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The Roth Trap
We practitioners knew that this moment was coming. The tax law changed back in 2005 (Tax Increase Prevention and Reconciliation Act of 2005). Many of us thought that we saw a way to fund a Roth, even if the taxpayer was over the annual Roth income limits for contributions. How? Well, by funding a nondeductible IRA for 2006, 2007… well, you get the idea. We would convert it over to a Roth in 2010. The only part that would be taxed was the appreciation, and that wasn’t so bad. Read More—

Home Buyer Tax Credit
There are some new restrictions, such as the credit being disallowed if the house costs more than $800,000. Also no credit is allowed if you are under age 18 when you buy the home (with an exception).  The IRS learned that some “taxpayers” as you g as age four were claiming the credit, so the put the nix on the underage thing. You now also have to attach a copy of the closing statement to your return. Read More—

Innocent Spouse
So you are married. You file a joint tax return with your spouse. You later divorce your spouse. You and your (now ex) spouse are audited by the IRS. Remember, the IRS lags a year or two before they select returns for audit. The IRS finds unreported income and assesses additional tax. Let’s say that the income triggering the tax belongs to your ex-spouse. Read More—

So You Owe The IRS
There is a process here. You can't just call the IRS and say "Let's make a deal." You have to complete a form (Form 656, Offer in Compromise). There is a $150 fee.  You have to submit financial information (Form 433-A Collection Information Statement). Be very careful completing this form. The IRS scrutinizes this form much more closely when considering an OIC than when you request an installment agreement. The IRS will ask you for financial documentation -- pay stubs, bank records, etc. Read More—

Employer Vehicles
Many companies today purchase or lease vehicles that are used by employees in the course of doing business. However, in many cases employees are allowed by employers to use these vehicles for personal use. In most cases, this personal use is a taxable fringe benefit. Read More—

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