What’s the best accounting method route for business tax purposes?

Businesses basically have two accounting methods to figure their taxable income: cash and accrual. Many businesses have a choice of which method to use for tax purposes. The cash method often provides significant tax benefits for eligible businesses, though some may be better off using the accrual method. Thus, it may be prudent for your […]

Do I qualify for a cash award?

Taxpayers who give the IRS Whistleblower Office (WBO) information about unpaid taxes may qualify for cash awards. To be eligible, tips must be credible and specific, relate to tax underpayments or violations of tax laws and be used to collect proceeds. One individual submitted a claim that targeted taxpayers based on 36 broad categories of […]

What should I do if I receive a refund, but it’s wrong?

Mistakes happen. What if you receive a refund from the IRS that you’re not entitled to? Or what if you receive one that’s more than you’re entitled to? How you must handle it depends on details. A paper check refund should be voided and returned within 21 days of receipt to the address in the […]

Auditing revenue recognition

The top line of an income statement for a for-profit business is revenue (or sales). Reporting this line item correctly is critical to producing accurate financial statements. Under U.S. Generally Accepted Accounting Principles (GAAP), revenue is recognized when it’s earned. With accrual-basis accounting, that typically happens when goods or services are delivered to the customer, […]

What’s happening in the courts?

In one recent federal court case, a nonresident alien taxpayer claimed deductions from taxable income for multiple personal exemptions. The IRS denied them. The taxpayer argued in court that the Tax Cuts and Jobs Act had made everyone other than nonresident aliens ineligible for several personal exemptions. Not surprisingly, the court disagreed with this interpretation […]

Introduction to Tax Forms for Gig Economy Workers

Are you one of millions of Americans who participate in the gig economy? If so, the IRS considers you an independent contractor. Essentially, you’re a solo business owner, which ushers in a unique set of tax rules and obligations. A recent post in the National Tax Advocate blog examines some of the essential tax issues […]

Deduction distinction: The difference between “repairs” and “improvements”

Deadline to return ERTC funds fast approaching

Earlier this year, the IRS launched a voluntary disclosure program involving the Employee Retention Tax Credit (ERTC). It allows eligible businesses to pay back money they received after filing ERTC claims in error. The disclosure program runs through March 22, 2024, and allows employers to repay 80% of the money received. With the deadline to […]

What do I do if I donate a car to charity?

Donating a car to your favorite charity helps the organization and may give you a nice tax deduction. But you must itemize deductions and follow the rules. For a car worth at least $250 but not more than $500, you need a written acknowledgment letter from the charity with certain details. You must have this […]

Did you Gamble and win?

Did you bet money on the Super Bowl? If so, you aren’t alone. The American Gaming Association estimated that a record $23.1 billion would be wagered on Super Bowl 58. If you won, congratulations! Not to rain on your parade, but Uncle Sam generally wants his share. The rules apply even to “casual gamblers” who […]