innocent spouse relief

What is Innocent Spouse Relief and How Can You Claim It?

Although more couples these days are choosing to customize and personalize their wedding vows and break with the traditional “to honor and obey” language, it’s a safe bet that not even IRS agents who tie the knot promise not to burden their betrothed with an unfair tax liability.

However, that is indeed the financial problem — and sometimes nightmare — that many spouses find themselves struggling with, which is why the IRS offers “innocent spouse relief.” Read more

National Football League Is Giving Up Its Tax-exempt Status

With all the distractions of deflated footballs, player misconduct and the safety of the game, the NFL is volunteering to give up its tax-exempt status.

The NFL As A Non-profit Entity.

The National Football League (“NFL”) which you figure makes millions in revenue every year is recognized by the IRS as a tax-exempt entity and does not pay income taxes as any for-profit-company would.

Section 501(c)(6) of the Internal Revenue Code provides for the exemption from  tax entities which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

Those entities are specifically:

  1. business leagues,
  2. chambers of commerce,
  3. real estate boards,
  4. boards of trade and
  5. professional football leagues.

It’s obviously notable that only professional football leagues are included here, as opposed to all sporting leagues.

It seems inconceivable that the NFL is not “engaging in a regular business of a kind ordinarily carried on for profit”.  How are their efforts to maximize profits any different than those of Major League Baseball, the National Basketball Association or the National Hockey League?

Well professional football leagues were not always included in this list.  This change dates back to 1966, when the tax code was amended to give a professional football league tax-exempt status in order to facilitate the merger of the NFL and the old American Football League. Now keep in mind that even though the NFL has been granted tax-exempt 501(c)(6) status, the 32 teams inside the league are subject to taxes as for-profit businesses.

Let’s Look At The Stats!

In order to have a tax-exempt status, the NFL must be run as a charitable foundation. In 2012, they gave away a meager $2.3 million. Almost all of it–$2.1 million– went to the NFL Hall of Fame. Oh by the way, last time I checked the price of Adult admission to the Hall of Fame was $24.00 ($17.00 for a child). The average admission price (including free admission museums) for all museums in the United States is $8.00.

In 2012, NFL commissioner Roger Goodell was paid $29.5 million to run the organization. More crazy: Goodell’s salary is 1/10th of what the NFL claimed in total assets for 2012– $255 million. Even crazier: Goodell made 15 times what the NFL donated to other charities. Extremely crazier: the NFL only made charitable donations equaling one-one hundredth of their annual income.

The NFL’s most recent Form 990 filed with the IRS ended on March 31, 2012. They claimed revenue of $255 million, up from $240 million in 2011. So, if you were concerned, things are good. The NFL has assets of over $822 million.

Under “grants”– meaning donations to other non profit organizations, the NFL did increase the number from just over $900,000 to $2.3 million. Generous right? However: their total salaries increased by $27 million to a total of over $107 million.

Here’s the best part: after all that, thanks to creative thinking, the NFL claims it finished the year in the red with negative $316 million.

What else did they spend money on? Well, for one thing, new office construction cost $36 million.

Just to put all this in perspective: going by numbers in Forbes, Goodell would come in at around number 28 of the highest paid CEOs in 2012. He made more than the heads of FedEx, AT&T, Heinz, Ford Motors, Goldman Sachs, as well as Rupert Murdoch.

Going back to whether the NFL should get to keep its tax-exempt status, the important thing here is that WE THE PEOPLE through our politicians in Washington D.C. granted the NFL this tax exemption, even if it was decades ago. This is no different that us granting the NFL’s anti-trust exemption for negotiating television broadcast contracts. As a result, should that exemption be revoked if the NFL blacks out its fans, forces fans to pay for personal seat licenses, extorts public money from municipalities by threatening to move teams, etc.? Up until now the NFL may technically be a “nonprofit,” but is it really acting in the public interest?

A “Tax Hail Mary Pass” Doomed To Fall Short Is Now A Game Ending Completion.

Citing this issue as a “distraction”, NFL Commissioner Roger Goodell said in statement on April 28, 2015 that the league is giving up its status as a tax-exempt organization.

In a statement sent out to the NFL’s 32 team owners and Representatives Paul Ryan (R-Wisc.) and Sander Levin (D-Mich.) of the House Ways and Means Committee, Goodell outlined the voluntary move, saying it would not make a “material difference to our business”. Note that he now refers to the NFL as a business.

The move, first reported by the Sports Business Journal, would allow the NFL to no longer be forced to disclose compensation figures for its top officials, including Goodell. Note that now he can make even more money without worrying about disclosing it.

Robert McNair, chairman of the NFL’s finance committee and owner of the Houston Texans, released a statement regarding the decision stating that “the income generated by football has always been earned by the 32 clubs and taxable there. This is the case whether the league office is tax exempt or taxable. The owners have decided to eliminate the distraction associated with misunderstanding of the league office’s status, so the league office will in the future file returns as a taxable entity”.

So now there is no confusion, starting with the 2015 tax year the NFL will file income tax returns as for-profit-corporation and as a privately-held corporation its executives need not disclose their compensation, the business’ revenues or any other financial information to the public.

It should be noted that major league baseball and basketball surrendered their tax-exempt status long ago. The only other two major sports organizations that have similar tax-exempt status are the National Hockey League and the Professional Golfers Association. It’s just a matter of time before this issue becomes a distraction to them too.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco, San Diego and elsewhere in California resolve your IRS tax problems to allow you to have a fresh start.

The 5 Biggest, Best Homeowner Tax Breaks – Get Them While They Are Still Here!

Leaving off deductions you’re eligible for, such as mortgage interest and property taxes, is leaving money on the table and with tax reform revving up again on Capitol Hill, with the heads of key committees pledging to work toward a simpler and fairer tax code, Congress may ne looking to tradeoff these tax breaks with lower tax rates. Sounds intriguing?

Homeownership can pay off big time if you itemize your deductions. Use these five tax breaks to cut what you owe Uncle Sam:

1. Home Office

Do you work at home? Collect a tax break either by using the simplified method explained below or doing some complicated calculations to claim your exact home office expenses. When you opt for the simplified method, you get $5 per square foot and can claim up to 300 square feet of office. That’s a $1,500 deduction!

