Vernoia, Enterline + Brewer, CPA LLC

Archive for June, 2016

Business owners denied expense deduction for advances to their corporation

Business owners, especially those who operate in corporate form, need to realize that there is a difference between advancing business funds to cover anticipated expenses and being entitled to a deduction for those expenses. A married couple who held partial interests in a corporation learned that difference to their detriment recently in the Tax Court (Aleamoni, TC Summary Opinion 2016-21) when they were not allowed to deduct advances they made to the corporation as business expenses on their Schedules C. The court held that the advances were investments and not expenses the taxpayers incurred in carrying on a trade or business. (more…)

Employer had reasonable basis classifying workers as independent contractors

A federal district court has concluded that an employer who classified its workers as independent contractors was entitled to relief under Section 530 of the Revenue Act of 1978 (Nelly Home Care, DC-Pa., May 10, 2016). As a result, the employer did not owe employment taxes for the period at issue. (Of course, in that case, the IRS will now likely go after the workers for self-employment taxes if they have not already treated themselves as independent workers and the limitations period for assessment has not expired.) (more…)

FAQ: Is the cost of a weight loss program for obesity tax deductible?

Yes …but only if it is a medical necessity. The IRS has ruled that uncompensated amounts paid to participate in a weight-loss program as treatment for a specific disease or diseases (including obesity) diagnosed by a physician are deductible expenses for medical care. The deduction is subject to the limitations of Code Sec. 213 and its regulations. (more…)

How do I calculate the EITC for members of the U.S. military?

militaryTo claim the EITC, a taxpayer must satisfy two tests with respect to earned income. First, the taxpayer must have some earned income. Additionally, the taxpayer’s earned income must fall within certain ranges as the credit is subject to income phaseout. As the taxpayer’s adjusted gross income (or, if greater, earned income) rises beyond the phaseout threshold, the credit is reduced according to a percentage phaseout, until it is eliminated at the completed phaseout amount. (more…)

IRS gearing up for revived private tax collection

The IRS is gearing up to outsource some taxpayer collection accounts to private collection agencies. Legislation passed in 2015 directed the IRS to resume working with private collection agencies. The revived program is expected to operate in a similar manner to past ones, with emphasis on taxpayer protections. (more…)

IRS prepares to launch voluntary certification program for PEOs

The IRS is set to launch its new voluntary certification program for professional employer organizations (PEOs), also known as employee leasing organizations, on July 1, 2016. A recently-released guidance package describes how PEOs can obtain certification to become “certified PEOs” (CPEOs). (more…)

Taxpayer protections: IRS oversight bills advance in Congress

identity theftResponding to growing concerns over the scope of tax-related identity theft, the House has approved legislation to give victims more information about the crime. The House also took up a bill expanding disclosure of taxpayer information in cases involving missing children and the Ways and Means Committee approved a bill impacting disclosures by exempt organizations. (more…)