Posted on July 12, 2017 in Taxation Law

Bitcoin, a digital currency, has gained popularity and utility in the last few years. Released in 2009, Bitcoin has been lauded as a superior currency accepted throughout the world and able to be transferred more efficiently than traditional denominations.

Bitcoin and other digital currencies like Ethereum are based on a technology called the blockchain. The blockchain is a digital ledger that keeps track of economic transactions. The blockchain has recorded every Bitcoin transaction that has ever occurred, for example.

The blockchain is considered incorruptible because it is publicly available and not stored in a central location. Instead, copies of the ledger are constantly being updated and reconciled on millions of computers across the world. Without this technology, cryptocurrencies would not maintain their integrity.

While cryptocurrencies rely on the blockchain, it is widely thought that the blockchain has other uses, such as the recording of deeds or the formation of contracts. In whatever context, such transactions are usually still regulated and taxed by the IRS. Those involved in this emerging market could be subject to fines, penalties, and interest if they do not understand and comply with these tax obligations.

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 Posted on June 21, 2017 in Property Taxes

If you do not pay your property taxes on your home, you risk having your home sold at a tax sale. However, this consequence does not happen immediately, and the government must take multiple steps in order for your home to be sold.

There are a number of actions you can take if you have fallen behind on your property taxes, including speaking with a knowledgeable California property tax attorney.

The most important factor to keep in mind is that your home cannot be sold within five years of the delinquency. You have five years to pay the back amount or enter into a payment plan.

Property Taxes and Liens Against Your Home

If you do not pay your property taxes, a lien will be placed on your home. The lien will not just be the amount of back taxes that you owe. It will also include any amounts of interest, penalties, and costs stemming from the failure or late payment of taxes.

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 Posted on June 15, 2017 in Taxation Law

Raising money through crowdfunding has become more popular in recent years and its popularity shows no signs of slowing. Kickstarter and Go Fund Me are two popular platforms used to crowdfund.

At its inception, crowdfunding was mostly used by artists like musicians and filmmakers to support projects that were unlikely to be profitable. However, crowdfunding has been used increasingly as an alternative to venture capital fundraising. With people finding new uses for crowdfunding, new questions arise about whether such money is taxable.

Types of Crowdfunding

Crowdfunding campaigns may offer one or several types of considerations (or rewards) in exchange for a contribution. Some campaigns do not offer anything in return, simply the satisfaction of helping a cause.

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 Posted on June 07, 2017 in Small Business Taxes

When a business wraps up due to closure, merger, sale, or reorganization, California requires that certain measures be taken to alert the state that the business is no longer operating in the state.

These steps, as simple as they may be, can be overlooked. In fact, many business owners have faced serious repercussions by not following them. Failure to take these steps can result in future tax liability, including penalties and interest.

Step 1: Inform the Franchise Tax Board of the Entity’s Final Tax Year

The first step a business winding down must take is to tell the Franchise Tax Board (FTB) that the final return filed by the business will, in fact, be the last one. This is an easy step to complete; however, it is also easy to overlook.

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 Posted on May 29, 2017 in Taxation Law

“You are being audited” are words no person or business wants to hear. Tax audits induce stress and tax professionals are usually needed. Often, taxpayers are concerned that they will discover a large tax obligation or that an audit will take up valuable time.

One of the most important steps you can take in the instance of being audited is to have all supporting documentation on hand. This requires keeping documents for the recommended period of time as well as having an organizational system for these records.

How Long Should I Keep Records?

Records supporting your tax returns should be kept until the period of limitations for that tax return expires. This includes support for any income, deduction, or credit claimed on your taxes.

The period of limitations refers to the timeframe you have to amend a tax return and the timeframe the IRS can determine you owe additional taxes.

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 Posted on May 22, 2017 in Taxation Law

Tax returns and all taxes owed for 2016 were due on April 18, 2017. If you failed to file your tax return and make payment of any taxes due, there will be repercussions. 

The best way to minimize the fallout for late filing and paying is to take care of both matters as soon as possible. Penalties and interest will start to accrue immediately, leaving you with an even bigger bill. 

