Education (related to your business; includes books tailored to your industry and transportation expenses to and from classes, seminars, and workshops)
Home office expenses
Interest on business debts
Legal and professional fees
Moving expenses
Rent expenses
Salaries and benefits
Taxes (e.g., state, payroll, personal property, real estate, sales, excise and fuel)
Business licenses
Telephone and internet expenses
Travel expenses
Personal tax deductions for business owners:
Charitable contributions
Child and dependent care expenses
Retirement contributions
Health care expenses
Want to find out if any of these apply to your business? Give us a call at 816-524-4949 or visit our website to schedule a free consultation.
The Internal Revenue Service today reminded taxpayers that a special tax provision will allow more Americans to easily deduct up to $600 in donations to qualifying charities on their 2021 federal income tax return.
Ordinarily, people who choose to take the standard deduction cannot claim a deduction for their charitable contributions. But a temporary law change now permits them to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations.
Under this provision, individual tax filers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.
Included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, a more limited version of this temporary tax benefit originally only applied to tax-year 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, generally extended it through the end of 2021.
Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with their volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.
The IRS reminds taxpayers to make sure they’re donating to a recognized charity. To receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, they can use the IRS Tax Exempt Organization Search tool.
Cash contributions to most charitable organizations qualify. But contributions made either to supporting organizations or to establish or maintain a donor advised fund do not. Contributions carried forward from prior years do not qualify, nor do contributions to most private foundations and most cash contributions to charitable remainder trusts.
In general, a donor-advised fund is a fund or account maintained by a charity in which a donor can, because of being a donor, advise the fund on how to distribute or invest amounts contributed by the donor and held in the fund. A supporting organization is a charity that carries out its exempt purposes by supporting other exempt organizations, usually other public charities.
Keep good records Special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining an acknowledgment letter from the charity before filing a return and retaining a cancelled check or credit card receipt for contributions of cash.
For details on the recordkeeping rules for substantiating gifts to charity, see Publication 526, Charitable Contributions, available on IRS.gov.
Courtesy of the Internal Revenue Service
Need tax assistance? Call us at 816-524-4949 or visit our website to schedule a consultation.
In recent years, tax schemes and scams have been on the rise. Con artists work year-round which means taxpayers must remain vigilant to avoid being victimized. Here are some tips to help people recognize and avoid some of the most common tax-related scams.
Email phishing scams
The IRS does not initiate contact with taxpayers by email to request personal or financial information. Generally, the IRS first mails a paper bill to the person who owes taxes. In some special situations, the IRS will call or come to a home or business.
Taxpayers should report IRS, Treasury or tax-related suspicious phishing scams by saving the email and then sending that file as an attachment to phishing@irs.gov. They should not open any attachments, click on any links, reply to the sender, or take any other actions that could put them at risk.
• Leave pre-recorded, urgent, or threatening messages on an answering system. • Threaten to immediately bring in local police or other law enforcement groups to arrest the taxpayer for not paying, deport them or revoke their licenses. • Call to demand immediate payment with a prepaid debit card, gift card or wire transfer. • Ask for checks to third parties. • Demand payment without giving the taxpayer an opportunity to question or appeal the amount owed.
Criminals can fake or spoof caller ID numbers to appear to be anywhere in the country. Scammers can even spoof an IRS office phone number or the numbers of various local, state, federal or tribal government agencies.
If a taxpayer receives an IRS or Treasury-related phone call, but doesn’t owe taxes and has no reason to think they do, they should:
Fall is here and another school year is in full swing. Many teachers are already dipping into their own pockets to buy classroom supplies that will help set their students up for success. Doing this all year long can add up fast. Fortunately, eligible educators may be able to offset qualified expenses they paid in 2021 when they file their tax return in 2022.
Educators who work in schools may qualify to deduct up to $250 of unreimbursed expenses. That amount goes up to $500 if two qualified educators are married and file a joint return. However, neither spouse can deduct more than $250 of their qualified expenses when they file their federal tax return.
Taxpayers qualify for this deduction if they:
Teach any grade from kindergarten through twelfth grade.
Are a teacher, instructor, counselor, principal or aide.
Work at least 900 hours during the school year.
Work in a school that provides elementary or secondary education.
Qualified expenses include:
Professional development courses.
Books.
Supplies.
Computer equipment including related software and services.
Supplementary materials.
Athletic supplies only for health and physical education
Personal protective equipment, disinfectant, and other supplies used for the prevention of the spread of coronavirus.
Expenses for COVID-19 protective items. These items include, but are not limited to:
Face masks.
Disinfectant for use against COVID-19.
Hand soap.