The Fine Print:

  • You can’t deduct a home office just because you head in there after dinner to read and answer emails from co-workers.
  • You have to use your home office “substantially and regularly to conduct business.”
  • Your home office doesn’t have to be in your home. A studio, garage, or barn can count as a home office.

Where You Claim it: Form 8829

2. Energy-Efficient Upgrades

Energy-efficiency home upgrades you made in 2014 can potentially cut your tax bill by up to $500, thanks to the residential energy tax credit. This tax credit lets you offset federal taxes dollar-for-dollar. You may be able to claim up to 10% of what you spent in 2014 on such items as insulation, a new roof, windows, doors or high-efficiency furnaces or air conditioners.

The Fine Print:

  • There’s a $500 lifetime cap (meaning you have to subtract any energy tax credit you used in prior years).

Where You Claim it: Form 1040, Form 5695

3. Mortgage Interest Deduction

This is the mother lode of tax deductions. You typically can deduct the interest you pay on your home loan of up to $1 million (married filing jointly). You have to use your mortgage to buy, build or improve your home. Using a home equity line or mortgage for something else, like paying college tuition? It’s generally OK to deduct the interest on loans up to $100,000 (married filing jointly) as long as your home secures the loan.

The Fine Print:

  • An RV, boat or trailer counts as a home if you can sleep and cook in it and it has toilet facilities.
  • Second home loans count toward the $1 million loan limit.

Where You Claim it: Schedule A

4. Property Tax Deduction

The property taxes you paid to the state, the county, the city, the school district and every other government entity that reached into your pockets last year are usually deductible on your federal tax return. If your mortgage lender paid your property taxes, look on your annual escrow statement to see the exact amount paid.

The Fine Print:

  • You can’t deduct assessments (one-time charges for things like streets, sidewalks and sewer lines).
  • Keep a record of the assessments you paid. When you sell your home, you can generally use the cost of those assessments to reduce any tax you owe on your sale profit.

Where You Claim it: Schedule A

5. Private Mortgage Insurance

Did you put down less than 20% when you bought your home? If you did, your lender probably forced you to buy private mortgage insurance. Those monthly premiums are tax deductible, if you can clear a few hurdles. (See The Fine Print below.)

If you have a Veterans Affairs, Federal Housing Administration or Rural Housing Service loan, you likely paid upfront mortgage insurance premiums at the closing table (they might have called it a guarantee fee). The deduction for those is pretty complicated.

You get to deduct a part of that upfront premium each year. To figure out how much to deduct, you first check to see which is shorter:

  • The length of your mortgage
  • 84 months (seven years)

If your mortgage lasts more than seven years, you divide the cost of that upfront mortgage premium by 84 months and then multiply by the number of months you paid it (so 12 months for a full year) to get your deductible amount.

If you mortgage lasts seven years or less, you divide by the number of months it lasts and multiply by the number of months you paid it.

The Fine Print:

  • You have to have gotten your mortgage in 2007 or later.
  • When adjusted gross income is more than $100,000 (married filing jointly) you start losing the private mortgage insurance deduction and it disappears completely when your adjusted gross income is more than $109,000.

Where You Claim it: Schedule A

What About Everything Else?

What about all the other home-related expenses you paid, but can’t deduct, like your new deck or the pipes you replaced? Hang on to those invoices and receipts by scanning them (receipts fade over time) and storing them in a file or online. When you sell your home and you’re figuring out if you owe federal tax on the profits, you may be able to subtract the cost of the improvements you made from your home’s selling price.

Impact Of Tax Reform On Homeowner Tax Breaks.

Many benefit from tax breaks such as mortgage interest and property tax deductions, plus tax-free write-offs of up to $250,000 or $500,000 of home sale capital gains, depending on whether they file returns as singles or married couples. Renters get none of these.

Homeowner write-offs become targets for cutbacks or elimination whenever tax code reforms get serious attention because of their costs in uncollected federal revenue. The mortgage interest deduction alone will cost the Treasury $113.4 billion in fiscal 2015, and property tax write-offs will cost $27.8 billion, according to estimates by the congressional Joint Committee on Taxation.

President Obama kicked off the tax legislative season with a budget proposal that would limit mortgage interest and other deductions for upper-income taxpayers. No surprise there. He called for essentially the same change last year, and this year’s version was widely viewed as dead on arrival in a Congress controlled by Republicans.

But what might Republican tax reformers themselves have up their sleeves? Last February the top Republican tax writer, Rep. Dave Camp of Michigan, then chairman of the Ways and Means Committee, came out with a massive tax code overhaul blueprint that would offer lower tax rates and a big increase in the standard deduction in exchange for drastic cutbacks in special-interest deductions and credits, including the benefits traditionally enjoyed by homeowners.

Camp retired from Congress at the end of the last session. His reform plans — considered too controversial to pass in an election year — never moved out of committee. But the impetus for some sort of wholesale reform of the sprawling Internal Revenue Code remains alive and well. Of course anything is likely or even possible this year but for now homeowner tax breaks appear safe for the time being, probably until 2017 at the earliest.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

The Tax Benefits Of Claiming Your Sweetheart on Your Tax Return, Giving Gifts To Your Sweetheart Or Marrying Your Sweetheart – Part 2 Of 2.

Valentine’s Day is all about that special someone in your life, but have you ever wondered if your date across the dinner table might actually be able to save you money on your tax return or if the two of you now decide to get married, whether you can deduct any portion of the wedding and thereafter pay less in taxes?

In part 1 of this blog, I discussed what you need to know about who qualifies as a dependent and what you need to know on deducting gifts to your staff.

Can you get a Tax Write-Off for your wedding?

Tax write-offs are usually the last thing a bride and groom think about when planning a wedding. To the surprise of many, however, wedding purchases and/or rentals can actually save money when it’s time to pay taxes at the end of the year. While there are rules and stipulations to each of these tax write-offs, many newlyweds take advantage of them every year.

