by Fresh Start Tax | Aug 27, 2012 | Income Tax Preparation
Many questions are asked regarding IRS and tax rules and regulations regarding same-sex domestic partners and civil unions.
State Laws vary from State to State however federal law is very specific regarding these issues.
Questions and Answers to Federal Tax Law and the IRS.
The following questions and answers provide information to same-sex domestic partners, same-sex individuals in civil unions and same-sex couples whose marriage is recognized by state law (for convenience, these individuals are referred to as “same-sex couples” and each individual is referred to as a “same-sex partner” in these questions and answers).
Below this information are questions and answers for same-sex couples who reside in community property states and are subject to their state’s community property laws:
1.Can same-sex partners who are legally married for state law purposes file federal tax returns using a married filing jointly or married filing separately status?
Same-sex partners may not file using a married filing separately or jointly filing status because federal law does not treat same-sex partners as married for federal tax purposes.
Head of Household
2.Can a taxpayer use the head-of-household filing status if the taxpayer’s only dependent is his or her same-sex partner?
A taxpayer cannot file as head of household if the taxpayer’s only dependent is his or her same-sex partner. A taxpayer’s same-sex partner is not one of the related individuals described in the law that qualifies the taxpayer to file as head of household, even if the same-sex partner is the taxpayer’s dependent.
Qualifying Child
3. If a child is a qualifying child under section 152(c) of both parents who are same-sex partners, which parent may claim the child as a dependent?
If a child is a qualifying child under section 152(c) of both parents who are same-sex partners, either parent, but not both, may claim a dependency deduction for the qualifying child.
However if both parents claim a dependency deduction for the child on their income tax returns, the IRS will treat the child as the qualifying child of the parent with whom the child resides for the longer period of time.
Should the child resides with each parent for the same amount of time during the taxable year, the IRS will treat the child as the qualifying child of the parent with the higher adjusted gross income.
Itemized Deductions
4.Can a same-sex partner itemize deductions if his or her partner claims a standard deduction?
Yes. A same-sex partner may itemize or claim the standard deduction regardless of whether his or her partner itemizes or claims the standard deduction.
The law prohibits one spouse from itemizing deductions if the other spouse claims the standard deduction , same-sex partners are not spouses as defined by federal law, and this provision does not apply to them.
Income Tax Preparation – Tax Services- CPA’s, Former IRS – Upper Montclair
Child Adoption
5.If a same-sex couple adopts a child together, can one or both of the same-sex partners qualify for the adoption credit?
Yes. Each same-sex partner may qualify to claim the adoption credit on the amount of the qualified adoption expenses paid or incurred for the adoption.
The same-sex partners may not both claim credit for the same qualified adoption expenses, and neither same-sex partner may claim more than the amount of expenses that he or she paid or incurred. The adoption credit is limited to $13,360 per child in 2011.
Thus, if two same-sex partners each paid qualified adoption expenses to adopt the same child, and the total of those expenses exceeds $13,360, the maximum credit available for the adoption is $13,360.
The same-sex partners may allocate this maximum between them in any way they agree, but the amount allocated to a same-sex partner may not be more than the amount of expenses he or she paid or incurred.
The same rules generally apply in the case of a special needs adoption.
Total Tax Credit
The total tax credit for such an adoption is limited to $13,360, but the amount that each same-sex partner may claim is not limited by the amount of expenses paid or incurred.
Second Parent
6. If a taxpayer adopts the child of his or her same-sex partner as a second parent or co-parent, may the taxpayer (“adopting parent”) claim the adoption credit for the qualifying adoption expenses he or she pays or incurs to adopt the child?
Yes. The adopting parent may claim an adoption credit to the extent provided under the law. The law does not allow taxpayers to claim an adoption credit for expenses incurred in adopting the child of the taxpayer’s spouse.
However, this limitation does not apply to adoptions by same-sex partners because same-sex partners, even if married for state law purposes, are not treated as spouses under federal law.8.Is a same-sex partner the stepparent of his or her partner’s child?
If a same-sex partner is the stepparent of his or her partner’s child under the laws of the state in which the partners reside, then the same-sex partner is the stepparent of the child for federal income tax purposes.