Often, people who do not file on time do so because they have a complicated tax situation. They may have questions that they cannot answer, or they may be worried about a situation because they do not understand it. 

In these cases, contacting a tax professional, such as a tax lawyer, can speed up the process and give you the confidence of knowing that your tax matters are being handled properly and with the most benefit to you.

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 Posted on April 28, 2017 in Taxation Law

If you are an independent contractor, you may be required to pay your taxes several times throughout the year. This is called an estimated tax.

This requirement comes as a surprise to many freelancers and contract employees. If not properly handled, it can create undue stress as well as expose the taxpayer to IRS penalties.

It is important to not get bogged down in the complexity of your tax situation as an independent contractor. Instead, you should reach out to a professional, such as a tax attorney, who can advise you on how you need to comply.

What Federal Taxes Must You Pay Quarterly?

When independent contractors are paid, certain taxes are not deducted from their paycheck. These taxes are called the self-employment tax, and include Social Security, Medicare, and similar state taxes.

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 Posted on April 19, 2017 in Taxation Law

A new law will soon go into effect that will revoke the passports of taxpayers who owe a significant amount of back taxes. This law was passed in 2015 as a tax collection tool for the Internal Revenue Service (IRS).

Details of the Law

The law allows the IRS to certify your tax debt to the State Department—the agency that issues passports. Once a tax debt is certified, the State Department will revoke passports or prevent passports from being issued to the tax debtor. The IRS has not yet begun certifying tax debt and has not announced the exact date this process will begin; however, the IRS did indicate that the first certifications could come in early 2017.

Who Will Be Affected by This Law?

The new law will apply to individuals with seriously delinquent tax debt. The law defines this type of debt as federal tax debt of more than $50,000, including interest and penalties indexed for inflation.

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 Posted on April 12, 2017 in Taxation Law

Is a Non-U.S. Citizen Required to File a U.S. Tax Return?

Non-U.S. citizens with taxable income must file a tax return and must adhere to special requirements. This situation often comes up with international students and scholars who work or receive scholarship funds.

Requirements for Non-U.S. Citizen Taxpayers

Non-U.S. citizen taxpayers are defined in the Internal Revenue Code as those who are resident or nonresident aliens who are engaged in trade or business within the country. These individuals must file a U.S. tax return.

Foreign teachers, trainees, or students who are temporarily in the country on F, J, M, or Q visas will be considered to be engaged in trade or business.

Most people with non-immigrant status of F-1, J-1, M-1, Q-1, and Q-2 can be employed in the U.S. If such people are employed, they can apply for a Social Security number. If someone is not eligible for a Social Security number and has a tax filing requirement, an Individual Taxpayer Identification Number can be applied for through the IRS.

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 Posted on March 31, 2017 in Taxation Law

If you a considering moving outside of the United States and renouncing your citizenship or long-term green card, there are important tax considerations you should review.

One of the most important determinations is whether you are a “covered expatriate,” as this group must pay an Exit Tax. There are steps you can take to avoid being classified as a covered expatriate.

The Exit Tax is calculated by the IRS as if you sold your assets and reported the gains. Net capital gains are taxed at rates of up to 23.8 percent. In 2017, the first $699,000 of gain is not subject to the Exit Tax.

Who Qualifies as a Covered Expatriate?

1. Anyone with a net worth of over $2 million. Net worth includes your assets anywhere in the world, including your assets in the U.S. There are several complications if you are married.

The net worth of each spouse will be calculated separately. If the husband or wife owns most of the assets, it may be possible for a spouse to gift assets to the other in order to bring each person’s net worth under $2 million. For receiving spouses who are U.S. citizens, such a gift may not be taxed.

If your spouse is not a U.S. citizen (even if he or she is a green card holder), then the gift may be subject to the gift tax if over $149,000 (in 2017). If more assets than this need to be transferred between spouses to come in under the $2 million net worth cut off, you could avoid the gift tax by making the transfers over a number of years or by relying on a unified tax credit.

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