The Attire. Brides often wear their wedding dress only once. And while some opt to keep them for whatever reason, others have no idea how to discard them. For a tax write-off, consider donating the wedding gown to a nonprofit organization like Goodwill, MakingMemories.org or CinderellaProject.net. These organizations will take your dress and issue you a donation receipt for your good efforts. While you’re at it, consider donating the bridesmaids dresses, flower girl dress, ring bearer’s outfit and any nonperishable decorations.

The Venue. Believe it or not, some wedding venues are tax deductible. Choose a ceremony or reception venue located at a museum, public-owned park or even a historic house or building of some sort. These places are usually owned by nonprofit organizations who use the money they receive for upkeep purposes only. Speak with the head of the venue sight to make sure that it is a nonprofit organization and what portion of the cost you pay is in excess of the deemed value of the rental of the space (only the excess amount could be deductible as a charitable contribution).

Wedding Favors and Gifts. Charity donations can make thoughtful wedding gifts and favors. They also save you money during tax season. So instead of purchasing a trinket that your guests or attendants may discard later, opt for a donation to your favorite charity on behalf of all those who are a part of your wedding.
Flowers and Foods. You can also get a tax write-off for items that have a short life, such as leftover food and all those floral centerpieces. After the wedding is over, ask a friend or family member to bring the items to a local nursing home, homeless shelter or somewhere similar. You will get a tax deduction for the cost of the remaining food and flowers and you’ll put a few smiles on faces.

Documenting. Whether you have your taxes done by a professional accountant or take care of them yourself, it’s important to document each of these wedding tax write-offs. Keep all your receipts for any purchases you make and request a donation sheet (signed by the organization) that states how much you donated, what you donated and when. Save all your contracts for any wedding venues and, if possible, request that the venue organizer provide you with receipts for each of your payments.

Reporting Charitable Contributions. To claim charitable deductions, you must itemize them on Schedule A of Form 1040. The IRS will need any and all receipts and statements that support the fees, expenses and donations that you claim. If your total noncash contributions exceed $500, you must also fill out Form 8283, Noncash Charitable Contributions, and attach it to your tax return. If you donate a single item worth more than $5,000, you must add Form 8283, Section B, and obtain an appraisal.

Is an Engagement Ring Tax Deductible?

An engagement ring signifies a commitment between two partners and marks their intention to marry at a later date. Because engagement rings are typically made from precious metals and stones, the price can range from several hundred dollars to several thousand dollars. Whether you may claim an engagement ring as a tax deduction depends on individual circumstances.

Purchasing a Ring. If you plan to propose and purchase an engagement ring to seal the deal, you may not deduct the cost of the ring from your taxes. An engagement ring is considered a capital gains item rather than a household item, making it ineligible for deduction purposes.
Donating a Ring. You may donate an engagement ring to a charitable entity if, for instance, your engagement ended without marriage or if you divorced and no longer want to keep the ring. In most cases, the donation represents a charitable contribution that you can deduct from your tax liabilities for the year in which you donate the ring. However, to claim the ring as a tax deduction, the charitable organization must be able to use or sell the ring. Contributions that a charitable entity cannot use are not tax deductible.

Appraisal. The amount you can deduct from your tax liability depends partially on the value of the ring. Obtaining a certified appraisal of the ring might help you maximize your tax deduction if the ring has increased in value since purchase. The cost of the appraisal is not included in the charitable contribution deduction; however, you may deduct the cost of the appraisal as a miscellaneous deduction.

Considerations. The Internal Revenue Service only allows you to claim the appraised value of a donated engagement ring if you have had possession of the ring for more than one year. Otherwise, you may only deduct the purchase price of the ring after donating it to a charitable entity. Also, if the value of the ring exceeds 50% of your adjusted gross income for the year, you may only deduct the portion of the value that is equal to 50% of your adjusted gross income, minus the value of any other charitable contributions claimed for the same tax year.

Is There A Marriage Tax Penalty?

Federal income taxes can be particularly difficult to fully grasp. The marriage penalty is the term used to describe the difference in the amount of taxes paid by a married couple versus what they would have paid if they had remained single. For some couples, this difference results in higher taxes; for others, the resultant tax liability is lower. While the marriage penalty used to stem from many inequities in the U.S. tax code, a great many of those were eliminated by legislation. The two lowest tax brackets for “married filing jointly” are exactly double that of the same tax brackets for those filing “individually,” which results in no penalty at all for those brackets. Additionally, the standard tax deduction for married filing joint is exactly double the standard deduction for single filers.

Because the marriage penalty no longer stems from simple imbalances in the standard deduction and all tax brackets, the only realistic way to calculate it is to use a standard tax calculator and compare the results by running it three times. After running the tax calculator once as married filing jointly and once for each person as a single filer, add the results from the two single calculations and compare them to the results from the joint calculation. The amount paid via annual taxes is not the whole story. Differences in the taxable nature of capital gains, home sales and other large tax events can significantly change the total amount of taxes a couple pays over multiple years.

It’s Risky Business To Claim Your Sweetheart on Your Tax Return or Deduct Gifts To Your Sweetheart or Take A Tax Write-Off For Your Wedding.

Writing off wedding costs reduces your tax liability for the year in question and may increase your tax refund but consider whether you are willing to endure an audit for your attempted deductions. Quirky write-offs are red flags for the IRS. So if you are writing off your honeymoon as a business trip, keep a log of activities like appointments and what business was transacted. A paper trail of receipts will back up your case. It costs a lot to support our children and sometimes even our friends who have been living on the couch for the past year but taking advantage of these tax tips may provide you with some relief and well-deserved tax savings this Valentine’s Day.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

The Tax Benefits Of Claiming Your Sweetheart on Your Tax Return, Giving Gifts To Your Sweetheart Or Marrying Your Sweetheart – Part 1 Of 2.

Valentine’s Day is all about that special someone in your life, but have you ever wondered if your date across the dinner table might actually be able to save you money on your tax return or if the two of you now decide to get married, whether you can deduct any portion of the wedding and thereafter pay less in taxes?

What you need to know about who qualifies as a dependent.