Hand sanitizer.
Disposable gloves.
Tape, paint or chalk to guide social distancing.
Physical barriers, such as clear plexiglass.
Air purifiers.
Other items recommended by the Centers for Disease Control and Prevention to be used for the prevention of the spread of COVID-19.
Courtesy of the Internal Revenue Service
This deduction is for unreimbursed expenses paid or incurred during the tax year. Taxpayers should keep records, such as receipts, and other documents that support the deduction with other tax documents. Eligible taxpayers will claim the deduction on Form 1040, Form 1040-SR, or Form 1040-NR.
Need tax assistance? Call us at 816-524-4949 or visit our website to schedule a consultation.
The Justice Department said yesterday that Bruce Matson, the former chief legal officer at now-defunct law firm LeClairRyan, has been sentenced to 44 months in prison after pleading guilty in July to obstructing a federal probe. U.S. District Judge John Gibney of the Eastern District of Virginia in Richmond also ordered Matson to pay a $10,000 fine, according to the DOJ. Matson was accused of lying to a DOJ watchdog that was probing his alleged misappropriation of funds from title insurer LandAmerica Financial Group’s bankruptcy.
Prosecutors had requested 46 months in prison and a $250,000 fine, while Matson’s attorneys requested a 37-month sentence. LandAmerica, one of the largest title insurance groups in the U.S., filed for bankruptcy in the Eastern District of Virginia in 2008. Matson, was assigned the role of liquidation trustee for the company’s remaining assets while at LeClairRyan. He was found to have embezzled approximately $800,000 from the trust between 2015 and 2018, and misappropriated a total of $4 million, according to court papers. According to prosecutors, in 2019 Matson lied to the U.S. Trustee probing the depleted trust funds, telling them he moved the funds because of high bank fees and tax identification issues. Matson agreed to disbarment in November 2020.
Considering bankruptcy? Call us at 816-524-4949 or visit our website to schedule a consultation to determine if this is your best option.
Individual taxpayers and business owners can use the IRS’s Offer in Compromise Booklet or the new how-to video series to learn how an offer in compromise works and decide if it could help them resolve their tax debt. Taxpayer’s can use pre-qualifier tool see if they are eligible for an offer in compromise.
An offer in compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed. An offer in compromise is an option when a taxpayer can’t pay their full tax liability. It is also an option when paying the entire tax bill would cause the taxpayer a financial hardship. The goal is a compromise that suits the best interest of both the taxpayer and the agency.
When reviewing applications, the IRS considers the taxpayer’s unique set of facts and any special circumstances affecting the taxpayer’s ability to pay as well as the taxpayer’s:
• Income • Expenses • Asset equity
The booklet covers everything a taxpayer needs to know about submitting an offer in compromise, including:
• Who is eligible to submit an offer • How much it costs to apply • How the application process works
The booklet also includes the forms that taxpayers must complete as part of the offer in compromise process. The current application fee is $205. However, taxpayers who meet the definition of a low-income taxpayer don’t have to pay this fee.
New how-to video series on offer in compromise The IRS recently launched a how-to video series on this valuable payment option for taxpayers. The playlist consist of easy-to-navigate information taxpayers need to know when considering and applying for an OIC. Topics in the series include:
Courtesy of the Internal Revenue Service
• An overview of the OIC process, forms and pre-qualifier tool for help in getting started • Step-by-step walk throughs of Forms 433 – A & B OIC, which are known as collection information statements and needed for individual and business-related offers • A step-by-step example of how to complete the OIC application, Form 656 • A final checklist to ensure everything needed is included to submit a valid offer
Need tax assistance? Call us at 816-524-4949 or visit our website to schedule a consultation.
AMC Entertainment Holdings Inc. has surged almost 20-fold this year after thousands of retail investors piled in to defend the stock against short sellers looking to profit from its decline. Executives and board members at the movie theater chain have unloaded shares worth more than $70 million in 2021 after selling a fraction of that amount in prior years, according to regulatory filings. Chief Executive Officer Adam Aron became the biggest seller of that group this month when he sold stock worth more than $25 million, saying it was prudent for estate-planning purposes. None have made purchases. Many of the stock sales, including Aron’s, were pre-planned. A spokesman for Leawood, Kansas-based AMC, declined to comment. AMC was struggling financially for years even before the pandemic pummeled the theater business in 2020, causing a sharp drop-off in revenue from which the industry still hasn’t recovered. But in January, fired-up retail traders rushed in, driving up the share price and helping rescue AMC from the brink of bankruptcy.
Contemplating bankruptcy? Call us or visit our website to schedule a consultation to determine if this is your best option.
