Showing posts from October, 2012

IRS Audit Red Flags

The following are the latest items the IRS focuses on for Tax Audits:

1. Company Cars - Employers frequently don't report the taxable benefit that employees receive from their personal use of company-owned cars. The IRS plans to focus on the use of company cars, especially "luxury" models, in its next series of audits.

2.High Income Taxpayers -  The IRS will aggressively pursue self-employed taxpayers with gross income of more than $1 million. In 2011, the IRS audited 12.5 percent of all individuals with incomes of more than $1 million (up from 8.4 percent in 2010). These audits are frequently performed by the LB&I audit groups and are much more invasive than typical audits. These audits should always be fought with a tax attorney.

3.Form 1099-K Matching - Form 1099-K (credit card) matching payee statements with receipts will be the focus of small business auditing. This is the new "cash audit" program and will focus on restaurants and formerly cash businesses…

Tax Increase Starting January 1, 2013

Expiring Tax Cuts Here are some of the tax cuts that are scheduled to expire on December 31, 2012 if Congress does not take action before then: The maximum federal income tax rate on most2013long-term gains from real property sales is scheduled rise from the current 15 to 20 percent.The top rate on most long-term gains from selling properties acquired after December 31, 2000 and held for more than five years is scheduled to rise from the current 15 to 18 percent.If you sell a rental property for a gain in 2013, a 25 percent maximum rate will apply to the gain amount attributable to the cumulative depreciation write-offs you've taken on the property. The same 25 percent rate also applies to depreciation-caused gains from 2012 sales. (Depreciation can cause a taxable gain even if you sell a rental property for somewhat less than the amount you invested -- because your basis in the property for tax gain/loss purposes is reduced by depreciation deductions.)The maximum rate on 2013 short…