Dependents, which can range from a girlfriend to a child or even a friend, are often an area where tax deductions are either missed or misstated on tax returns. To help taxpayers navigate this gray area, here are the tests necessary to claim someone as your dependent—and some of the tax benefits available for claiming the one you love:

First and foremost, whether they are your child or your Valentine:

You cannot claim them if you can be claimed as a dependent by another person.

They cannot file a joint tax return (in most cases).

They must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico.

In order to claim a child as a dependent, these five additional tests must be met:

Relationship: Must be your child, adopted child, foster-child, brother or sister, or a descendant of one of these (grandchild or nephew).

Residence: Must have the same residence for more than half the year.

Age: Must be under age 19 or under 24 and a full-time student for at least 5 months. Can be any age if they are totally and permanently disabled.

Support: Must not have provided more than half of their own support during the year.

Joint support: The child cannot file a joint return for the year.

These four tests determine where a relative or sweetheart qualifies as a dependent:

They are not the “qualifying child” of another taxpayer or your “qualifying child.”

Dependent earns less than $4,000 taxable income in Tax Year 2015 and $3,950 in Tax Year 2014.

You provide more than half of the total support for the year.

The person must live with you all year as a member of your household or be one of the relatives who doesn’t have to live with you.

You can even claim a boyfriend, girlfriend, domestic partner, or friend as a qualifying relative if:

They are a member of your household the entire year.

The relationship between you and the dependent does not violate the law, meaning you can’t still be married to someone else. Also check your individual state law, since some states do not allow you to claim a boyfriend or girlfriend as a dependent even if your relationship doesn’t violate the law.

You meet the other criteria for “qualifying relatives” (gross income and support).

Once you’ve determined who in your life can be claimed as a dependent, be sure to take advantage of the following tax deductions and credits:

Dependent exemption: Have you been supporting your boyfriend or girlfriend? If he or she meets the above tests, this may entitle you to a deduction of $3,950.

Dependent care credit: Allows you to claim up to $6,000 of your eligible dependent care costs for two or more dependents.

Child tax credit: Depending on your income, you can claim up to $1,000 per qualifying child—helping to reduce your federal taxes.

What you need to know on deducting gifts to your staff.

If you own or run a business, you know how important it is to keep your staff feeling appreciated. Sometimes you will want to reward your staff members after a particularly big project or demanding event. Other times that you may want to give gifts to staff include holiday gatherings, birthdays, wedding and birth announcements and after a staff member loses a loved one. The IRS understands that businesses routinely give small gifts to employees and has established rules governing the deductibility of those gifts.

General Rules Regarding Gifts. The IRS allows businesses to make gifts to other businesses or individuals for the purposes of developing goodwill and a favorable business environment. There are two broad categories of gifts — tangible gift items and entertainment. The IRS allows businesses to deduct gifts of up to $25 in value per recipient. If you make a gift to a client’s or employee’s wife, the IRS considers that to be a gift to the client or employee. If the gift is an entertainment expense, the IRS allows you to deduct half of the expense, as long as the expense is not exceedingly lavish or unreasonable.

De Minimis Fringe Benefits. The IRS also recognizes that employers frequently provide gifts or insignificant fringe benefits to their employees that cannot be reasonably tracked and expensed. Generally, if a business provides complimentary bagels to employees on an infrequent basis, or sends flowers to a staff member mourning the loss of a loved one or celebrating a new birth, this expense is deductible to the company but not taxable to the employee. Generally, if the gift is less than $100 in value, and is given infrequently by the company, or only on special occasions, there is no requirement to report this item as income.
Awards and Prizes. The IRS considers cash awards and prizes of any amount to be compensation and are, therefore, deductible to the employer. Awards and prizes are taxable to the employee, however; and as a business owner, you must track the award and report it on the employee’s W-2 form. However, if the award is for longevity, safety or similar awards, you may only deduct $400 for awards not part of a qualified plan that does not discriminate against highly compensated employees, or $1,600 for all awards.

Reporting Gifts. For gifts of nominal value that you give to employees to promote goodwill, you can generally deduct the expense on your business tax return or on your Schedule C as a nonwage business expense. Deductible expenses include most meals you provide to employees and up to $2,000 in life insurance.

In part 2 of this blog I discuss how you may get a Tax Write-Off for your wedding, is an engagement ring tax deductible and is there a Marriage Tax Penalty?

It’s Risky Business To Claim Your Sweetheart on Your Tax Return or Deduct Gifts To Your Sweetheart or Take A Tax Write-Off For Your Wedding.

Writing off wedding costs reduces your tax liability for the year in question and may increase your tax refund but consider whether you are willing to endure an audit for your attempted deductions. Quirky write-offs are red flags for the IRS. So if you are writing off your honeymoon as a business trip, keep a log of activities like appointments and what business was transacted. A paper trail of receipts will back up your case. It costs a lot to support our children and sometimes even our friends who have been living on the couch for the past year but taking advantage of these tax tips may provide you with some relief and well-deserved tax savings this Valentine’s Day.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Wife Convicted Of Murdering Husband To Avoid Him Learning Of Their Outstanding IRS Debt

While death and taxes are always certain, take lesson from Amy Bosley that you should never mix them together.

These are busy days for Joe Yates.  The brisk fall air has ushered in a long ledger of names. Home owners in need of having their chimneys swept and inspected. And those with chimney emergencies who summon Yates 24 hours a day.  These are also somber days for the 6-foot-5 inch, 280 pound Pendleton County man, known to many Northern Kentuckians as simply “Big Joe.”

“Big Joe,” who is 30, has a tall top hat and tails to fill. It’s a hat he wishes would never have been left vacant.  “Big Joe,” is one of 14, who lost their boss and their jobs in the early hours of May 17, 2005.

That boss was Robert Bosley, owner of Bosley Roofing and Chimney Sweep in Alexandria, who was shot to death as he slept in his small cabin in Campbell County. Robert was the owner of Bosley Roofing and Chimney Sweep of Alexandria, and a member of St. Peter & Paul Church, National Chimney Sweep Guild, Alexandria Businessman’s Association and he was a private pilot. Robert who lived to age 42 was murdered by his wife Amy Bosley. The reason? Amy did not want Robert to know the huge business debts and IRS debts she had racked up. Yes this is another story of how outstanding IRS debt contributed to the death of a taxpayer. 

