpayer; whereas Box 2 reflects the amounts billed by the educational institution. The IRS could care less about the amounts billed. It bases the credit computation on the amounts paid. If Box 1 is left blank, then the IRS does not know how much was paid by the taxpayer for qualified tuition payments.

In addition to the problems associated with the Form 1098-T, the IRS [Read more…] about IRS Examining Education Credits

You May Be Running Out of Time If You Own Offshore Accounts

June 11, 2018 by Frank

You May Be Running Out of Time

If You Own Offshore Accounts

September 28, 2018 Effective Date

The U.S. Government, concerned about offshore tax evasion, implemented the Foreign Account Tax Compliance Act (FATCA) which included enhanced enforcement, onerous penalty provisions, criminal prosecutions, and implemented third-party reporting.

By way of background, we suggest you read our June 4, 2013, June 21, 2012 and August 9, 2016 blogs that discussed the Bank Secrecy Act (BSA) that requires certain U.S. persons who have a financial interest in or signature authority over a foreign financial account to report the account annually to the Department of Treasury by electronically filing Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (commonly called FBAR), through FinCEN’s BSA E-Filing System. In addition to FBAR reporting requirements, in certain circumstances FATCA requires filing Form 8938, Statement of Specified Foreign Financial Assets, with the federal Form 1040 income tax return.

WHO MUST FILE A FBAR? [Read more…] about You May Be Running Out of Time If You Own Offshore Accounts