Jun 212018

In a rare decision, the U.S. Supreme Court essentially over-ruled itself.  Get ready to pay sales tax on internet orders from out of state companies.  While this will undoubtedly be a boon for states with low or no state income tax, it will cost online purchasers.  As background, the U.S. Supreme Court in Quill Corp. v. North Dakota (1992) held that generally a company (seller) had to have a physical connection or presence in the state where a purchaser was located in order for state sales tax to be collected.  That meant that no state sales tax was collected when purchasing a product from an out of state seller with no physical location in the buyer’s state.  Many states have historically collected tax on out of state purchases through what is commonly know as a Use Tax.  This involved voluntary reporting and payment on behalf of the purchaser.  As you might imagine, not many wanted to voluntarily pay tax.

With this new decision in South Dakota v. Wayfair, Inc. consumers will probably be paying sales tax when making internet purchases from out of state companies.  Will this have a significant impact on internet business activity?  Time will tell.

States have long been desiring this change in the law and it will undoubtedly mean that you will be paying more.

Nov 172015
Wealthy Americans: reduce your exposure to the 3.8% tax on unearned income

Also called the unearned income Medicare contribution tax or the net investment income tax; this tax impacts more taxpayers than you might think. This tax applies to individuals, estates and trusts. You should note that this tax is a surtax so it is a second level of taxation in addition to the regular taxes that Americans have been paying. The surtax is calculated as 3.8% of the lesser of your net investment income or the excess of the modified adjusted income over a threshold of $250,000 for joint filers and surviving spouses. ($125,000 for married folks filing separate returns and More…

Sep 282015
International Financing for Green Cards?

Many U.S. businesses get their funding from local banks or private U.S. investors.  Sometimes, however, there is an opportunity to get financing from abroad on more advantageous terms.  One such opportunity was recently illustrated in a recent Wall Street Journal article.  The article describes U.S. real estate developers receiving funds from foreign investors in exchange for green cards.  When such an opportunity arises, certain U.S. income tax implications should be considered as part of the deal.  In my first blog, I will discuss these tax implications as related to U.S. businesses. When a U.S. business receives funds from a foreign More…

Aug 312015
The Kiddie Tax - Part One

The Kiddie Tax – Part One Internal revenue code section 1(g) taxes unearned children’s income as if it belonged to the parents. This is known as the Kiddie tax. This income is taxed at the parents’ tax rates. Generally, the Kiddie tax rules apply to income of any child who is under age 18, turns 18, or is a full-time student who turns 19 – 23 before the end of the year. Generally, children’s income is taxed as follows. The tax on the income of a child who is subject to the “Kiddie tax” rules is the greater of: A. More…

Mar 132014
Common Mistakes Made by Taxpayers with Form 1099

Tax season has now arrived, and taxpayers are hurrying to get their returns completed in time.   However, for those who receive Form 1099, they need to take certain precautions because making mistakes can cost them a significant amount of money.  Below are three traps that many taxpayers who receive Form 1099 fall into. Mistake 1:    Forgetting to watch your mail-Taxpayers who receive Forms W-2 typically are careful to watch for this form in the mail.  However, many taxpayers who receive Form 1099 are often careless by not      watching out for it.  These taxpayers should be sure to watch out for More…

Feb 192014
2014 Tax Savings Tips

As tax season approaches, most taxpayers are concerned about finding ways to decrease their taxable income.  Utilizing these tax sheltering tips can help taxpayers save a significant amount of money on the amount of taxes that they owe.  Here are three simple ways to reduce your taxable income: 1.    Utilize Retirement Plans – Of course retirement vehicles are important in terms of  planning for retirement; however, they are also beneficial for saving on taxes as well.  They can reduce the amount of business and personal taxes owed.  In some instances, business owners may defer taxes on $50,000.00 of income per More…

Jul 232013
What to do if You Get a CP21B or CP21C Notice From the IRS

Whenever you get a notice from the IRS, the first thing to do is read it! And read it carefully. After doing so, if you agree with it, there is no action required for either of these notices. In either case, these notices indicate that you’ve requested changes to your tax return and the IRS has agreed to those changes. The difference in the two forms is whether or not you’ll be receiving a refund because of those changes. A CP21B is an indicator that you will receive a refund, and a CP21C shows that you will not receive a More…

Jul 152013
Have You Received a Notice From the IRS?

One of the scariest moments is going to the mailbox and finding a notice from the IRS. The worst thing to do is to throw it in a pile and ignore it, hoping it will go away. When you open it, you may find a notice in your favor. Perhaps you miscalculated your return and overpaid or if you asked for a change on your return they may have granted it. One the other hand, you may be receiving a notice that you’re up for an audit, or as they say, a notification of examination. Since 2001, the IRS has More…

Jun 072013
4 Business Lessons You Can Teach Your Student/Employee This Summer

If you’re hiring a student as an employee this summer, the best lesson you can give them is how the business world works. This lesson will go well beyond the summer they spend with you and might even help them understand the ways of the world. Here are 4 tips to help you teach your student: When you have your new student complete their W-4, explain to them that employers use this form to figure out how much federal income tax to withhold from worker’s paychecks. If the student is receiving tips as part of their income, encourage them to More…

May 182013
6 Ways to Make Your 2013 Tax Season Easier

No one likes unplanned tax surprises, especially when you owe. Now is the time to start your tax planning for next year by  looking at these 6 areas: 1. The first thing on your tax planning to-do- list is to make sure you have a qualified tax professional or CPA. If not, this is the time to start shopping for one. Take your time to make an informed decision and once you have selected a qualified tax professional, they can guide you down the tax planning path. a good tax professional can give you tax tips and while you are ultimately responsible More…