Robert was born Aug. 6, 1962 in Campbell County Kentucky. With his wife, Amy, they were making a name for themselves in their small Kentucky community. Together they ran a successful roofing and chimney sweep business eventually turning it into somewhat of a local empire with Amy right beside him handing the bookkeeping.

Amy Bosley was the archetypal American dream wife…attractive, kind and funny, a devoted mother, a valued business partner to her husband, an untiring charity worker and community stalwart in the small town of Campbell, Kentucky.

Together they were like local royalty with their million-dollar roofing business and being active volunteers in their community. They had sports cars, horses, their own plane and a 50-ft motor-yacht. They also planned to build a castle-like mansion on their 35-acre estate. It was on this land, mainly remote woods, that the Bosley’s had built their weekend retreat, a luxury cabin.

Nightmare In The Woods.

But that dream became a nightmare at dawn on a May morning in 2005 when 38-year-old Amy rang police in floods of tears to report that an intruder had broken into their remote luxury cabin deep in woodland in Campbell County.

“Someone is breaking into my house,” Amy frantically told a 911 dispatcher.

The conversation then abruptly ends.

So the 911 dispatcher called back and getting through to Amy asks if the intruder was still in the house?

Amy replied: He just left but he shot my husband. Oh my God, he shot my husband!!

Moments later a patrolman arrived at the Bosley’s cabin. Amy Bosley tells him, He shot my husband, he shot my husband! She tells him the intruder fled out the back door. The patrolman pushes past her and there, lying on the bed is Robert Bosley riddled with bullets. His lips were blue. He was dead. He was face down on the bed, shot 7 times. The room and the rest of the cabin, had been ransacked – possessions and clothes strewn around the doors and windows broken.

The Bosleys’ two sons, Trevor, nine, and Morgan, six, asleep in a first-floor loft bedroom had not been harmed although they had been woken by the commotion and told to stay in their room by their mother.

Police searched the house and grounds, but no intruder was found. Amy Bosley in a state of shock was taken to the house of friends. She described the intruder as a white guy in his thirties, very tall and with a pointed very mean face.

Police launched a manhunt for the intruder using sniffer dogs and helicopters but no one was found. The lead investigator immediately suspected something was wrong with Amy’s story. Robert had been shot seven times while sleeping, and his gun was missing. Also missing were the shell casings, which should have littered the crime scene. Indeed, surveying the wreckage, one hardened detective muttered to a colleague: “This is overkill…No intruder would kill the guy like this and then destroy the place.” Detective Dave Fickensecher said later “You could see bullet-holes everywhere. The once immaculate cabin was a shambles. Whatever had gone on was extremely violent.”

Amy Bosley made a tearful statement in a press conference held the next day in which she said: “We have every faith in the police department and the investigation to find this killer. We are helping the authorities in every way we can. Unfortunately as of now all I can remember is that I woke up and was on the floor. I heard shots and I saw a man leave the house.”

Soon afterwards police investigations began to reveal that the Bosley marriage had not been as idyllic as Amy claimed it to be. Robert spent most weekends on his boat on nearby Lake Cumberland holding parties at which most of the guests were women.

Friends said that Robert would be on the lake for days at a time and refuse to tell Amy who he was with and when he would be back. But not all the Bosley’s secrets concerned Robert’s extramarital affairs. A close study of the finances of the roofing company, of which Amy was financial director, showed that the apparently booming enterprise was going bust.

Police also discovered a motive: the Bosley’s were deep in debt, and, unknown to Robert, the IRS was literally knocking at their door over a $1.5 million tax bill. Amy it seemed was destroying the business by embezzling nearly $2 million which should have been paid to the IRS. In fact during the investigation into the murder, police discovered something suspicious in Amy’s car: hundreds of unmailed checks to the IRS totaling about $1.7 million in back taxes.

Weeks before the shooting, Amy met with an IRS Revenue Officer who informed her they were investigating Robert for nonpayment of taxes. According to police, Amy went to great lengths to keep the tax problems from her husband even going as far as to impersonate him over the phone. She also got a P.O. Box for the business which Robert did not know about and had all IRS notices go to that box so Robert would not be aware of this problem. But this tax problem was coming to a head and Robert was to hear about it firsthand from the Revenue Officer himself.

Crime Scene Staged?

Throughout the investigation, police, prosecutors, townspeople and even the Bosley family had their suspicions about who committed the crime — Amy Bosley, something she vehemently denied. “I had no reason to shoot him,” she told police. But the Bosley’s unusual marriage, the looming IRS investigation, Amy’s story of an intruder and her behavior following the murder just didn’t seem to add up.

“Her actions weren’t appropriate. He’s dead just two hours and she’s bashing him in a police interview,” said Fickenscher. Prosecutors felt her crying was forced and not at all genuine. “Her husband had just been killed and even though she would do the same crying out, no one saw a tear fall from her eye,” said an investigator.

Authorities said even the crime scene looked staged. Around the body police found just two bullet shell casings; the others were found in the most unusual of places, like the bottom of the washing machine. According to Amy’s lawyer, Jim Morgan, those casings were old, probably left in Robert’s jeans from target practice. “Just like coins typically fall out of your pocket in the washing machine, the shell casings [did too],” he said.

Police don’t buy that explanation and had their own theory. The day of the murder, the IRS was coming to audit the business’s books, potentially exposing Amy’s secret. Police say Amy might have felt that the only way to make the tax problem go away was to kill her husband. “The IRS was investigating Robert Bosley and if Robert Bosley couldn’t tell them otherwise, then he could be at fault,” said Fickenscher.

Ten days after Robert Bosley was shot and killed, Amy was arrested for the murder. She insisted she was innocent, but a week later another piece of incriminating evidence turned up in Amy’s purse — a Glock handgun. It was the same type of gun used to kill her husband. Even though police had no doubt they’d found the murder weapon, authorities couldn’t definitively match it to the lead slugs that struck Robert Bosley because the slugs were too mutilated.