A Florida man who lied to get a low-interest COVID-19 relief loan has been sentenced to six months in federal prison. Willy Curry pleaded guilty in August to wire fraud in connection with his fraudulent application to the U.S. Small Business Administration. According to a plea agrement, Curry applied for an Economic Injury Disaster Loan with the SBA in June 2020. He falsely claimed that Will Curry Computers was established in 2015 and had annual gross revenues of approximately $755,416, a cost of goods sold of approximately $170,664, and 10 employees. Prosecutors said Curry actually established the business in 2020, and it had minimal revenues or costs of goods sold and no employees. Curry actually worked full-time as a network manager for Miami-Dade County and suffered no loss of salary from the COVID-19 pandemic, investigator said.
Need to speak with an attorney? Call us at 816-524-4949 or visit our website to schedule a consultation.
Anyone who gambles incessantly risks bankruptcy and the denial of discharge without adequate documentation of gambling losses.
Bankruptcy Judge Timothy A. Barnes of Chicago wrote an opinion listing records that gamblers should keep to avoid having their discharges denied under Section 727(a)(5). The section calls for the denial of discharge if “the debtor has failed to explain satisfactorily . . . any loss of assets or deficiency of assets to meet the debtor’s liabilities.”
The debtor sold real estate and received about $70,000 in net cash proceeds. He filed a chapter 7 petition 10 months later. Within six weeks of the sale, the debtor withdrew some $15,000 from ATMs located in casinos. Within a month of the sale, the debtor made $37,000 in cash withdrawals from his bank. The debtor testified that he lost the $52,000 playing poker at casinos.
In his bankruptcy papers, the debtor listed $51,600 in unsecured debts. The chapter 7 trustee filed an adversary proceeding to deny discharge under Section 727(a)(5). In his October 29 opinion, Judge Barnes said that the trustee carried his initial burden by making “a prima facie showing that funds sufficient to pay the Defendant’s debts in full existed.” Judge Barnes denied discharge because the debtor “failed to sufficiently explain the dissipation of such funds.”
In his opinion, Judge Barnes focused on the insufficiency of the debtor’s testimony at trial and the inadequacy of documentary evidence of gambling losses. The opinion also lists the types of evidence that a gambler could introduce to justify discharge.
The ATM withdrawals at casinos were “some evidence” but only represented 30% of the sale proceeds. Although a gambler “typically leaves little in the way of documentary evidence,” Judge Barnes said “there is more the [debtor] could have done to convince the court. For instance, the [debtor] could have provided a witness to corroborate his gambling, traveling, absences from work/community/home, etc.”
Judge Barnes said it was “difficult to fathom” why the debtor made frequent trips to casinos but could produce “no corroborating documentation from gas stations, buses, restaurants or similar trip-related expenses.”
Judge Barnes was mystified as to why the debtor had no records of winnings. The debtor, he said, was asking him “to believe that he is an incredibly unlucky (or perhaps poor) poker player as the [debtor] never discussed or mentioned leaving the poker table with winnings.”
Judge Barnes denied discharge because the “lack of even a basic accounting of gambling wins and losses (beyond simply what was withdrawn in cash) makes it impossible for the court to determine whether the cash was really lost gambling or was hidden away to avoid creditors.”
Considering bankruptcy? Call us at 816-524-4949 or visit our website to schedule a consultation and determine if that is your best option.
There are many reasons a business owner may choose to close their doors, and there are many things that must be done to go out of business. Two important steps all business owners must take are fulfilling their federal tax responsibilities and informing the IRS of their plans. The closing a business page of IRS.gov is designed to help owners navigate the process of shutting down.
Small businesses and self-employed taxpayers will find a variety of information on the page including:
What forms to file
How to report revenue received in the final year of business
How to report expenses incurred before closure
The page also details steps all business owners should take when closing a business.
File a final tax return and related forms. The type of return to file and related forms depends on the type of business.
Take care of employees. Business owners with one or more employees must pay any final wages or compensation, make final federal tax deposits and report employment taxes.
Pay taxes owed. Even if the business closes now, tax payments may be due next filing season.
Report payments to contract workers. Businesses that pay contractors at least $600 for services including parts and materials during the calendar year in which they go out of business, must report those payments.
Cancel EIN and close IRS business account. Business owners should notify the IRS so they can close the IRS business account.
Keep business records. How long a business needs to keep records depends on what’s recorded in each document.
Courtesy of the IRS
The page also provides helpful information for business owners declaring bankruptcy, selling their business and terminating retirement plans.
Have tax questions? Give us a call at 816-524-4949 or visit our website to schedule a consultation.