Recognized by State Law
7. The following questions and answers provide information to same-sex domestic partners, same-sex individuals in civil unions and same-sex couples whose marriage is recognized by state law (for convenience, these individuals are referred to as “same-sex couples” and each individual is referred to as a “same-sex partner” in these questions and answers). Below this information are questions and answers for same-sex couples who reside in community property states and are subject to their state’s community property laws:
State Law vs Federal Law
8. Can same-sex partners who are legally married for state law purposes file federal tax returns using a married filing jointly or married filing separately status?
A. No. Same-sex partners may not file using a married filing separately or jointly filing status because federal law does not treat same-sex partners as married for federal tax purposes.
Head of Household
9. Can a taxpayer use the head-of-household filing status if the taxpayer’s only dependent is his or her same-sex partner?
A. No. A taxpayer cannot file as head of household if the taxpayer’s only dependent is his or her same-sex partner. A taxpayer’s same-sex partner is not one of the related individuals described in the law that qualifies the taxpayer to file as head of household, even if the same-sex partner is the taxpayer’s dependent.
Qualifying child
10. If a child is a qualifying child under section 152(c) of both parents who are same-sex partners, which parent may claim the child as a dependent?
A. If a child is a qualifying child under section 152(c) of both parents who are same-sex partners, either parent, but not both, may claim a dependency deduction for the qualifying child. If both parents claim a dependency deduction for the child on their income tax returns, the IRS will treat the child as the qualifying child of the parent with whom the child resides for the longer period of time. If the child resides with each parent for the same amount of time during the taxable year, the IRS will treat the child as the qualifying child of the parent with the higher adjusted gross income.
Standard vs Itemized Deductions
11. Can a same-sex partner itemize deductions if his or her partner claims a standard deduction?
A. Yes. A same-sex partner may itemize or claim the standard deduction regardless of whether his or her partner itemizes or claims the standard deduction.
by Fresh Start Tax | Aug 27, 2012 | FBAR, Tax Lawyer
With the advent of FBAR and the voluntary disclosure policies many taxpayers are on the cusp of a potential tax crime.
Much thought goes into the IRS pursuit of tax criminals. Obviously the IRS cannot pursue everyone so they pick and chose they victims carefully.
Much of the thought that goes into these cases will depend on the size of the case, the amount of tax owed, the willfulness of the intent, aspects of the deception and the possibility of conviction of the case and lastly, what is in the best interest of the U.S. government.
The Conviction rate is well in the favor of the U.S. government. As a general rule, they get there person historically about 90% of the time.
Each case is based on its own set of facts.
What is Voluntary Disclosure Practice of the IRS
It is currently the practice of the IRS that a voluntary disclosure will be considered along with all other factors in the investigation in determining whether criminal prosecution will be recommended.
Internal Practice of IRS
This voluntary disclosure practice creates no substantive or procedural rights for taxpayers, but rather is a matter of internal IRS practice, provided solely for guidance to IRS personnel.
Does not Guarantee Immunity
A voluntary disclosure will not automatically guarantee immunity from prosecution however a voluntary disclosure may result in prosecution not being recommended.
This practice does not apply to taxpayers with illegal source income.
When does Voluntary Disclosure Occur
A voluntary disclosure occurs when the communication is truthful, timely, complete, and when:
1. the taxpayer shows a willingness to cooperate (and does in fact cooperate) with the IRS in determining his or her correct tax liability; and
2. the taxpayer makes good faith arrangements with the IRS to pay in full, the tax, interest, and any penalties determined by the IRS to be applicable.
3. A disclosure is timely if it is received before:
4.. the IRS has initiated a civil examination or criminal investigation of the taxpayer, or has notified the taxpayer that it intends to commence such an examination or investigation;
5. the IRS has received information from a third party alerting the IRS to the specific taxpayer’s noncompliance;
6. the IRS has initiated a civil examination or criminal investigation which is directly related to the specific liability of the taxpayer; or
7. the IRS has acquired information directly related to the specific liability of the taxpayer from a criminal enforcement action (e.g., search warrant, grand jury subpoena).
If you have any questions whether a crime has been committed, call us today.
If you are having any issues and would like to speak directly to a tax attorney call us today for a no cost professional consult.
IRS Investigations!!!
Totals
Investigations Initiated
2502
Prosecution Recommendations
1765
Information/Indictments
1567
Total Convictions
1270
Total Sentenced*
1269
Percent to Prison
81.2%
Average Months to Serve
44
*Sentence includes confinement to federal prison, halfway house, home detention, or some combination thereof.
by Fresh Start Tax | Aug 27, 2012 | FBAR, Tax Lawyer
With FBAR becoming the latest trend in IRS enforcement many taxpayers were not even aware of FBAR Filing or Due Dates requirements. The IRS is making FBAR a major project because it is yielding Billions of dollars into the Fed Revenue.
