The objective of the IRS’ Offer in Compromise (OIC) program is to accept an offer for less than the amount of tax that’s owed when it is in the best interest of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements.

If you are unable to pay your tax liability in a lump sum or through an installment agreement, and you have exhausted your search for other payment arrangements, you may be a candidate for an offer in compromise. (more…)

Medical expenses are deductible if you itemize your deductions.  However, there is a limit on how much of those medical expenses can be deducted based upon your income for the year.  Currently, only medical costs that exceed 7.5% (10% if you are subject to the alternative minimum tax) of your adjusted gross income (AGI) can be deducted.  

For example, you have wages of $50,000, interest income of $1,000, and no adjustments to your income.  Your AGI is $51,000 and 7.5% of the AGI is $3,825.  In this case, you would only be able to deduct your medical expenses that exceed $3,825. Thus, if your deductible medical expenses for the year were $5,000, you can only deduct $1,175. (more…)

A Congressional research report titled “Tax Gap: Misclassification of Employees as Independent Contractors,” focused on the tax gap created by misclassifying workers as independent contractors rather than employees and the problems associated with enforcing proper classifications.

Businesses must withhold tax and pay Social Security, Medicare and unemployment tax on wages paid to employees.  On the other hand, they don’t withhold or pay taxes on payments to independent contractors.  An IRS study found that workers misclassified as independent contractors for whom employers did not report compensation on Form 1099-MISC reported only 29% of their compensation on their tax returns and, as a result, created a significant tax gap.  The IRS study also found that 15% of employers misclassified 3.4 million workers as independent contractors, causing an estimated total tax loss of $2.7 billion, in inflation-adjusted 2006 dollars. (more…)

Starting July 1, 2010, many businesses offering tanning services must collect a 10 percent excise tax on the tanning services that it provides. This excise tax requirement is part of the Affordable Care Act that was enacted in March 2010.

Here are nine tips on the tanning excise tax that providers must collect. (more…)

Prior to the recent economic downturn, flipping real estate was popular.  With mortgage interest rates low and home prices at historical lows, flipping appears to be on the rise again.   House flipping is, essentially, purchasing a house or property, improving it, and then selling it (presumably for a profit) in a short period of time.  The key is to find a suitable fixer-upper that is priced under market for its location, fix it up, and resell it for more than it cost to buy, hold, fix up and resell it.    (more…)

The Departments of Labor, Treasury and Health and Human Services recently issued regulations to implement a new Patient’s Bill of Rights as part of the Health Care Reform Act.  The major initial provisions include the following: (more…)

The deadline for the completion of qualifying First-Time Homebuyer and Long-Term Homeowner Credit purchases has been extended.  Taxpayers who entered into a binding contract before the end of April now have until September 30, 2010 to close on the home. (more…)

For small business owners, tax breaks often come in the form of tax deductions – which can offer a nice little instant cash savings – if you know how to navigate tax law and claim the deductions you deserve (not what you believe you are entitled to). 

Large tax deductions are a notorious red flag for the IRS, with home-based businesses, in particular, facing an increase in tax audits due to suspicious deduction activity on income tax returns.

To help you navigate the complex world of business tax deductions, here is some foundational guidance that will help you take the deductions that you deserve. (more…)