Our Accounting Articles
Putting your home on the market? Know the tax consequences of your sale.
Summer is a common time to put a home on the market. If you’re among those who are following this trend, it’s important to be aware of the tax consequences. If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain — as long as you meet certain tests. Gain that qualifies for exclusion also is excluded from the Affordable Care Act’s 3.8% net investment income tax.
A loss on the sale of your principal residence generally isn’t deductible. But if part of your home is rented out or used exclusively for your business, the loss attributable to that portion may be deductible.
If you’re selling a second home, be aware that it won’t be eligible for the gain exclusion. But if it qualifies as a rental property, it can be considered a business asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss.
If you have a home on the market, please contact us to learn more about the potential tax consequences of a sale.
© 2014 Thomson Reuters/Tax & Accounting
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How to Handle IRS Notices
Is this your situation? Just when you thought tax season was over, you receive a notice from the IRS. Don’t panic — you’re not alone. The IRS sends millions of notices and letters out each year. Many are computer-generated, because these days, the IRS relies less on employees to get directly involved in issues including collections. Many state and local governments are following suit and sending out more notices to taxpayers. read more…
Deadline Coming up to Report Foreign Account Holdings
The deadline is approaching for certain taxpayers to report accounts they hold in foreign banks and other financial institutions. You also may be required to report foreign accounts over which you have signature authority, such as an account that you maintain on behalf of a relative or employer — or if you have power of attorney over an elderly parent’s foreign account, even if you never exercise that authority. read more…
Inundated with Tax Clutter? Here's what you can Toss
E-filing is on the upswing. According to the Data Book recently released by the IRS, the agency processed 240 million returns during its last fiscal year, of which 59 percent, or 151 million, were filed electronically. Of the 146 million individual income tax returns filed, almost 83 percent were e-filed.
You might think those numbers suggest we are close to becoming a paperless society, at least when it comes to the IRS. That would be a wrong assumption. read more…
IRS Reminds Taxpayers that Phone Scams Continue After Tax Season
Scammers take advantage of taxpayers by pretending to be from the IRS. Fake phone calls, e-mails and texts inform taxpayers the IRS wants to talk to them about their tax returns and that makes most people feel on edge and less guarded about security.
While tax season emboldens these thieves, the IRS wants taxpayers to remember, just because April 15th has passed, the scams have not slowed down. In its guidance, (IR-2014-53), the tax agency reminds the public:
The IRS will always send taxpayers a written notice of any tax due via the U.S. mail. The IRS never asks for credit card, debit card or prepaid card information over the telephone.
Frequent targets may include recent immigrants who may be seen as more vulnerable. Victims are often threatened with deportation, arrest, having their utilities shut off, or having their driver’s licenses revoked. Callers may be insulting or hostile, apparently to scare potential victims into cooperating
In other variations of the fraud, potential victims may be told they are entitled to big refunds, or conversely, they may be told they owe money which must be paid immediately to the IRS. Some taxpayers have also received calls which purported to be from the IRS informing victims about lottery or sweepstakes winnings, or soliciting donations for debt relief funds related to a well-publicized disaster, such as a flood or hurricane. Scam artists who are unsuccessful the first time may call back with a new strategy.
The IRS lists other common characteristics of this type of phone-scam to watch for:
- The perpetrators use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
- They may be able to recite the last four digits of a victim’s Social Security number.
- They spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS caling.
- They sometimes send bogus IRS e-mail to some victims to support their bogus calls.
- Victims may hear background noise of other calls being conducted to mimic a call site.
- After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or Department of Motor Vehicles, and the caller ID supports their claim.
What to Do
If you’ve been targeted by this scam, you can contact the Federal Trade Commission and use its “FTC Complaint Assistant” at FTC.gov. Please add the words “IRS Telephone Scam” to the comments of your complaint.
If you receive an e-mail claiming to be from the IRS, do not open any attachments to such an e-mail, and do not click on any links within the e-mail. Instead, forward the message to phishing@irs.gov.
Contact Us
For more information, please contact Robert Puerto, CPA, at 516-248-7361, or click here to email Robert. He would be happy to address any questions you may have.
Source: Bizactions