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United States Tax Court Basics – Paul Gaulkin CPA

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A taxpayer may petition the Tax Court for redetermination of their deficiency within 90 days of the mailing of a notice of deficiency according to Code Section 6213(a). If the 90 day deficiency notice was used by the Appeals Office, it is possible to arrange for pretrial settlement with the Regional Counsel of the IRS. This can be accomplished even after the case has been docketed in the Tax Court. Small Tax Cases Taxpayers filing a petition with the Tax … Read more

Deducting Student Loan Interest Code Section 221 – Paul Gaulkin CPA

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Interest payments made on student loans are deductible for adjusted gross income or “above the line”. This means that a taxpayer can deduct the interest whether or not he or she has chosen to itemize deductions for the tax year. For 2012, eligible taxpayers may deduct up to $2,500 of interest expense on a qualified education loan under Code Section 221. Deduction Phase Out The deduction begins to phase out for single taxpayer with adjusted gross income between $60,000 and … Read more

Property Exchanged for Services – Paul Gaulkin CPA

stacks of cash USA

In some cases, a taxpayer may receive property in exchange for services rendered. This property received is considered income and therefore the taxpayer must include the FMV of the property on their tax return. The amount that is included in income becomes the basis of the property to the taxpayer. Price Agreed Beforehand If the taxpayer performed the services for a price agreed on beforehand, the IRS will accept that a price as the FMV of the property if there … Read more

Using Suspended Passive Activity Losses – Paul Gaulkin CPA

Piggy bank with change infront

Disallowed passive activity losses are generally suspended and may be carried forward indefinitely until they are able to be used to offset passive income in future years. The IRS has this suspension to basically prevent taxpayers from benefiting from a net loss that is derived from passive activities until the economic interest in the activity is completely relinquished. Qualifying Disposition of Passive Activity When a qualifying disposition of the passive activity that generated the losses occurs, the suspended losses become … Read more

Tax Assessment Appeal – Paul Gaulkin CPA

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Generally, different assessments can be appealed at different times. Below we will list these assessments and when they can be appealed by a taxpayer. Pre-Assessment Appeal The following penalties can be appealed by a taxpayer prior to assessment by the IRS: 1. Penalties asserted by the IRS in the course of examining a taxpayer’s return. This is generally considered the accuracy related penalties subject to the deficiency assessment procedures. 2. Trust fund recovery penalties and preparer penalties. 3. Intentional disregard … Read more

Quick Refund of Corporate Estimated Taxes Form 4466 – Paul Gaulkin CPA

Tax refund check

A corporation that has an overpayment of its estimated tax for the year can file Form 4466 (Corporation Application for Quick Refund of Overpayment of Estimated Income Tax) to get a quick refund from the IRS. For purposes of a quick refund, an overpayment equals the excess of the corporation’s estimated tax payments over its expected final tax liability for the year. Form 4466 Form 4466 must be filed in paper form after the close of the tax year. The … Read more

Protective Claim for Refund Form 907 – Paul Gaulkin CPA

Refund check with cash behind

A taxpayer can file a claim for refund only if the request is made in a timely fashion and the taxpayer provides the IRS with grounds for the claim and facts to inform the IRS of the basis for the claim. In the event the taxpayer does not have complete information or recovery of the claim depends on the occurrence of a future event, a protective claim for refund can be filed to toll the applicable limitations period for filing … Read more

Employment Taxes Overpayment Error Form 941 – Paul Gaulkin CPA

description showing FICA

In the event an error involves overpaid FICA taxes from a previous quarter in the same calendar year or a pervious calendar year, or over collected federal income tax from a previous quarter in the same calendar year there are a few steps that need to be taken to fix the error. Filing Form 941 The first thing that needs to be done is file a Form 941 (Employer’s Quarterly Federal Tax Return) for the quarter in which the error … Read more

Receiving Tax Refund through Representative Form 2848 – Paul Gaukin CPA

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The IRS will allow an authorized representative to receive a refund check on behalf of a taxpayer, however, they will not allow the check to be in the name of the authorized representative. This is to try and stop fraudulent tax professionals from taking advantage of taxpayers by scamming them out of their refund check. Power of Attorney Form 2848 In order for the authorized representative to be able to have a refund check sent to them, the taxpayer needs … Read more

Voluntary Overpayment of Tax – Paul Gaukin CPA

Global Strategy

When someone makes a payment of tax and they are under no legal obligation to do so, that person has made a voluntary payment that is generally nonrefundable. An example of this is if a shareholder of a corporation attempted to file a refund for tax paid by the corporation, the shareholder would be denied that right for the refund. Wrongful Voluntary Overpayment of Tax There have been cases however when a taxpayer sued for a refund in regard to … Read more