The Surprising Outcome

Amy first pleaded not guilty, but her case didn’t hold up well during a dramatic four-hour pretrial hearing.

While there was a mountain of circumstantial evidence against Amy, prosecutors admitted they didn’t have a slam dunk. But statements Amy’s children, Morgan, 9, and Trevor, 6, gave to police following the murder would become the strongest piece of evidence. “The first thing that woke the children up was gunshots,” said the investigator. “The children heard the glass breaking after the gunshots,” the investigator added, which would contradict Amy’s story of an intruder break-in.

Their testimony was crucial, but no one wanted to force young children who had already lost their father to testify against their mother. As a result, prosecutors reluctantly offered Amy Bosley a deal — the minimum sentence of 20 years if she pleaded guilty — and to everyone’s surprise she took the deal. “Amy entered a plea for one reason, and that was to save her children from testifying,” said her attorney, who maintains his client is not guilty. Robert’s parents who are now raising the couple’s two children were happy to hear that the kids would be spared from having to testify against their mother.

In November 2005, Amy Bosley was sentenced to 20 years for murder and five years for the tampering charge. The sentences to be served concurrently. Unfortunately, the IRS would still be looking to collect the over $1.7 million in payroll taxes from Robert’s estate.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are being audited or investigated by IRS or in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including tax audits, criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Man Convicted Of Threatening To Assault & Kill IRS Agent And Torture The Agent’s Family Over Audit Proceedings

While death and taxes are always certain, take lesson from Andrew A. Calcione that you should never mix them together.

In May 2014, a federal judge found 49-year-old Andrew A. Calcione of Cranston, Rhode Island, guilty of threatening to assault an IRS Revenue Agent, rape and kill the agent’s wife and injure the agent’s daughter while the agent watched before murdering the agent. The reason? Mr. Calcione didn’t want to pay his tax bill of $330,000.

According to government testimony as reported in United States of America v. Andrew A. Calcione, U.S. District Court for the District of Rhode Island (Providence County), Case No. 1:13-mj-00291-LDA, Mr. Calcione was selected for audit for the years 2008, 2009 and 2010. Mr. Calcione’s behavior is also so bizarre because for many years worked as a professional tax return preparer and was a partner in a tax preparation business in Rhode Island. As a result of the audit which was being conducted by an agent out of the IRS office in Warwick, Rhode Island, it appeared that Mr. Calcione would be responsible for an additional $330,000 in tax liability.

In April 2013 while the audit was still in progress, Mr. Calcione and his ex-wife Patricia were asked to sign a form allowing extra time to assess their case. As part of the audit process, an IRS revenue agent requested that Mr. Calcione and his ex-wife sign a Consent to Extend Time to Assess Tax. A consent is almost always requested during audit because, by statute, the Service does not have an unlimited time to examine a tax return. As a general rule, the IRS can’t assess tax more than three years after the later of the date the return was due or the date the return was actually filed (this is sometimes referred to as the statute of limitations) though exceptions may apply. If an audit is bumping up against that statute of limitations, it is sometimes (but not always) advantageous to sign a consent to allow more time to argue your case before the IRS issues a notice of deficiency. In short, it’s a question of timing.

Mr. Calcione signed the document, but his wife did not, spurring the agent to leave a voicemail on

Mr. Calcione’s cell phone asking about the consent on July 12, 2013.

Mr. Calcione called the agent back three days later which was July 15, 2013. He did not, however, call to leave a friendly status update. Rather, according to court documents, Mr. Calcione advised the agent that if he called again, Mr. Calcione would show up at the agent’s home and torture the agent’s family before killing all of them. And he said it all on voicemail.

It wasn’t a run of the mill threat either. The initial call lasted over 3 minutes and contained numerous threats.

Court records reveal the following snippet of the call: “I’m just going to show up where you live. Hmm, and that’s a promise, man. It’s not a threat. I will just show up where you live, and then, it will be the end of it, like that. Huh? Hmm, I’m just right up the street, mother f****r, anytime you’re ready. Yeah … hmm, hmm. Security? Hmm (laughs). This ain’t Fisher Karate, karate, Jiu-Jitsu, f*****g kick boxing, or whatever. I have no problem f*****g blowing your brains … no … I won’t even think twice about it. Matter of fact, I’d shoot you in the f*****g knee caps, tie you to a f*****g chair, gag ya … and then f**k your wife in front of ya, and then blow her f*****g brains out in front of ya and maybe kill your f*****g kid and then maybe [inaudible]. So you can deal with that.”

You’d think that he’d stop there. But he didn’t. Mr. Calcione actually called the agent back on the same day, telling him to “disregard my previous voicemail.” Mr. Calcione went on, according to the agent, to say that the message was intended to mess (though he used a more colorful word) with his daughter.

After receiving the threatening calls, the agent reported Mr. Calcione to the police.

Prosecutors were able to establish that both calls came from a cell phone belonging to Mr. Calcione’s wife. The agent also recognized Mr. Calcione’s voice.

Mr. Calcione later switched up his story and told police that the message was actually intended for his ex-wife (and you wonder why she’s an ex). At some point, it must have dawned on him that none of those stories made any sense so he tried another version, claiming that he had been talking to himself in the car and must have accidentally called the agent using hands-free.

What’s really bizarre is Mr. Calcione’s explanation for the call. He told IRS special agents that the call was intended for his ex-wife who was apparently seeking increased child support (and you wonder why she’s an ex). At some point, it must have dawned on him that this story made no sense so he tried another version claiming that he was merely talking out loud in his car and must have accidentally activated his phone’s hands free calling feature.

Court records reveal that prior to this offense, Mr. Calcione ran a successful financial services business and had no criminal record.

U.S. District Court Chief Judge William E. Smith didn’t buy any of Mr. Calcione’s stories. He found Mr. Calcione guilty of threatening to assault and murder the agent and his family after Mr. Calcione waived a jury trial.