It is first important to know who is responsible to file a FBAR Report.
FBAR responsibility.
Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
It is important to understand that the IRS is currently running matching programs with overseas financial institutions tracing the signatures to US persons to Foreign bank accounts.
Do not forget or ignore the deadline-June 30 FBAR due date.
Form TD F 90-22.1 is a reporting document, not a tax form. That means there is no timely delivered provision. You can’t just have the envelope postmarked by June 30. The Treasury expects to have your Form TD F 90-22.1 in hand on June 30.
The FBAR must be received by the Department of the Treasury on or before June 30th of the year immediately following the calendar year being reported. The June 30th filing date may not be extended.
The IRS has just received $500 million in additional Congressional money and a sizable portion of those funds will be dedicated to running unreported FBAR filers down.
If you are in compliance, absolutely no need to worry.
If you are not sure whether you need to file the FBAR report or just want to have questions answered call us today for a no cost professional tax consult.
You can speak directly to a tax attorney or lawyer. 1-866-700-1040.
All consultations are free.
Remember, if you are in compliance you will never have anything to fear.
by Fresh Start Tax | Aug 26, 2012 | Income Tax Preparation, Representation
Fresh Start Tax L.L.C. of South Florida is a local tax specialty firm dealing with income tax, business and corporate tax preparation and planning. We also are IRS and State Tax Representation Experts. 954-492-0088
You can have your tax return ( income or business tax preparation ) prepared and filed through former IRS agents and managers who worked out of the local South Florida IRS offices. 954-492-0088. Free Consults for income tax preparation.
Tax Tips for our clients and potential clients in regard selling your home.
Taxpayers are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale. Make sure you can prove all sell dates.
If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ,$500,000 on a joint return in most cases. Check with us to make sure.
You will not eligible for the full exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
If you can exclude all of the gain, you do not need to report the sale of your home on your tax return.
If you have a gain that cannot be excluded, it is taxable.
You must report it on Form 1040, Schedule D, Capital Gains and Losses.
You cannot deduct a loss from the sale of your main home.
Special Note : If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home.
If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
Call us to find out more, 954-492-0088.
Income Tax Preparation, Former IRS Agents, Fresh Start Tax LLC , South Florida , Broward & Dade County, Tax Tips, Selling your Home
by Fresh Start Tax | Aug 25, 2012 | IRS Tax Debt, IRS Tax Problem, Tax Levy and Wage Garnishments
We are a IRS tax specialty firm dealing with IRS tax resolution.We are comprised of Tax Attorneys, CPA’s and Former IRS agents who have over 60 years with the IRS.
As a former IRS agent I have filed thousands of levies when working for the IRS. I/we know the exact and quickest way to get the levy released.
We can get bank account levies usually released within 5 days. Believe no tax resolution company that tells you different, they would be scam artists.
Bank Account Levies can be handled and released with simple procedures.
Most of the time, bank accounts are levied because taxpayers fail to answer a series of letters sent by the IRS. IRS has no choice but to levy. IRS will either send out a bank levy or a wage levy or both.
Once contact is made with the IRS and financial information given to them with documentation, the IRS will work out a settlement strategy and settle.
There is a lot of skill involved in getting what is in the best interest of the taxpayer and not the IRS. Call us today and we will review your options of get your bank account levy released and get you immediate tax levy release
Bank Account Levy Holding Period, the good news!
A bank that received a bank account levy must wait 21 calendar days after a levy is served before sending payment to the IRS.
Then, on the next business day ( the 22nd day ), it must turn over the taxpayer’s money to the IRS. The bank will not send money that is subject to attachment or execution under judicial process. “Bank” includes credit unions, savings and loan associations, trust companies and other like types.
During the 21 holding period most levies can be released. It is our magic time to call IRS get the levy released and get our clients case settled.
Most clients will be filling out a form 433A or 433 F along with financial documentation to get the bank account levy released by the IRS.
IRS will also use this contact period to make sure all tax returns are filed and up to date.
Call us at 1-866-700-1040 and start the process right now.
We are affordable, friendly and assessable, since 1982.
