Tax Identity Theft

Over the last few years, there has been an influx of tax identity theft cases.  As tax preparers, we have seen this issue continuously growing, especially in today's technologically savvy society.  Even if you have not been personally victimized, you have heard the buzz words "tax identity theft," and you may ask yourself the following questions: "What is tax identity theft?  How does it happen?  How can I protect myself?"

IRS Provides Relief for Small Businesses

On February 13, 2015, the IRS released Revenue Procedure 2015-20 which may allow some small businesses to avoid filing Form 3115, Application for Change of Accounting Method.

Independent Contractor or Employee

If you are a business owner, then chances are you have hired individuals to provide services for your business.  Did you classify these individuals as employees or independent contractors?  The distinction is very important, and if the wrong classification is made it can be costly to the business owner.
 
In determining whether an individual is an employee or contractor, it is important to take into account all factors that provide evidence of the degree of control and independence. Evidence of the degree of control can be broken down into three categories:
 

What to do if you receive a tax notice?

Have you ever received a notice from the IRS or a state taxing authority?  If so, then you may have experienced some level of anxiety and uncertainty on how to respond to the notice.  This often leads many taxpayers to procrastinate in addressing the notice, which usually compounds any existing issues.  If you receive a notice it is important to:
 
1.  Remain calm
2.  Attend to the notice as soon as possible
3.  Note the allotted response time
4.  Retain copies of any notices received
5.  Contact and send your CPA a copy of the notice
 

Withdrawing Cash from Your Closely-Held C Corporation

The simplest way to withdraw cash from a C-corporation is to distribute cash as a dividend. However, a dividend distribution is taxable to the extent of the corporation's “earnings and profits,” yet it’s not deductible by the corporation.  With S-corporations, distributions are “tax free” to the extent the shareholder has basis in the stock.  Beyond that, S-corporation distributions are taxable as capital gain.  There are, however, several alternative methods available that allow one to withdraw cash from a corporation while avoiding dividend (and capital gain) treatment:

 

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