Following the conviction, the U.S. government made several statements:

Assistant U.S. Attorney Gerard B. Sullivan had prosecuted the case and his boss, United States Attorney Peter F. Neronha referred to Mr. Calcione’s behavior as “outrageous, threatening, and frankly bizarre noting that “[t]he vast majority of Americans understand the payment of their federal taxes is part of their civic responsibilities.” Mr. Neronha went on to say that his office would be “seeking the toughest, appropriate sense in this case.”

J. Russell George, the Treasury Inspector General for Tax Administration, stated that “the Treasury Inspector General for Tax Administration works aggressively to protect IRS employees from individuals who seek to impair the integrity of tax administration by threatening harm or committing violent acts.”

Special Agent in Charge Robert E. O’Malley of the IRS Criminal Investigation Division stated that “threats and assaults directed against IRS employees are investigated and pursued to the fullest extent of the law.” Adding, “we will continue to place a priority on ensuring the safety of IRS employees by working towards the arrest, conviction, and sentencing of the perpetrator.”

For the record, while bad behavior and threats can always be considered criminal, there are special rules which apply with dealing with the feds. Federal law provides that “knowingly and intentionally threaten to assault and murder a Revenue Agent of the IRS with intend to interfere with the official in the performance of official duties and knowingly and intentionally threaten to assault and murder a member of the immediate family of a Revenue Agent of the IRS are each punishable by statutory penalties of up to 10 years in federal prison and a fine of up to $250,000.”

That meant that Mr. Calcione could face up to 20 years for his crimes.

But on September 27, 2014 in U.S. Federal District Court he was sentenced to a year and a day in federal prison. Although part of the record is sealed, what is public suggests that Mr. Calcione may have tried to claim an anxiety disorder as a reason for his bizarre behavior. If true, he will have plenty of time to meditate while in prison. By the way, his tax bill of $330,000.00 will still be waiting for him when he completes his sentence.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are being audited or investigated by IRS or in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including tax audits, criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Does The National Football League Deserve Tax-Exempt Status?

Now here is a fact that is not so widely known – the National Football Association which you figure makes a ton of money is recognized by the IRS as a tax-exempt entity. 

Besides the match-up of the Seahawks and the Patriots in Super Bowl 49, people are excited over the entertainment and half-time show, what celebrities will be attending the game and of course – the commercials.

Sponsors present their best commercials during the Super Bowl, and the big game wouldn’t be the same without them. For the advertising community, the Super Bowl is their Super Bowl, and often creates commercials specifically for the enormous viewership that the game provides. For many, watching the commercials is the most entertaining part of the Super Bowl. Advertisers try to get their money’s worth by unveiling their most creative and innovative spots. The cost to air a 30-second commercial during the 2015 Super Bowl is $4.5M.

How about the cost of a ticket to attend the Super Bowl? Well the cheapest seat – and this is face value – is $800.00. The more expensive seats (and I am not even talking about suites) go up to $1,900.00.

The NFL is a non-profit entity.

The National Football Association which you figure makes a ton of money is recognized by the IRS as a tax-exempt entity and does not pay income taxes as any for-profit-company would.

Section 501(c)(6) of the Internal Revenue Code provides for the exemption from  tax entities which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

Those entities are specifically:

  1. business leagues,
  2. chambers of commerce,
  3. real estate boards,
  4. boards of trade and
  5. professional football leagues.

It’s obviously notable that only professional football leagues are included here, as opposed to all sporting leagues.

It seems inconceivable that the NFL is not “engaging in a regular business of a kind ordinarily carried on for profit”.  How are their efforts to maximize profits any different than those of Major League Baseball, the National Basketball Association or the National Hockey League?

Well professional football leagues were not always included in this list.  This change dates back to 1966, when the tax code was amended to give a professional football league tax-exempt status in order to facilitate the merger of the NFL and the old American Football League.

Let’s Look At The Stats!

In order to have a tax-exempt status, the NFL must be run as a charitable foundation. In 2012, they gave away a meager $2.3 million. Almost all of it–$2.1 million– went to the NFL Hall of Fame. Oh by the way, last time I checked the price of Adult admission to the Hall of Fame was $24.00 ($17.00 for a child). The average admission price (including free admission museums) for all museums in the United States is $8.00.

In 2012, NFL commissioner Roger Goodell was paid $29.5 million to run the organization. More crazy: Goodell’s salary is 1/10th of what the NFL claimed in total assets for 2012– $255 million. Even crazier: Goodell made 15 times what the NFL donated to other charities. Extremely crazier: the NFL only made charitable donations equaling one-one hundredth of their annual income.

The NFL’s most recent Form 990 filed with the IRS ended on March 31, 2012. They claimed revenue of $255 million, up from $240 million in 2011. So, if you were concerned, things are good. The NFL has assets of over $822 million.

Under “grants”– meaning donations to other non profit organizations, the NFL did increase the number from just over $900,000 to $2.3 million. Generous right? However: their total salaries increased by $27 million to a total of over $107 million.

Here’s the best part: after all that, thanks to creative thinking, the NFL claims it finished the year in the red with negative $316 million.

What else did they spend money on? Well, for one thing, new office construction cost $36 million.

Just to put all this in perspective: going by numbers in Forbes, Goodell would come in at around number 28 of the highest paid CEOs in 2012. He made more than the heads of FedEx, AT&T, Heinz, Ford Motors, Goldman Sachs, as well as Rupert Murdoch.

Charitable Deduction Rule

So one may ask – if I go on NFL.com and order super bowl tickets, can I claim a charitable deduction? Well the tax law states that when you make a donation to a charity and receive a benefit back, the amount deductible is only the excess of your contribution over the benefit you receive. Also, your charitable deduction cannot include the value of any benefits you received from the charity.  An example would be where you paid $200 to attend a charitable ball for which the charity states that the value of the ticket is $75.  In such an instance your charitable deduction would be $125.

What Do you Think?

