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Are Social Security Benefits Taxed?
If you’re getting close to retirement, you may wonder: Are my Social Security benefits going to be taxed? And if so, how much will you have to pay? It depends on your other income. If you’re taxed, between 50% and 85% of your benefits could be taxed. (This doesn’t mean you pay 85% of your [...]
More Parents May Owe “Nanny Tax” This Year
In the COVID-19 era, many parents are hiring nannies and babysitters because their daycare centers and summer camps have closed. This means that more parents may owe "nanny tax" this year. Keep in mind that the nanny tax may apply to all household workers, including housekeepers, babysitters, gardeners or others who aren’t independent contractors. If [...]
Journal Entries May Signal Financial Statement Fraud
With a median loss of $954,000, financial statement fraud is the costliest type of white-collar crime, according to the Association of Certified Fraud Examiners. Fortunately, auditors and forensic accountants may be able to detect inflated income and other financial manipulation by testing journal entries. Unearthing suspicious entries Financial statement frauds come in many forms. For [...]
Tax Implications of Employer-Provided Life Insurance
Does your employer provide you with group term life insurance? If so, and if the coverage is higher than $50,000, this employee benefit may create undesirable income tax consequences for you. “Phantom income” The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything [...]
Employers Have Questions About FICA Deferrals
The IRS has provided guidance to employers regarding the recent presidential action to allow employers to defer the withholding, deposit and payment of certain payroll tax obligations. The three-page guidance in Notice 2020-65 was issued to implement President Trump’s executive memorandum signed on August 8. Even with the guidance, employers have questions about FICA deferral, specifically [...]
What Happens When You Can’t Pay Your Taxes?
While you probably don’t have any problems paying your tax bills, you may wonder: What happens in the event you can’t pay your taxes on time? Here’s a look at the options. Most importantly, don’t let the inability to pay your tax liability in full keep you from filing a tax return properly and on [...]
How to Protect Your Investment Accounts from Fraud
Because the average investment account boasts a much larger balance that a typical checking or savings account, cybercriminals are particularly interested in hacking them. Financial institutions are largely responsible for ensuring the security of these accounts, but business customers and consumers also should adopt defensive measures. Here are five recommendations for how to protect your [...]
Filing Cash Transaction Reports for Your Business
Does your business receive large amounts of cash or cash equivalents? You may be required to begin filing cash transaction reports with the IRS to report these transactions. Filing requirements Each person engaged in a trade or business who, in the course of operating, receives more than $10,000 in cash in one transaction, or in [...]
Stepped-Up Basis of Inherited Property
If you’re planning your estate, or you’ve recently inherited assets, you may be unsure of the “cost” (or “basis”) for tax purposes. Generaly, there is a stepped-up basis of inherited property. Fair market value rules Under the fair market value basis rules (also known as the “step-up and step-down” rules), an heir receives a basis [...]
Are Scholarships Tax-Free or Taxable?
COVID-19 is changing the landscape for many schools this fall. But many children and young adults are going back, even if it’s just for online learning, and some parents will be facing tuition bills. If your child has been awarded a scholarship, you might be wondering . . . are scholarships tax-free or taxable? Scholarships [...]
Back-to-School Tax Breaks
Despite the COVID-19 pandemic, students are going back to school this fall, either remotely, in-person or under a hybrid schedule. In any event, parents may be eligible for certain back-to-school tax breaks to help defray the cost of education. Here is a summary of some of the tax breaks available for education. (1) Higher Education [...]
How Fraudsters Steal Unemployment Benefits
When Congress authorized an additional $600 in monthly unemployment benefits as part of the CARES Act, out-of-work Americans weren’t the only ones it helped. Criminals have descended like locusts on state unemployment insurance agencies. How fraudsters steal unemployment benefits is by using stolen identities to fraudulently claim both standard benefits and the additional funds administered [...]
Why is Partner Taxable Income Different than Cash Received
If you’re a partner in a business, you may have come across a situation that gave you pause. In a given year, you may be taxed on more partnership income than was distributed to you from the partnership in which you’re a partner. Why is partner taxable income different than cash received? The answer lies in [...]
Bartering is a Taxable Transaction
During the COVID-19 pandemic, many small businesses are strapped for cash. They may find it beneficial to barter for goods and services instead of paying cash for them. If your business gets involved in bartering, remember that the fair market value of goods that you receive in bartering is taxable income. And if you exchange [...]
Protect Customer Data When Working Virtually
With cyberthieves active during COVID-19, the Internal Revenue Service and its Security Summit partners today urged tax professionals and other business owners to review critical security steps to ensure they protect customer data when working virtually. Many tax professionals and other businesses have expanded telework options this year as firms and other businesses work to [...]
Disclaimer
This blog is designed to provide competent and reliable information regarding the subject matter covered. However, it is being provided with the understanding that the blogmaster is not engaged in rendering investment advice. Laws and practices often vary from state to state and if investment assistance is required, the services of a licensed investment professional should be sought. The blogmaster resolutely encourages the reader/viewer to do their own research and due diligence before acting on any information contained herein. As such, Roger Rossmeisl specifically disclaims any liability that is incurred from the use or application of the contents of this blog. It should also be noted that the views contained in this blog are not necessarily representative of the opinions/beliefs of the other owners, management and/or employees of Kho & Patel CPAs.
