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Articles Posted in Tax Law

TAX DAY IS APRIL 18 ELPO

By Nathan Vinson, Attorney

English, Lucas, Priest and Owsley, LLP

Tax Day is a day that we know you celebrate with great abandon. Right?

If you do in fact go all out for Tax Day, this year, you’ll need to move your Tax Day celebrations to April 18. Traditionally, Tax Day is April 15. In some circumstances, it is moved back a few days to accommodate a holiday. This year, Tax Day is April 18 because of Emancipation Day, which is a holiday in Washington, D.C. that marks the anniversary of the abolition of slavery in the nation’s capital.  It is celebrated annually on April 16.  Because that date falls on a Saturday, Emancipation Day will be officially celebrated on April 15 this year, shutting down city offices.

Tax Day is also moved when April 15 falls on a Saturday or Sunday. It is then moved to the following Monday.

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By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP

We’ve heard more than one report of people getting called by scammers pretending to be the IRS, wanting money for back taxes or claiming that the IRS is going to IRS doorwaysue you. Make no mistake: the IRS will not call you.

This time of year, as many people are working on tax filings, anticipating returns and otherwise crunching numbers, the IRS is top of mind, and the scammers know it.

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By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP

If you own a small business, offering health insurance to your employees is likely one of your biggest headaches. There are an incredible number of options for health insurance, including the use of health savings accounts. Some small businesses have never offered it for those reasons, and because the costs of it can send a company’s expenses through the roof.

It’s understandable – and until recently, it was entirely legal. Employees could go elsewhere for insurance, such as through a spouse’s work or purchase it privately. But the Affordable Care Act changed all of that. The Act mandates that businesses offer health insurance to employees and their dependents. The rules were phased in over time (but they’re here now), and it’s only for those businesses that hit certain thresholds. An excellent Associated Press article recently outlined all of the thorny problems for small businesses. You can read that here.

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By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley

lottery tix photoWe all would love a nice windfall of unexpected money. Whether that’s winning the lottery, receiving an inheritance or taking home a fat prize from a TV quiz show, it’s nice to think about what we might do with sudden wealth that we didn’t really do much to earn, and comes in a large lump sum.

In the case of lottery or quiz show winners, the first thing you want to do is tell everyone because you are excited. But that’s a mistake – a big one. When people know that you have an unexpected amount of cash coming your way, people you haven’t heard from in years will ask you for money. Also expect that your everyday friends may ask for money – and it may surprise you who makes that ask. Then comes the charities and those who represent those organizations.

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By Nathan Vinson, Attorney

English, Lucas, Priest and Owsley, LLP

IRA gift provisionOver the past decade, Congress has passed a law – usually at the last minute – that allows for gifts directly from Individual Retirement Accounts to charitable organizations with favorable tax treatment. The gifts can be up to $100,000 to qualifying organizations, but it has to be made directly to the charity. The IRA gift provision has been a popular way for some to give to their favorite organizations, for two key reasons:

  • The gift counts towards your required minimum distribution from your IRA for the year. As you may know, seniors ages 70.5 and up are required to take a minimum distribution from their IRA each year.
  • The gift is excluded from taxable income. The money won’t be included in your taxable income (as it would otherwise) if the money is paid directly to the qualifying charity.

Only those who are 70.5 or older can take advantage of it.

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By Nathan Vinson
Attorney, English, Lucas, Priest and Owsley, LLP

tax movesWe’re about five weeks out from January 1, 2016. Yes, really.

That means if there are financial moves you intended to make this year to save on your 2015 tax bill, you need to get going. I’ve outlined here a brief checklist to get you started.

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entertainers auditBy Nathan Vinson
Attorney, English, Lucas, Priest and Owsley, LLP

If you are working in the entertainment industry, the IRS has your tax returns in its sights.

In a new “Entertainment Audit Technique Guide,” the IRS recently instructed its auditors to closely examine tax returns from those in the entertainment business.  Auditors will be scrutinizing deductions claimed on tax returns for expenses which, according to the guide, entertainers have historically been “aggressive or abusive” in taking.

The IRS wants to reign in these perceived industry norms to ensure that the entertainers are legitimately entitled to the claimed deductions. In tax parlance, the expenses giving rise to deductions must be “ordinary and necessary.” As the guide puts it, “The distinction between ordinary/necessary and extravagant must be more clearly drawn.”

Those in the entertainment business can include, but are not limited to, comedians, musicians, singers, songwriters, actors, producers and those involved behind the scenes. The IRS wants to see that the deductions entertainers are taking are substantiated with legitimate receipts and records, and that the expenses truly are business-related (i.e. “necessary”).

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By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP

Goodwill receiptAlmost everyone makes charitable donations of some kind, and many of us expect to deduct the value of those donations from our income when our taxes are being prepared. While it’s not a primary motivator for most who give to charity, it certainly helps spur some giving and motivates some to meet charitable obligations prior to the end of the calendar year.

Here are a few tax rules to keep in mind when making charitable donations of property (i.e. noncash donations), as federal tax law and regulations require certain documentation of gifts depending on the value of the gifts.  In tax parlance, these rules are called “substantiation” requirements.

For gifts under $250, minimal documentation is required to claim a tax deduction. While it is generally required that the taxpayer obtain a receipt from the charitable organization, the taxpayer is excused from doing so if getting a receipt is “impractical.”

An example that the tax regulations use is dropping off property (i.e. clothing) at a charity’s unattended drop site (i.e. a Goodwill drop box after store hours).  In that instance, taxpayers are required to retain in their own records (but not submit to the IRS) documentation containing:

  • the name and address of the charity;
  • the date and location of the donation;
  • a description of the property, including its value;
  • the fair market value of the property contributed and the method used to determine the fair market value; and
  • possibly other documentation.

As you can see, it may just be simpler to get the receipt!

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By Nathan Vinson, attorney
English, Lucas, Priest & Owsley, LLP

IRS taxes gambling

The IRS is considering changing the way it taxes gambling payouts.

Since 1977, the IRS has required those who won $1,200 or more from slot machines or $1,500 or more from Keno to report and pay taxes on those winnings. We wrote about this rule earlier this year as it pertains to horse racing, a subject near and dear to Kentucky hearts.

After nearly 40 years of this practice, the IRS is considering changing that limit to $600, and casino gaming operators aren’t pleased.

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