Going back to whether the NFL should get to keep its tax-exempt status, the important thing here is that WE THE PEOPLE through our politicians in Washington D.C. granted the NFL this tax exemption, even if it was decades ago. This is no different that us granting the NFL’s anti-trust exemption for negotiating television broadcast contracts. As a result, should that exemption be revoked if the NFL blacks out its fans, forces fans to pay for personal seat licenses, extorts public money from municipalities by threatening to move teams, etc.? The NFL may technically be a “nonprofit,” but is it really acting in the public interest?

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco, San Diego and elsewhere in California resolve your IRS tax problems to allow you to have a fresh start.

 

IRS Clarifies Application of One-Per-Year Limit on IRA Rollovers, Allows Owners of Multiple IRA’s a Fresh Start in 2015

If you have an IRA beware of this new rule that limits the number of IRA Rollovers that are not “trustee to trustee” to one per year.

When you receive a distribution from a traditional IRA or your employer’s plan, you would normally report it as income unless you rollover that distribution to another IRA no later than 60 days after the day you receive the distribution from your traditional IRA or your employer’s plan. In the absence of a waiver or an extension, amounts not rolled over within the 60-day period do not qualify for tax-free rollover treatment. You must treat them as a taxable distribution from either your IRA or your employer’s plan. These amounts are taxable in the year distributed, even if the 60-day period expires in the next year. You may also have to pay a 10% additional tax on early distributions as discussed later under Early Distributions. Unless there is a waiver or an extension of the 60-day rollover period, any contribution you make to your IRA more than 60 days after the distribution is a regular contribution, not a rollover contribution.

Until recently, taxpayers would take advantage of this law for than once in a calendar year to enable short term access to retirement monies without have to recognize income from the short-term use of the funds during each 60-day measuring period. But starting with 2015, the IRS has stated in Announcement 2014-15, 2014-16 I.R.B. 973, that this manner of rollover is limited to one per year even if the rollovers involve different IRA’s reflecting an interpretation by the U.S. Tax Court in a January 2014 decision, Bobrow v. Commissioner, T.C. Memo. 2014-21.

Before 2015, the one-per-year limit applies only on an IRA-by-IRA basis (that is, only to rollovers involving the same IRAs). Beginning in 2015, the limit will apply by aggregating all an individual’s IRAs, effectively treating them as if they were one IRA for purposes of applying the limit.

Although an eligible IRA distribution received on or after Jan. 1, 2015 and properly rolled over to another IRA will still get tax-free treatment, subsequent distributions from any of the individual’s IRAs (including traditional and Roth IRAs) received within one year after that distribution will not get tax-free rollover treatment. As today’s guidance makes clear, a rollover between an individual’s Roth IRAs will preclude a separate tax-free rollover within the 1-year period between the individual’s traditional IRAs, and vice versa.

As before, Roth conversions (rollovers from traditional IRAs to Roth IRAs), rollovers between qualified plans and IRAs, and trustee-to-trustee transfers–direct transfers of assets from one IRA trustee to another–are not subject to the one-per-year limit and are disregarded in applying the limit to other rollovers.

IRA trustees are encouraged to offer IRA owners requesting a distribution for rollover the option of a trustee-to-trustee transfer from one IRA to another IRA. IRA trustees can accomplish a trustee-to-trustee transfer by transferring amounts directly from one IRA to another or by providing the IRA owner with a check made payable to the receiving IRA trustee.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Year-end Tax Checkup If You Are Older Than 70.5 Years – Have you satisfied your 2014 required minimum distribution?

Do not be at risk for a major tax penalty.

Don’t let the hustle and bustle of the holiday season distract you into a hefty tax penalty come April. As the end of a year approaches, many consumers begin taking distributions from many of their retirement accounts-including 401(k) and 403(b) plans, and traditional IRAs-starting in the year they turn 70-and-a-half or the year when they retire, whichever is later. Failure to do so and the amount you should have withdrawn will be taxed at 50%. It’s one of the biggest penalties in the tax code and you would be surprised how many people fall into this trap. Fidelity Investments reports that of the more than 750,000 Fidelity IRA customers who need to take a Required Minimum Distribution (“RMD”) this year, 68% have yet to withdraw enough.

For many people the wait to the end of the year to take the RMD is deliberate because waiting to withdraw gives funds more time to grow tax-free especially when the market is on an upswing, as it has been.

Just don’t delay too long and put this off beyond mid-December because it can take a few days for trades to settle and funds to become available for withdrawal especially when markets are closed for holidays and with people off celebrating the holidays the processing time may take longer. You also want to make sure you get with your advisor before her or she takes off for the balance of the month to be certain of the amount of RMD that must be taken.

Brokerages often have resources consumers can tap to make sure they’re withdrawing the right amount, or even to set up automatic withdrawals. The IRS also has worksheets and charts to help determine the correct amount. Even if you think you have that number nailed down, it can help to have a conference call with your tax preparer and financial advisor to plan for how a withdrawal may affect your tax bill next year. Consider taking out more than the minimum to ensure you have enough to live on-or just the minimum to avoid being pushed into a higher tax bracket.

Other pitfalls to watch out for.

Unnecessary RMD’s. Even if you have multiple individual retirement accounts, you only need to take one RMD from the collection, based on your age and the total value of the accounts. You don’t have to take it out of each individual account.

Merged-money mistakes. If both spouses need to take RMD’s, that cash needs to come from both parties’ accounts. Filing a joint return doesn’t mean you could take the entire amount for both spouses from one spouse’s account. The “I” in IRA is for individual. There’s no such thing as a “joint IRA”.

Inheriting An IRA. If you inherit an IRA, check before year’s end to see if you need to take an RMD. Death gets you out of pretty much everything in the tax code except for required minimum distributions.

Facing the RMD for the first time. You have a bit of a grace period. In the year you turn 70.5, you have until April 1 of the following year to take that first distribution. But a distribution on say, March 15, 2015, counts for 2014. You’ll still need an RMD for 2015-and that double withdrawal could have a more significant tax impact.

And if you do forget, what should you do?

With a properly completed Form 5329, Additional Taxes On Qualified Plans, attached to your return you may be able to persuade the IRS to waive the penalty. For taxpayers having to follow this procedure we also recommend including a statement explaining why you missed the deadline.

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.